The Shocking Truth About ESG Investing
The debate around ESG investing has jumped the shark.
And I'm going to tell you why.
Now, if you’re unfamiliar, ESG stands for environmental, social, and governance. ESG investing is simply an investment strategy that takes these three factors into account when screening potential investments.
These standards are largely voluntary, although some people worry that the government could mandate them in the future.
Such a thing is not unlikely, and in fact, ESG mandates do exist in the U.K. and the EU.
In the U.S., the closest thing to a mandate we’ve had was a 2022 SEC proposal that would force dedicated ESG funds to prove they are in fact delivering on any ESG goals they market...
In other words, making sure that if a fund markets itself as adhering to ESG standards that it actually does.
But beyond that, at least currently, there are no mandates in place that force funds, retirement plans, or individual companies to meet any ESG standards.
So this begs the question: Why are so many folks opposed to ESG?
The main argument seems to be that by integrating ESG standards, funds, retirement plans, and companies could lose money by putting these standards ahead of profitability.
After all, their primary responsibility is to shareholders, not to morally righteous politicians and environmentalists (as it should be).
But here’s what most anti-ESG folks don’t understand…
Many of the standards that fall under the ESG umbrella already exist.
It’s just that they’re not paraded around as ESG standards.
They’re simply nothing more than standards that require fiduciaries to properly consider risk factors that could negatively affect the performance of an investment.
To give you an example of what I’m talking about, consider the “G” of ESG, which stands for governance. This includes stuff like transparency, leadership accountability, and corruption indicators. These are all valid components of any investment analysis that, if left unchecked, could result in severe losses and financial damages.
Make no mistake: Oversight is a necessary function of boards of directors, and when it doesn’t happen, you end up with the kinds of financial disasters that crush investors. Think Enron, Lehman Brothers, and VW, which, after getting busted on its emissions testing hustle, ended up costing the automaker more than $20 billion in fines while losing more than $100 billion of its market cap. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
Forget ESG Investing — Just Get Rich!
While the term ESG is quite popular today, for the most part, it's just recognizing risk assessments that have been around for decades, while also taking into account new risks that maybe weren’t around 20 years ago...
Like the rise in extreme weather events, for instance.
I’m talking about everything from extreme droughts and heat waves to more frequent and intense flooding conditions and tropical storms.
As an investor, you need to understand how these conditions are going to affect the industries in which you invest... and there are few industries that can ignore these extreme weather conditions.
Sectors that will be affected include agriculture, energy, insurance, construction, and commercial fishing, just to name a few.
These aren’t ESG concerns, folks. These are valid risk-tolerance concerns that should absolutely be addressed. To ignore such environmental risks to profitability would be no different than ignoring accounting errors.
This isn’t about fighting climate change or pollutive industries. This is about limiting risk and ensuring profitability, plain and simple.
The truth is I couldn't care less about the ESG debate. It’s nothing more than political theater that only serves to distract us from the truth that, when it comes to building and protecting your wealth, you need access to objective investment analysis, not philosophical temper tantrums.
One of the things I’ve always loved about my job is working for a company that champions individual thought and not following the herd. Not only is this how I live my life, but it’s also how I’ve been able to help so many people earn so much money in industries that no one else was paying attention to early on and industries that were often trivialized when they first got started.
I did this with renewable energy back in the early 2000s, leading investors to about a half-dozen triple-digit gains in the solar and wind space.
I did this with cannabis nearly 10 years ago, leading investors to three quadruple-digit gains by investing early in the Canadian cannabis market. My biggest score there was a 3,105% gain on a company called Canopy Growth Corporation (TSX: WEED).
Hell, I was even the one who told investors to buy Tesla (NASDAQ: TSLA) right after it went public. And we all know how that played out…
Bottom line: You’ll never create real wealth by following the herd.
So instead of getting sucked into this manufactured debate bout ESG, just focus on what’s important — getting rich!
Here’s how you can do that right now.
To a new way of life and a new generation of wealth... Jeff Siegel
To a new way of life and a new generation of wealth...
Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor's page.
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