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Companies with good ESG scores pollute as much as low-rated rivals

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Re: Companies with good ESG scores pollute as much as low-rated rivals

#61

Post by ke88y »

CameronNemo wrote: post #39
legitster wrote: post #26

Earlier quoted context omitted.

I find it hilarious the kind of conspiracy theories people lob at BlackRock and Vanguard. BlackRock maybe I can maybe understand, but Vanguard is like the most straightforward boring investment company in the world. It's literally a shareholder co-op for passive investment funds. People have no idea what they are talking about.

How is ESG passive investment?

The two are totally orthogonal. Passive refers to fund management style, and passive management can certainly be based on inputs that require human judgement or decision making.

Eg, the components of the S&P 500 are selected by committee, but obviously SPY is passively managed.

You can have a passively managed fund that is designed to to track an index of companies with a certain ESG score, or to track an index as well as possible while excluding non-ESG components, for example.

Re: Companies with good ESG scores pollute as much as low-rated rivals

#62

Post by rayiner »

JamesBarney wrote: post #41
Dig1t wrote: post #3

A component of ESG scores is how much you discriminate against white people. So of course you can have a good ESG score yet be a polluter.

A couple of hiring managers from oil and gas companies have told me there is a strong push to try not to hire white ICs if you can help it. This makes more sense in the context of trying to get a good ESG score to improve their P/E ratio.

Lawyers are going to have a field day over the next few years litigating over these discriminatory practices in view of SFFA and it’s logical corollaries: https://s.wsj.net/public/resources/documents/AGLetterFortune...

What’s remarkable is that apparently none of these hiring managers and executives saw this coming. The stuff they’ve put into writing is wild. Some of the stuff, like aspirational racial quotas, wasn’t even legal under pre-SFFA law. I don’t know who was advising these people.

Re: Companies with good ESG scores pollute as much as low-rated rivals

#63

Post by Aerroon »

ke88y wrote: post #59
Aerroon wrote: post #43

Earlier quoted context omitted.

When I first read about it I thought someone was playing an elaborate joke. It makes no sense why such ephemeral concepts should somehow lead to better investments. If anything, the entire ESG score thing seems like a scam to get people to make bad investments and to then bet against those investments.

> It makes no sense why such ephemeral concepts should somehow lead to better investments. Each component alone makes sense, if interpreted in a way that is consistent with shareholder capitalism. 1. Environmental. Interpreted in terms of shareholder capitalism, Environmental might mean something like "how well does this company work as a hedge against increasingly likely tail risks, and how resilient will it be to p…

I think even component-wise it wouldn't work well. These components are turned into metrics that can then be gamed. They obviously are gamed: the US corporate world seems to be chock full of token efforts like this.

But if ESG did follow the points as you listed them, then it would probably receive a lot less political flak.

Re: Companies with good ESG scores pollute as much as low-rated rivals

#64

Post by Dig1t »

eli wrote: post #50
Dig1t wrote: post #3

A component of ESG scores is how much you discriminate against white people. So of course you can have a good ESG score yet be a polluter.

What specifically are you talking about?

Here’s Apple’s ESG report: https://s2.q4cdn.com/470004039/files/doc_downloads/2022/08/2...

In it they say: “We’re making progress in increasing representation, and currently 50 percent of our workforce in the U.S. is made up of people from underrepresented communities.”

“Please see the Appendix on page 81 for more data on representation”

Then scroll to page 81.

We see that 43% of the company is white (the US is 60% white as of the last census, so white people are in fact underrepresented at Apple)

27.9% of the company is Asian

9.4% black

14.8% Hispanic

So they have stated that they are working on “increasing representation” (hiring) all categories of people except white.

They report these numbers because they are used to calculate the company’s ESG score. More diversity = higher score, where diversity is defined as fewer white people.

A higher ESG score means that ESG funds are more likely to invest in this company, pushing up the company’s value.

This is a literal economic incentive to discriminate against white people.

Re: Companies with good ESG scores pollute as much as low-rated rivals

#65

Post by Xeamek »

CameronNemo wrote: post #13

I think caring about ESG, and especially evaluating a company's governance, is important. But I don't know how much I really want BlackRock and Vanguard to be the ones doing the scoring...

Black Rock does NOT own the world, here is why:

https://youtu.be/NzKOVVvDGhE?si=Xhog1L_VRtzMsaQ6

Re: Companies with good ESG scores pollute as much as low-rated rivals

#66

Post by [deleted] »

mcpackieh wrote: post #25

Not really news is it? From two years ago: https://www.bloomberg.com/professional/blog/bp-esg-outlook-s... > BP’s ESG performance and outlook are bolstered by an ambitious net-zero emissions target from its operated upstream production by 2050, complemented by a tenfold surge in green spending, 50 gigawatts of renewable-power generation by 2030 and a 40% decline in oil and gas volume. Ecological metrics are favorable…

[deleted]

Re: Companies with good ESG scores pollute as much as low-rated rivals

#67

Post by maigret »

water9 wrote: post #51
distant_hat wrote: post #48

Often companies with good ESG scores optimize for having good scores. Its like studying to the test and they may have particularly poor results outside of the test that they have studied for. Also, ESG is political and like all things that involve politics, many things that may be good for the score may be bad for the environment. Easiest example to see is in energy with things like nuclear power, and 'biomass' and c…

Nuclear power if done safely is a much better alternative than say windmills which require extensive mining to make and kill thousands of birds a year.

You’ll hate cats then https://www.statista.com/chart/15195/wind-turbines-are-not-k...

Re: Companies with good ESG scores pollute as much as low-rated rivals

#69

Post by jmholla »

ZeroGravitas wrote: post #11

When they say pollute in the headline, they mean only C02, which makes the headline misleading clickbait even for people who don't understand what the S and G in ESG stand for. > It can very well be that a high-emitting firm is very good at governance or employee satisfaction. There is no strong relationship between employee satisfaction or any of these things and carbon intensity,” Goltz argued. > “Even the environm…

> for people who don't understand what the S and G in ESG stand for.

They stand for Social and (corporate) Governance. I just looked it up myself. I wish these articles would explain that. Even the link on the word ESG is unhelpful.

Re: Companies with good ESG scores pollute as much as low-rated rivals

#70

Post by Exoristos »

ke88y wrote: post #59
Aerroon wrote: post #43

Earlier quoted context omitted.

When I first read about it I thought someone was playing an elaborate joke. It makes no sense why such ephemeral concepts should somehow lead to better investments. If anything, the entire ESG score thing seems like a scam to get people to make bad investments and to then bet against those investments.

> It makes no sense why such ephemeral concepts should somehow lead to better investments. Each component alone makes sense, if interpreted in a way that is consistent with shareholder capitalism. 1. Environmental. Interpreted in terms of shareholder capitalism, Environmental might mean something like "how well does this company work as a hedge against increasingly likely tail risks, and how resilient will it be to p…

Wow, this is chilling.
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