The truth about dirty assets

SINCEESGESGESG 2016 the value of investments in financial products that claim to abide by environmental, social and governance () rules has grown from $23trn to $35trn. Bloomberg Intelligence, a research firm, reckons it could exceed $50trn by 2025. funds typically tell their customers that, among other things, they do their bit to tackle climate change when they invest in publicly listed companies. Most individual investors take these claims seriously and buy these funds in good faith.Such faith is not always well-placed. A lack of rigorous measurement means that greenwashing is rife and bogus claims go uncontested. Many funds claim that there is no trade-off between maximising profits and green investing, which seems unlikely for as long as the externalities created by polluting firms are legal and untaxed. And funds often seek to meet their goals simply by excluding the shares of firms in polluting industries from their portfolios, and piling instead into pricey tech stocks, from Alphabet to Zoom.