Environmental, Social and governmental (ESG) is a paradigm shift in the world of investment strategy that goes beyond the traditional financial analysis. It takes into account non financial factors into investment decision making, aiming to identify potential risks and opportunities purely non financial. Recently investors poured trillions of dollars, hoping to benefit the non financial aspect of the business world.

But quite recently, this overly hyped concept is facing a consistency in criticisms, mainly due to its lack of disclosures and being hypocritical to its own ideology. Before moving on to UnFiltering the concept of ESG and revealing its true intensions, let us begin by understanding who created this concept and who actually cares.

Who Discovered ESG 

The story of ESG started to build up in the frosty month of January, 2004 when a letter was penned by Kofi Annan, the esteemed Secretary-General of the United Nations. This wasn’t just any letter, it was an invitation, a call to arms, addressed to the CEOs of over 50 major financial institutions. The mission? To embark on a joint venture, a noble initiative under the banner of the UN Global Compact, bolstered by the support of the International Finance Corporation (IFC) and the Swiss Government. And thus, the thrilling saga of ESG investing was set into motion. Now investors are joining the story with needless bustle to showcase their ESG labeled investments and companies joining in to collect those ESG points so just to be dreaming to get the Midas touch of VC’s like BlackRock, StateStreet and Vanguard and hoping to sprinkle their financial fairy dust on to the next unicorn.

Who Benefits from ESG 

Venture capitalists like BlackRock have been open about declaring a fundamental reshaping of global capitalism that would make companies like BlackRock make investments in smaller companies much easier based on their social and environmental practices. Fink said “BlackRock is a leader in this (ESG), and we are seeing the flows, and I continue to see a big shift in investor portfolios”. what Larry fink did not mention was most of the significant shift was actually by inserting primary ESG Funds into popular model portfolios offered to investment advisors, who sells them to clients across North America. This means that many investors got into the ESG wagon without even knowing about it. After reading this article, you might question “Do I support ESG”. Question you should ask is, have you invested in Stocks, mutual funds, or such funds. You may not know but a portion of your funds might be supporting ESG. 

Strip ESG of its “good for value” and “good for investors” arguments, the only argument left for it is that it is good for society, and there too, ESG is destined to fail. Forcing culture is the new norm for BlackRock and this culture can be woke or anti woke and this culture has no limitation to imagination. ESG was meant and is a political and societal impacting tool used to get unknown indirect results. This results are unknown in short term but in coming years will show companies new entry barriers to be approved of the ESG score and in return capital.