Don’t be fooled by most ESG rankings – focus on materiality instead James Harwood
The
Wall Street Journal recently ran an article about how big technology stocks dominate ESG funds. Tech companies are not usually associated with big ESG issues like climate change, renewable energy, or diversity. So, are financial advisers and investors being fooled?
Let’s consider whether the ESG investor is still concerned about investment performance. For most of the ones we may talk to as a fund manager, the answer is yes. Big tech names dominate the market: Apple, Microsoft, Amazon, Facebook and Alphabet are five of the largest companies in the S&P 500, so not holding big tech will impact your investment return versus the broad market. And ESG funds are (understandably) judged against how they perform versus the market as a whole.