The Irresponsibility of ‘Responsible Investing’

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Commentary The ESG (environmental, social, and governance)-focused investing sector has once again called its standards into question. The $2.7 trillion global market for ESG funds invests in debt and equity of companies purported to be socially responsible. There’s an entire cottage industry formed around ESG including ratings agencies, auditors, and investment consultants. The industry has become increasingly mainstream and many publicly traded companies are altering their corporate strategies to qualify. Today, Russia’s ongoing invasion of Ukraine has prompted debates about the industry’s practices.  International investment funds including those managed by UBS own so-called “green bonds”—debt whose proceeds are supposed to fund initiatives considered sustainable and environmentally friendly—issued by Russian Railways JSC and Russian bank Sovcombank PJSC. Both Kremlin-affiliated firms are now sanctioned by the United States and Western European allies, forcing ESG-aligned investors to divest their holdings of their green bonds from these issuers.  Suffice to say, securities issued by …

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