ESG Investing and Public Sector Unions

For the last few decades what used to be referred to as socially responsible investing has more recently morphed into “ESG” investing. The acronym stands for “environment, social, and governance,” and refers to how investors should evaluate the impact that every company they’re considering investing in has, positive or negative, in those three areas.

ESG investing has rapidly become a mainstream priority in the financial world. This year, the Securities and Exchange Commission is likely to mandate ESG disclosures for publicly traded U.S. companies. Reporting ESG scores is spreading as well to Europe, Canada, Australia, and elsewhere.

The implications of formalizing ESG reporting are intended to transform the global economy. Companies with low ESG scores will not only be subject to institutional divestment, which would itself constitute a serious threat to their ability to do business. They can also be denied access to lines of credit and other banking services, and they can end up unable to purchase insurance coverage.

The scope of what ESG deems objectionable is vast and inevitably subjective. It can implicate companies that may only involve a small fraction of their operations in the frowned upon activities. The allocation of low ESG scores is impacted by the corruptibility of the examiners and the criteria for ESG scoring may in many cases rest on premises that are either false or transient. With all that in mind, here some examples of activities that will draw a failing ESG […] Read More