War in Ukraine Reveals Flaws in Sustainable Investing
Russia’s invasion of Ukraine has upended geopolitics and, for many in the West, provoked moral righteousness. For investors who prided themselves on trying to do the right thing with their money, it has revealed fundamental flaws in the booming business of environmental, social and governance investing, known by the acronym ESG.
Here’s the problem: ESG is trying to gauge the sensitivity of companies to the public mood, either for moral reasons or because the public matter as customers, suppliers and employees of the companies. But the public mood keeps changing, and what counted as the right thing to do before Russia invaded has suddenly switched.
Photo courtesy of geralt.