Time to cast a critical eye on ESG investing
Research suggests there is little evidence to support the claim that by investing sustainably, investors can do well and do good at the same time. Investors should consider their objectives
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Genevieve Cua
THE bear market is raising tough questions on funds with the ESG (environmental, social, governance) or sustainable label, and the scrutiny has come none too soon.
The scrutiny has less to do with greenwashing – which remains pervasive – but more to do with a fundamental divide between investors’ interests and the feel-good goal of doing good for societies and the environment. Can investors have their cake and eat it?
Quite apart from the bear market, longer-term data and research suggest that there is little evidence to support the claims that investors can do well and do good at the same time, and that there is no trade-off in returns. What 2022 returns show, albeit over a short period, is that there is a trade-off in returns.
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