How environmental, social and governance (ESG) investing controversies can impact fossil fuels

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The past few years have witnessed a surge in the popularity and momentum of environmental, social and governance (ESG) investing — a form of responsible investing that aligns financial returns with positive environmental and social ones.

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The ConversationThe Conversation
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https://theconversation.com/how-environmental-social-and-governance-esg-investing-controversies-can-impact-fossil-fuels-202966https://theconversation.com/how-environmental-social-and-governance-esg-investing-controversies-can-impact-fossil-fuels-202966
Retrieved on: 
Wednesday, April 19, 2023
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Tags: 
Shell, Industry, Capitalism, Shorthand, The Wall Street Journal, Public opinion, Politics, Perception, BlackRock, Carbon, Government, Firearm, Wharton School of the University of Pennsylvania, Climate change, Time, Widener University Commonwealth Law School, ExxonMobil, ESG, Environment, News, Legislation, Renewable energy, Cryptocurrency, Management
Geotags: 
CANADA, UNITED STATES
Summary
Key Points: 
  • The past few years have witnessed a surge in the popularity and momentum of environmental, social and governance (ESG) investing — a form of responsible investing that aligns financial returns with positive environmental and social ones.
  • Institutional investors and asset managers have been viewing ESG investing as a means to mitigate investment risks and increase long-term returns.
  • In recent months, however, numerous news articles have highlighted the growing tensions and conflicts surrounding ESG investing.

The politics of ESG investing

    • A closer look at the rising anti-ESG sentiment in the United States shows that attacks on environmental, social and governance investing are based on cultural, rather than economic grounds.
    • This contradicts their belief that governments should not determine how capital is allocated and investment decisions are made.
    • The costs of making ESG investing a political issue are glaring.

Divergent views on ESG investing

    • Second, conservative opponents of ESG are dismissive of ESG investing’s promotion of what they consider to be liberal causes.
    • Thirdly, progressive opponents of ESG accuse ESG investing of being a form of greenwashing — the deceptive practice of making a company or product appear to be more environmentally friendly than it actually is.

Independent assessments of ESG performance

    • Briefly speaking, while many Canadian corporations have expressed positive attitudes toward ESG, it is concerning that public narratives regarding the fate of bitumen have become increasingly polarized, which parallels the politicization of ESG investing in the U.S.
    • We urgently require comprehensive and independent assessments of the compatibility of the Canadian fossil fuel industry with ESG criteria.
    • By taking a proactive approach to ESG, we can create a more sustainable and equitable future for all.
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