An investing movement that promotes itself as a protector of people and the planet has somehow found itself providing capital to the autocratic regime behind Europe’s worst military conflict since World War II.
“ESG is being used ineffectively,” said Mr Clements-Hunt, founder of advisory firm Blended Capital Group. Investors should be measuring risks across entire systems, not just corporate risks, but instead “the obsession with easy money-making is overriding everything”.. Industry researchers at Morningstar estimate that 14 per cent of sustainable funds globally held Russian assets right before the war.
“There are still people who inappropriately conflate sustainability and ethics,” said Hortense Bioy, Morningstar’s global head of sustainability research. “Sustainable and ESG funds aren’t the same as ethical funds.” Rachel Robasciotti, founder of Adasina Social Capital in San Francisco, which runs an $US89 million ETF that focuses on social justice issues, said that unless a business is clearly an instrument of a despotic regime, it’s important to differentiate between companies and the countries in which they operate.Time for a rethink