Is ESG Investing Bullsh*t?
Did you hear the news? Fossil fuels and deep sea oil rigs are all the rage these days when it comes to ESG investing. Forget doubling down on electric vehicles, renewable energy, solar etc… All we have to do to save the world is invest in Environmentally, Socially, Governance responsible companies…like Exxon. It looks like the entire climate change problem will solve itself.
If you didn’t catch the dripping sarcasm, you probably haven’t been watching the news much (or just too much Hannity). In case you missed it, the S&P 500 (the gold standard of public market investing) recently dropped Tesla from its ESG/sustainability index…
And decided to keep ExxonMobil!
If you are confused, it is because you should be. And yes, it’s the same Exxon with pumping stations on almost every corner…
You must be asking yourself: how can Big Oil be more sustainable and environmentally friendly than the company that revolutionized and mainstreamed the electric car?
One creates an environmental disaster by digging up millions of barrels PER DAY of prehistoric fossilized carbon sinks (aka oil) to be burned worldwide and re-released as CO2 into the atmosphere and had the one of the largest oil spills in recorded history, loosing 10.8M gallons of oil across 1,300 miles (2,100 km) of shoreline and devastating the local ecosystem for decades…
While the other pioneered Li+ ion batteries, electric vehicles and solar charging to help transition the world to a greener, renewable economy.
And yet, Exxon is the ESG recommended investment, not Tesla.
Since we’re talking oil spills, we might as well say… Something sounds fishy.
And that’s exactly the problem with ESG and arbitrarily defined metrics/targets.
What does it mean to be a good person?
What does it mean to be tall? To be rich? To be happy?…
Everything is relative and everything is in the “eyes of the beholder.” And in this case, thanks to Tesla’s poor track record on worker health and safety, the S&P 500 says they are not a good ESG investment (Btw, if you say their stock is overpriced, I won’t disagree with you there. But this is about much more than that).
But Exxon is…
If that doesn’t show how much of ESG is simply greenwashing, hand waving and picking favorites, I don’t know what does.
And I want to caveat all of this by saying: I’m just as big a critic of Elon Musk’s trolling, assholeish behavior and clear market manipulation (which he needs to answer for) as anyone… but come on.
Which company’s better for our planet long term: Tesla or Exxon?
ESG needs to stand for more than another Wall Street’s marketing ploy.
Our world doesn’t have time for half-assed investing and tricking consumers into believing they are making a difference. We need to go green, we need to invest in our future.
And ExxonMobil is anything but our future.
If you agree, consider joining 4WARD.VC’s accredited investor climate syndicate — investing in companies that move the world forward!
Because we should be funding the entrepreneurs building a better world, not Big Oil whose crooked execs lied about climate change for decades.
But that is not all. We need your help.
THIS IS AN OPEN CALL FOR PROPOSALS!
How would you design a better ESG (or other sustainable development — SDG) index?
What metrics should be taken into account? How should environmental topics like clean energy and GHG (greenhouse gas) emissions be weighed against things like reducing inequality and hunger?
If you have a great idea for an unbiased ESG 2.0, share your system below. If it’s well-thought out and credible we might just feature it on the site and help push for mainstream adoption.
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About the author
In addition to being the Partner and Syndicate Lead of 4WARD.VC’s angel network, Matt Ward is the host of The Startup Tank, a serial founder with multiple modest exits and a strategic startup advisor to high-growth, world-changing companies.