ESG is good business (but don't call it ESG)

How to lose and make money in the climate era

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THIS WEEK

Fighting over ESG is stupid, risky, and bad business. Let’s move on.

Plus: RSV vaccines, the E-BIKE Act, Skittles (?), deepfakes, allergies, and a new season of DRILLED

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⚡️ There’s 1000 words about ESG investing below, so now’s a good time to find a bank that supports climate action AND your community with Bank for Good.

This isn’t complicated.

Alongside books, teenagers’ periods, and the statue of David, the notion of even considering “ESG” parameters in an investment fund has become one of 2023’s political footballs. Florida’s built a whole stupid political machine fighting it, the Senate passed an even stupider bill banning it, cueing up Green Joe’s first veto.

That’s not to say ESG is perfect.

In fact, it’s become pretty difficult to pin down exactly what the hell ESG is. That’s in part because ESG is a bunch of great ideas smashed together in one acronym. Drilling down, each those ideas — to more comprehensively and aggressively consider environmental, social, and governance standards, all vitally important and overdue — doesn’t really have a standardized, measurable anything. Which means formalizing them through ratings and the like is asking for trouble.

It’s problematic! Does a complete lack of standards but need to burnish reputations among retail investors set the stage for massive greenwashing? Of course!

Friends, many things can be true at once. Capitalism can make civilizations prosperous, drive innovation, and fund the arts. Capitalism also has a track record of being horrifically exploitative of ecosystems and people and self-regulation more or less does not work.

This is all to say: I am fully cognizant that a corporation’s traditional purpose is to create value for shareholders.

But that is exactly why considering even just the “E” in ESG isn’t putting “politics over profits”. It’s the opposite.

Since the beginning of time, two things have been true:

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