2 Things the Haters Are Saying About Responsible Investing
We’ve talked before about how we love the haters. They tell us how to make our ideas better.
Haters are big on yelling out their opinions, and that makes them easy to find.
A quick Google search is all it takes to find people saying that responsible investing is the worst idea in the history of ideas.
(I’m pretty sure the worst idea was that purple ketchup they tried to sell us in the ‘90s. But hey, what do I know.)
We’re going to talk about some of their criticisms today. And we want to hear from you, too.
We want to make this a series in the Grove Weekly. We want to know what kind of criticisms you’re hearing about responsible investing, and we want you to send them in to WeCare@MangroveInvestor.com.
We might feature some of your feedback in this email.
But let’s get into what the haters are saying today…
“The green energy transition will take too long to matter.”
The argument here is that transitioning our energy infrastructure to things like wind, solar, and hydro power will take time.
And while that transition is happening, fossil fuels will still be in use.
If fossil fuels are part of the solution, then continuing to use them can’t be a problem. Therefore a green energy transition isn’t worth the investment.
At least, I think that’s the argument.
If I’m honest, I’m not totally sure, because this logic ignores the (apparently obscure) concept that time passes.
Yeah, fossil fuels are in use right now. And transitioning away from them will take a while.
But even if it takes a hundred years, that hundred years is going to come and go regardless of our energy policy.
In a century, we could have a totally renewable infrastructure – if we decide to invest in the sector today.
“ESG (environmental, social, and governance) labels don’t really mean anything.”
Ok, this is where we actually agree. (Congrats, haters!)
Remember back in the day when we first started getting “organic” labels on food?
It wasn’t regulated, and most people had no idea what it represented. So there was nothing stopping anyone from slapping an “organic” sticker on a bag of regular apples and raising the price.
And it’s true. “ESG” labels are worryingly close to early “organic” labels right now.
A report from Util, a sustainability-focused data company, proves as much.
It analyzed 6,000 U.S. funds based on the UN’s Sustainable Development Goals. That means it looked at whether the funds invested in things like responsible production, quality education, and decent economic growth.
Util found that ESG concepts were often contradictory – environmentally conscious funds might rank low on social and governance issues, and vice versa.
As The Financial Times reported, “Attempts to categorize companies as only good or bad did not meet the need for nuance.”
That’s why we steer clear of making recommendations on companies based on ESG rankings.
Instead, we dig into the details, do our own research, and make recommendations on our priorities – things like companies supporting their communities and innovating energy technology.
And in the future, we hope that the investing community at large can adopt a different label for responsible investments.
Until then, we’ll keep doing our due diligence, regardless of what these companies are called.
We hope you will too.
Now, on to the news…
Numbers to Know
Number of countries that have banned the sale of new gas- and diesel-powered cars by 2030 or earlier. The list includes Norway, Denmark, the U.K., Germany, Ireland, Iceland, and the Netherlands. In addition, the state of California will impose a similar ban in 2035. (Twitter)
127 degrees Fahrenheit
The temperature in Death Valley, Calif., during Labor Day weekend. It’s the highest temperature on Earth ever recorded in the month of September. As the heat wave strains the electric grid, the state urged residents to avoid charging their electric vehicles during peak hours. (The Independent)
Annual number of metric tons of lithium needed for electric vehicle batteries by 2050, according to the World Bank’s forecasts. But global lithium production as of 2018 was only 80,000 metric tons a year. “There’s going to be a real crunch to get the material,” warns Piedmont Lithium CEO Keith Phillips. (Yahoo Finance)
What’s New in Sustainable Investing
The first fully hydrogen-powered train service is now running in Germany
The new trains, built by French manufacturer Alstom, have a range of 1,000 kilometers on a single tank of hydrogen. Their only emissions are steam and condensed water, and they operate with a low noise level. Five hydrogen trains are already up and running, and nine more trains will start operating in the coming months. (Engadget)
Porsche plans blockbuster IPO in the coming weeks
Volkswagen is officially going to spin off its iconic Porsche brand. Reuters reports that the initial public offering (IPO) could value Porsche as high as $84.4 billion, making it one of Europe’s biggest IPOs ever. Volkswagen says it plans to use the proceeds from the IPO to bolster its efforts to build more electric vehicles. (CNN)
Links We Like
“Electric cars are getting more affordable, and ranges are increasing across the market. Today there are several battery-powered models that offer a solid driving range and don’t cost as much as a house.” (Business Insider)
“The manufacturing of the concrete and asphalt needed to build the nation’s bridges and highways is a dirty business. […] Soon, however, some of that infrastructure could be rebuilt and repaired with greener materials, if provisions in the Inflation Reduction Act work as intended.” (The New York Times)
“Even a short exposure to nature decreases amygdala activity, suggesting that a walk in nature could serve as a preventive measure against developing mental health problems.” (Max-Planck-Gesellschaft)