Friday, 16 April 2021
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Hello Everyone

Let me start by saying that I am not expert on this topic. I write this post in the hope that I will receive some advice from people who know a lot more about it than me.

I recently read a story in The Guardian titled "Green investing 'is definitely not going to work’, says ex-BlackRock executive". It was based on an interview with Tariq Fancy, the former chief investment officer for sustainable investing at BlackRock which is the world's largest asset manager. The central claim was that no matter how well intentioned, business leaders will always put profit ahead of environmental or social considerations.

Here are some quotes from the story:

Moving money to green investments doesn’t mean polluters will no longer find backers. The argument is similar to that of divestment, another strategy Fancy says doesn’t work. “If you sell your stock in a company that has a high emissions footprint, it doesn’t matter. The company still exists, the only difference is that you don’t own them. The company is going to keep on going the way they were and there are 20 hedge funds who will buy that stock overnight. The market is the market.

“I don’t think the public realizes we are not talking about stopping climate change,” he said. “We are literally talking about selling assets so we don’t get caught up in the damage when it hits.”

Under the current system the costs, says Fancy, are simply too high and the benefits of conducting business as usual are too great. A 2019 Morgan Stanley study found that getting to net zero by 2050 will cost $50tn.

What would work is a change in government policy that made it more expensive to pollute, such as a carbon tax, because that would change the corporate world and Wall Street’s incentives.

“If you put a tax on carbon, every single portfolio manager would adjust their portfolio,” he said.

I would be interested to hear your opinion about the quotes above.
1 year ago
It is critically important that governments create incentives for businesses to do the right thing, such as removing fossil fuel subsidies and implementing a meaningful carbon tax. However, I don't think this diminishes the value of green investing. CSR is changing corporate culture so that executives give greater consideration to environmental and social impacts, and it is providing easier access to capital for ethical businesses. That said, I think one of the biggest challenges is identifying which companies are making genuine progress towards environmental and social sustainability, and which are merely greenwashing.
1 year ago
It seems that everyone is jumping on the environmental, social, and corporate governance (ESG) bandwagon. According to Bloomberg Professional Services, ESG assets may hit $53 trillion by 2025, a third of global assets under management. So it is definitely not niche investing anymore.

I agree with Kelly Smithers that CSR/ESG is a good thing provided we have ways to ensure that the claims are objectively true and not mere greenwashing. I also agree that we need government intervention that provides financial and regulatory incentives for businesses to be environmentally and socially responsible.
1 year ago
Green investing can play an important role, but government policy is the most critical factor.
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