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ESG Funds - Are They Really?

Simon
in Fund Discussions
There was an interesting article in The Guardian (UK) today about the global plastics nightmare which is set to get even worse in the coming years. Among other apalling facts, the article details how some of the major world banks have invested tens of billions of dollars in single use plastics producers. Here's the link:

https://www.theguardian.com/environment/2021/may/18/twenty-firms-produce-55-of-worlds-plastic-waste-report-reveals

This got me wondering how many ESG funds are actually invested in these banks. And if they are, then how can they claim to be ESG funds? I had time only to conduct a brief survey of six ESG mutual funds, but will continue my research. Five of the six funds held at least one of the offending banks in The Guardian article. Two funds held two or more of the banks, and one fund held the top four worst offenders. Only only fund, Brown Advisory Sustainable Growth, held none of the banks.

It pays to dig deeper. If you are sleeping soundly at night believing your ESG fund is doing the world a favor wake up and think again.

Comments

  • LewisBraham
    +1 Good article.
  • Observant1
    edited May 2021
    Thanks for sharing.
    I didn't realize that just 20 firms are responsible for 55% of the world's plastic waste.
    Regarding ESG funds, there are different definitions of what constitutes ESG.
    Some investment firms have implemented "greenwashing" in order to jump on the ESG bandwagon.
    Caveat emptor!
  • Simon
    edited May 2021
    Northern US Quality ESG (NUESX) a fund Dr Snowball will be highlighting in June and apparently highly rated by Morningstar, holds Bank of America, Citigroup, and JPMorgan, which collectively loaned US$8.4 billion to single use plastics manufacturers from 2011-2020 (according to the article).

    I don't want to single out one fund or banks in general. A bank gave me a loan to buy my house and I've planted over 30 trees on our 2.67 acres. So "thanks bank" for helping me do good!

    But I still find it hard to reconcile the dichotomy of an ESG fund investing in companies which enable the plastics industry to not only survive - but thrive. By making such investmemts are they not complicit in the plastics problem themselves?

    As for NUESX (actually I will single out this fund...why not?) the fund page states: "This Fund seeks to invest in high-quality companies that are industry leaders with regards to their environmental, social and government practices. These standards can help protect the environment and foster more favorable living conditions for future generations".

    Maybe this fund's managers need a lesson on how single use disposable plastics protect the environment and help future generations?

  • MarkMark
    I think you are absolutely correct @Simon and thanks for pointing all of this out. I've already contacted my friends in Australia to get on the ball.
  • Baseball_Fan
    All a bunch of bullsheet. So. You invest in a ESG fund to do good but you live in a house instead of multi family... you're using up more energy than you need... credit card companies handcuff folks with less means to pay off high interest charges somewhat indefinitely, are minorities more affected by that? Amazon driving a tube of toothpaste out to your house cause you already paid for prime,. Did you travel by plane in the last several years? Are you wearing leather shoes? Do you pay taxes in the USA. You are supporting the massive weapons industry indirectly

    Where does the logic start and end? All marketing, social justice signalling, tell others how to act and live...you are being played

    Baseball Fan
  • MarkMark
    What's it like moving through life with blinders on? A good segment of the population, especially the under 30 crowd, have already committed to reduce, reuse and recycle. They see a planet awash in tons and tons garbage and waste that will not just magically disappear in their lifetime and will continue to pollute and degrade their quality of life. But hey just ignore it because there's money to be made.

    Heres a clue - there's money to be made in not funding polluters any longer and finding solutions to the mess we've made that needs to be cleaned up. Like my dad always said "leave it cleaner than you found it." No one is being played, they just changed the game.
  • LewisBraham
    @Baseball_Fan Ever hear the saying it is better to light one candle than to curse the darkness? You can rationalize any deed with the reductive cynical specious logic you applied. If you feed one hungry person, you can say well there are a million more still hungry, so why bother with this one and I ate food today myself, doesn't that implicate me anyway? Life exists on a spectrum and is not black and white and all-or-nothing arguments like Well, Al Gore travels in airplanes and lives in a big house, therefore let the world burn don't fly any more. The planet's rapidly warming climate due to carbon emissions doesn't care whether you're liberal or conservative.
  • Baseball_Fan
    Hey team

    Never said go ahead and pollute, consume excessively etc. I try to take care of the environment best I can as well. Just don't care for the faux signalling..and marketing bullspit, I really do believe that the ESG investment is kinda a sure i agree with you as long as you see it my way... Hokum to a large degree


    Best

    Baseball Fan
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