I’ll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play
Just like yesterday
Then I’ll get on my knees and pray
We don’t get fooled again
– Song by The Who. “Won’t get fooled again” from the album Who’s Next 8/71
Caveat emptor (let the buyer beware)
A new indicator that ESG has matriculated into the mainstream investment universe is the seeming endless, perhaps counterintuitive, range of companies who suddenly proclaim they have now drunk the Kool-Aid and are now or soon to be, cleaner, fairer, and overall committed to being good citizens of the sustainable world – if not potentially our saviors.
But beware the ESG industrial complex. Is there a watchdog? And if so, why should we believe them?
This edition the Socially Inspired Investor Digest/Podcast attempts to touch on the very complicated and evolving subject of ESG ratings. Without the right data you, the investor, really are challenged to make informed decisions on which investment options most closely align with your values.
Will we ever get to the point where respected rating agencies give us a meaningful measure of how a company meets a generally accepted ESG standards? Respectfully – that’s a hard one to absorb. It’s probably not even possible as much of it may be subjective. But some guidance is better than no guidance. Recently the SEC proposed significant criteria for companies to include relating to their disclosure on environmental impact and risks associated with them.
Ratings services nevertheless decided it’s worth their time and capital to develop their own rating systems. And that is actually a very good thing, even if imperfect. Like it or not, that’s part of the deal at this point, and that has to be ok with you. To make it even more bemusing is that most of the input for the data actually comes from the companies themselves.
So, what are we to make of these rating agencies and the data they use? Is this the cavalry to the rescue? Or a concerted effort to fool us once again?
Our SPOTLIGHT ON question this issue posed to our panel of experts this question:
“It seems more expansive company reporting on sustainability factors creates a better business model – WHY?”
To help us further understand the ratings process we are fortunate to have Tamara Close from Close Group Consulting as Pat O’Neill’s special guest on our very interesting PODCAST.
We hope you enjoy this important edition of the SOCIALLY INSPIRED INVESTOR DIGEST/PODCAST. Since we first published – just as the COVID-19 pandemic began – we have seen tremendous progress being made in the investing community, as we inhabitants strive for a better, more sustainable future.
Enjoy!
