4 min read

4 / Greenwashing & Imperial Fictions

4 / Greenwashing & Imperial Fictions
Photo by Markus Spiske / Unsplash

Today's five notable reads:

ESG Exodus - Bloomberg

Investors are now pulling cash out of US equity exchange-traded funds with higher environmental, social and governance standards. May saw $2 billion of outflows from ESG equity funds... the biggest monthly cash pullback ever.
Though nearly two-thirds [of RBC clients surveyed] said that socially responsible investing is the way of the future, 74% of those surveyed said many companies provide misleading information about their ESG initiatives.

Comment: ESG is a never-ending story. Last week, German police raided the Deutsche Bank HQ and its asset management subsidiary DWS, for wrongly claiming that billions of assets under management included ESG criteria when they did not. BNY Mellon was fined $1.5m by the SEC for “mis-statements and omissions” regarding ESG investment processes in a number of funds. It's no surprise that the SEC has recently proposed rules to crush greenwashing and address funds' use of ESG factors in their investment practices.

Whilst ESG funds are here to stay and in theory can make a meaningful impact by reallocating capital away from companies that refuse to be part of the transition to the net zero economy, some of the world's biggest ESG funds are packed with polluters. It doesn't help that companies that provide ESG ratings all use different criteria. Tesla was booted off the S&P500 ESG Index, while Exonn, a huge polluter, remained in it. It makes no sense. Globally, the asset management industry earned $1.8 billion in fees last year from their sustainable funds, which is huge given that ESG investing essentially boils down to marketing hype and PR spin. And despite the inability to demonstrate the impact of ESG funds on the world, they charge premium fees to invest. Large asset managers see it as a higher margin business whilst adding higher costs to competitors who don't operate at scale. ESG needs a complete overhaul.

Four things that contribute to investing success, other than IQ - Humble Dollar

If you listen to Buffett... In his public comments, he spends much less time talking about numbers than he does about psychology and decision-making. In fact, most of Buffett’s pithy aphorisms boil down to the same basic message: “Just be sensible.”
...genius hardly guarantees success. The most famous case in the investment world was probably the hedge fund Long-Term Capital Management. It failed spectacularly despite having two Nobel laureates among its founders.

Comment: Grossman lists knowledge, time and experience, mindset and luck as being just as important as IQ. I would add 'discipline' to this list. One of the hardest things is regularly adding to positions even if markets seem to be going against you every time. The biggest driver of returns is not market timing, or even security selection. Its asset allocation. Planning a suitable asset allocation strategy, relevant to a particular risk profile and time horizon, and sticking to it (for the most part), will reap far better rewards than trying to outsmart the market. Leave that to the hedge funds that spend millions each year on research, and still underperform.

The young, rich, anti-capitalist capitalists - Vox

They’re trying to shift more of the balance of financial power into the hands of the working class, transforming an economic system that they believe has unjustly given just a few people control over a majority of the capital.
Another factor fueling this small shift: A lot of money is changing hands in the US right now. Over the next 25 years, American baby boomers will pass on some $68 trillion to their children. It will be the biggest wealth transfer in US history, but the money won’t be handed out evenly. Even more wealth will get concentrated at the top.
I sometimes joke that there are way more socialists who need a financial adviser than there are socialist financial advisers.

Price of UK pint up more than 70% since financial crisis - FT

London pubs charging up to £8 with more rises to come as cost of beer ingredient barley jumps due to war in Ukraine
If it had risen solely in line with average consumer prices from January 2008 to April 2022, the cost of a pint would have been £3.35.

Comment: This is why you will not see me go back to London anytime soon.

The Imperial Fictions Behind the Queen's Platinum Jubilee - New York Times

Celebrating Queen Elizabeth II’s 70 years on the throne, the platinum jubilee is pregnant with meaning about the nation’s imperial past and the monarchy’s overdetermined role in it.
She has rarely missed the biennial Commonwealth gathering. Nor does she pass on opportunities to foreground the monarchy’s role in binding together these nations, with their alleged shared beliefs and values, a trope unlost on some Brexiters still pedaling a misguided belief in the Commonwealth as a replacement for the European Union.
It was to the Caribbean Commonwealth Realms that the Duke and Duchess of Cambridge were recently dispatched, commemorating the queen’s platinum jubilee and affirming her sovereign authority. Few were surprised when they were greeted with condemnation and outrage. Demands for reparations and a colonial reckoning long preceded their weeklong tour, though they forged ahead as if empire was at high noon.
To understand how and why Britain shaped the modern world, it must not turn away from the complicated relationship between monarchy, nation and empire, and the untold sufferings it wrought on colonized populations across the globe. Rather it must untangle and understand this complicated web of power and its tentacular legacies in spite, or because, of its reverence for Queen Elizabeth II.

Comment: History is complicated. History is also almost always an argument, where there will inevitably be two sides. But the empire is the biggest thing Britain ever did and it shouldn't be forgotten. Whilst I don't think you can apply modern ethics to the past, a modest understanding can sure help illuminate the fact that imperial legacy is absolutely embedded in British society. And whilst this shouldn't instil a sense of pride or shame today, or be seen as either 'good' or 'bad', it should certainly be acknowledged and lead to an understanding of how it has helped shaped contemporary Britain. As a child of imperial immigrants to the UK, accusations are often levelled that bringing this up means you're anti-British. Almost always from people that lack basic understanding of their homeland's historical record. I shed light around this topic as a patriotic gesture. That I care to enquire. A love for my country and a desire for it to be better. It's incredible that it even needs to be said.