Andrea Alms Video: Money In Motion 18 - Discovering A Hot Investment Spot - ESG

Transcript:

Hello. My name is Andrea Alms. I am technology investor, financial manager. And this is your money in motion. I was asked about ESG. What did I find? Some horror stories working in ESG space. Wonder how right can become so wrong. Unilever has mistaken political correctness with ESG and upset its major shareholders. Lloyds Banking Group sought to become a champion of diversity and inadvertently introduced discrimination into the workplace where none existed before e as conceptually simple but simply complex, ESG has become an esoteric buzzword. But what does it really mean and how should we think about in context of our investing? According to The Motley Fool, ESG stands for Environmental, Social and Corporate Governance. The three criteria to evaluate a company's sustainability performance according to Best Path Forward. They show a chart with definitions, examples and example of issues such as green house, green emissions, energy efficiency, health and safety, labor laws, board independence, executive pay according to seeking Alpha, they use a venn diagram and in the aggregate, ESG doesn't need to be a one size fits all solution. Now what this chart here shows examples of what it is and isn't to be ESG. It is wordy and nuanced. Each of us have a moral compass and it stands to reason that there are some investments we will avoid because it violates some sense of right and wrong. For example, illegality aside, we all know that there could be profits to be had from the narcotics trade, but we have no desire to pursue such investments because they are morally wrong. It is for this reason I would suggest that ESG is nuanced and needs to be tailored to each investor said differently just as above. There is no one size fits all when it comes to ESG. However, the approach being taken to ESG investing by investment managers and to some extent by corporate entities is based on a one size fits all assumption. By definition, investing is opinionated and exclusive to each of us. Let's keep an eye on this. Thank you. This is your money. Your money in motion.