The ESG Investing Scam: How Wall Street Sells You a Fantasy

The ESG Investing Scam: Wall Street’s Latest Money Grab

ESG investing—short for Environmental, Social, and Governance—sounds like a great idea. It promises to direct money toward companies that care about the planet, treat employees well, and follow ethical business practices. But in reality, it’s just another way for Wall Street to sell expensive investment products while pretending to do good.

Wall Street’s Rebrand: From Greed to Greenwashing

In the 1980s, Wall Street didn’t hide its true nature. “Greed is good,” as the famous line from the movie Wall Street goes. Today, that’s been replaced with “Greed and good.” But make no mistake—profit is still the priority. ESG is just another marketing gimmick to attract investors who want to feel like they’re making a difference.

The Problem with ESG Ratings

Big investment firms like BlackRock, Vanguard, and Fidelity have created ESG funds, claiming to invest in responsible companies. These funds rely on ESG ratings from agencies like MSCI and S&P, which score companies based on how well they handle environmental and social risks.

But here’s the catch: ESG ratings don’t measure how much good a company does. They measure how much environmental and social issues might hurt a company’s profits. That’s a huge difference.

Take McDonald’s, for example. MSCI upgraded its ESG rating because it made small changes to its packaging and waste management. But at the same time, its greenhouse gas emissions increased by 16% between 2015 and 2020. Since MSCI didn’t think those emissions would hurt McDonald’s bottom line, they didn’t factor into the rating.

This happens all the time. A Bloomberg study of 155 ESG rating upgrades found that only one was due to actual emissions reductions. So much for saving the planet.

Who Gets a Good ESG Score? Almost Everyone.

Because of this flawed system, 90% of the companies in the S&P 500 are included in at least one ESG fund.

Google and Facebook (Meta) get high ESG scores despite their role in spreading misinformation.
Coca-Cola and Pepsi are considered ESG-friendly, even though their sugary drinks contribute to diabetes and obesity, and their plastic bottles pollute the oceans.
Even oil giants like BP and Exxon have “respectable” ESG ratings.
Meanwhile, Tesla, the global leader in electric vehicles, was kicked out of some ESG indexes because rating agencies don’t like Elon Musk’s management style or his anti-union stance.

This system isn’t about ethics—it’s about making sure there are enough stocks in ESG funds so Wall Street can keep charging higher fees.

The Real Problem: ESG is About Profit, Not Impact

ESG funds cost more than regular index funds, but they don’t actually push companies to be more responsible. Instead of measuring how companies harm society and the environment, ESG ratings measure how these issues affect corporate profits. That’s a broken system.

A real ESG system would consider things like:

The health costs of smoking or excessive sugar consumption.
The impact of greenhouse gas emissions on climate change.
The real-world harm caused by unethical business practices.

Can ESG Investing Be Fixed?

The U.S. Securities and Exchange Commission (SEC) is starting to crack down on greenwashing. It recently proposed new rules requiring companies to disclose their carbon emissions, but only if those emissions are “material” to investors. The problem? What’s material to investors isn’t always what’s important for society.

The SEC needs to go further. All companies should be required to report their full carbon footprint, including emissions from their supply chains. ESG rating agencies should be held accountable for their misleading scores.

ESG Investing: The Ultimate Marketing Gimmick

Some conservatives call ESG investing “woke capitalism.” But in reality, it’s just regular capitalism with a green coat of paint. It lets Wall Street charge higher fees while making investors feel good about themselves—without actually changing anything.

The bottom line? If you care about sustainability, don’t blindly trust ESG labels. Dig deeper, and you’ll see that most of them are just another way for Wall Street to profit off your good intentions.

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