Vanguard Quits Climate Alliance In Major Blow To Woke Investing

Yeah, I can see where this is going. If you don't drink maggots, then you don't care about black lives.

 

ESG has nothing to do with China. It is a capitalist play by investors with a different set of incentives than other investors. Traditionally, an investor might look at the soda market and invest in PepsiCo or the Coca Cola Company. Then, their incentive would be for that other country to out-compete the other and get the most customers, no matter what. That could mean doing so in ways that weren't really sustainable.

Now, let's take another investor. That investor decides to buy both companies in equal measure. So now, competing for that customer ultimately isn't the most important thing. You don't care whether some customer buys Coca Cola or Pepsi. What you care about is that they buy one of them.

This raises the importance of systematic risks (defined broadly). Basically, you want to make sure that the most people have the chance to buy Coke or Pepsi. So you want to limit risks that could limit that. So if we have an environmental disaster, that lowers economic output and could cause less people to buy soda. If we have social inequality that grows out of control, you can have violence that stops people from buying soda. If you have governance issues, where managers start acting in their own interest above the interests of shareholders, that could make people stop buying sodas.

ESG is the natural result of Institutional Common Ownership. A good theoretical paper on the subject:

The Future of Disclosure: ESG, Common Ownership, and Systematic Risk by John C. Coffee :: SSRN

It has absolutely nothing to do with Marxism or any other right wing buzzwords. It is simply capitalism that right-wingers don't understand.

 

When it comes to my retirement funds or general investment funds I go with making money.

When I want to help the environment I donate money for that or participate in the local green cleanup group to clean local waterways.

I'd prefer not to mix the two. Usually trying to do two things at once results in both being done poorly.

 

So let's say your investment account invests in businesses that will be hurt by environmental degradation, such as, let's say, fishing (where environmental issues have been collapsing certain fishing sources), and those causing the environmental degradation (such as, let's say, oil/gas). What should you go with at that stage?

https://afspubs.onlinelibrary.wiley.com/doi/abs/10.1002/fsh.10705

 

I'd hope they're diversified enough that overfishing doesn't meaningfully impact my account. If the companies are reliably forecast to do poorly I'd rebalance out of them if I was for some reason managing individual stocks.

If I was concerned about the pollution I'd donate some of my time and/or money to help.

 

First, I wasn't discussing "overfishing" but the impact of climactic issues on fisheries, lowering supply.

But let's get more direct, lets say that environmental degradation has a negative impact on many industries, such as by lowering economic performance in enough industries that it hurts the entire economy across national borders. How do you "rebalance" that?

 

Black Lives Matter?!?