Time to separate hype from the reality of ESG investing
SummaryThere is more than enough evidence that it achieves a lot less than what ESG advocates like to claim
Legendary Investor Phil Fisher is said to have remarked that there are fads and styles in stock markets just as there are in women’s clothes. Notwithstanding his misogyny, there is more than a kernel of truth in his statement. A current fad that has struck the fancy of asset managers and regulators is environmental, social and governance (ESG) investing. Whether this will endure to become a staple in inancial markets or go the way of bell bottoms and floral shirts is something that time will tell, but, given the fact that ESG funds hold $2.7 trillion globally and about ₹12,500 crore in India, a dispassionate analysis of the theory and empirics around ESG investing is in order.