Environmentalism

Don't Believe the Hype About 'Socially Responsible' Investing

Want to make money and help the world, too? Wall Street says you can!

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Want to make money and help the world, too?

Wall Street says you can!

If you invest in "socially responsible" funds, say big investment funds like BlackRock, Parnassus, TIAA-CREF, etc., then they'll do good things for the world, and your retirement funds will grow.

These funds obsess about what they call Environmental, Social, and Governance factors. For example, Parnassus says it picks investments based on "their environmental impact, how they treat their employees, the quality of their relationships with local communities."

People believe. More than $100 billion poured in just in the first half of this year.

But I won't invest. My new video explains why.

One popular "socially responsible" fund, Generation Investments, is run by former Vice President Al Gore. His website claims they invest in "sustainable" companies that do things "consistent with a low-carbon, prosperous, equitable, healthy and safe society."

If you don't invest, Gore warns, you'll miss out on "the single largest investment opportunity in all of history. He says, "Sustainability can actually enhance returns!"

They do enhance his returns. The management fees help him pay for his many homes.

ESG funds probably won't do as much for you, if you invest.

"I've had a lot of experience looking at these types of investments," says Thomas Hogan, senior research fellow at the American Institute for Economic Research. "They don't actually accomplish the goals of being environmentally or socially responsible."

Al Gore's Generations Investments, for example.

"They're not really making socially conscious investments," says Hogan. "Their No. 1 holding is Alphabet, parent company of Google. They're just buying, basically, regular companies."

So, why do people invest?

"It makes people feel good," says Hogan.

Some "green" investment funds did well lately because oil prices dropped. But most will give you lower returns because they charge higher fees.

A Pacific Research Institute report found that their fees average 0.7 percent per year, which meant, over 10 years, the "green" portfolio was worth about 40 percent less than what you would have gained had you bought an S&P 500 index fund.

On top of that, what Wall Street calls "sustainable" or "social impact" investing is often just marketing.

Parnassus' brags that it owns US Foods and Clorox. What's special about them? Parnassus says food and cleaning supplies help meet U.N. sustainability goals like "nutrition" and "sanitation." Give me a break. US Foods and Clorox make good products, but there's nothing uniquely responsible about them.

The Boston Trust Walden ESG Impact Report brags about its activism, as if as lobbying for bigger government helped the world. They promote their lobbying for the Paris climate accord (see my video on why that's a bad idea) and for tougher workplace regulations in Bangladesh. Do they not know that tougher regulations make employment more costly, leaving more people more desperate?

BlackRock's socially "aware" fund brags that it gives you 2.62 percent more exposure to gender diverse boards. 2.6 percent? So what? Their "environmentally aware" fund also invests in Chevron and Exxon.

I asked BlackRock about these examples, but they never got back to us with an answer.

Worse, some of today's "environmentally responsible" funds probably harm the environment.

For example, most "green" funds wouldn't invest in the Keystone pipeline, but pipelines are much better for the environment than the alternative: hauling oil by train and truck.

Some "green" investors oppose fracking, but the United States led all countries in reducing carbon emissions mostly because fracking's natural gas reduces demand for coal and high carbon oil.

The ugly truth is that most so-called responsible investment funds charge more to sell feel-good nonsense that accomplishes nothing.

Instead, suggests Hogan, invest in any company that produces things people want. All those companies "(create) a lot of value for society."

They do.

I save money by investing in passive investments funds and exchange-traded funds that don't charge fat fees. They grow our economy without misleading people about "sustainability"—or enriching Al Gore.

COPYRIGHT 2020 BY JFS PRODUCTIONS INC.
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  1. I wish he still had his show on Fox.

    1. Mormons are your moral and intellectual superiors. How does that make you feel?

      1. If they’re superior why do they believe in scriptures that have been disproven? Why do they believe in wearing stupid garments?
        Why are you defending those stupid assholes?
        Are you Mormon? If you are you deserve to die. Plain and simple asshole.

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        2. They’re superior in that, on average, they are far more intelligent than you, shitstain.
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  2. My favorite Stossel was “are we scaring ourselves to death.” It’s now relegated to pastures of media memory holes but it made me want to change the world.

    Now I just taunt TonyFag democrats because they are ridiculous and their pain makes me glad. Age does that.

    1. I remember being a kid/teenager when Stossel was doing his “Give me a Break” segments on television. I had no idea what a libertarian was then, but everything Stossel said made a lot of sense.

    2. Except that in your senile mind anyone who disagrees with Fox news is a leftist.

    3. Same here. I was a kid and I remember how it changed the way I thought. I wonder how many future libertarians he inspired with his stories.

    4. Age makes you enjoy others pain? Nice try vile human.

      1. Only pain in dipshits like you and Tony.
        Why is it that dipshits like you adopt handles like yours? Do you hope the readers are fooled by the ‘book cover’ fallacy?
        Or is it just an expression of your idiocy?

        1. Leftists use a different dictionary. Assigning work and passing out the goodies according to political influence is “equality”. Your words are “violence”, and their head-bashing and setting fires is “peaceful protest”. And slavery to a Platyhelminthian [1] bureaucracy is “freedom”

          [1] Platyhelminthes: The phylum of Flatworms. Heartless, brainless, and spineless.

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  4. ‘Socially Responsible’ Investing is a religious scam against rich, woke liberals.
    It’s the same thing as televangelists selling miracle anointing oil, or eleventh century bishops peddling indulgences. Wash your sins away and profit.

    1. What about Indian casinos?

    2. Investing is a religious scam…

      It’s not religious, it’s science! So what if there’s no science involved and it’s based upon faith, it’s science!

      1. ummm, close italics after the first “science”. html fail.

      2. lol… +100 and only the socialist-left can STEAL multiple Trillions of dollars from the people in pursuit of “faith” based “science”.

  5. One popular “socially responsible” fund, Generation Investments, is run by former Vice President Al Gore.
    I keep my carbon footprint under one Gore so I don’t have to buy indulgences.

    1. My carbon footprint goes up to 11. For when you need that extra push over the cliff.

      1. I assume you are pushing grandma over the cliff.

      2. I believe virtually everything I read, and I think that is what makes me more of a selective human than someone who doesn’t believe anything.

        1. You are wrong.
          Again.

          1. YOU are humorless and completely ignorant of movies.

            1. You hope your lame references are seen as humor.
              Sort of like that lame ‘comedian’ Stewart, who, when busted on bullshit, claimed it was meant as a joke.

  6. I think everyone should invest in green funds – the more green a fund produces, the better. Then you can take your excess green and put it toward direct investments in whatever charitable work you want and you’ll have a much better return on your money than virtue signalling.

  7. In the investment world we have clients that draw a hard line. For example, they will not invest in companies that produce alcohol. Believing that some “responsible” investments are warm and fuzzy seems less profitable.

    1. I have exactly 1 hard line in my investments:

      No tobacco companies.

  8. I have been told by properly woke people that corporate profits are evil. How about a fund that invests only in companies that lose money? What kind of return would I get (and would maximize my personal social justice)?

    1. Profits are good, for people and for the environment.

      The most profitable firms are those who create the most of what people want, at prices they are willing to pay, while keeping their costs in resources used to create those goods or services to the lowest level possible.

      In capitalism, profits accrue to those who are the best at utilizing scarce resources to create value. In socialism, profits are stripped from those who are good at creating them and given to those who are good at rallying the mob. Guess which system leads to long term prosperity and which system leads to mass poverty?

    2. So Amazon and alphabet?

  9. If you want to save the world make as much money as you can and give some of it to the charities of your choice. These green mutual funds, well it doesn’t sound like a great investment choice to me.

    1. Sometimes it is not possible to actually change the thing you want to change if what you’re really doing is supporting the thing that you think needs changing.

      The particular argument there is really based on the notion that this is all about virtue signaling rather than actual change

      1. You not buying stock in Altria means nothing to Altria. They will continue to sells smokes to those who want them.

        1. Wrong. Buying that stock absolutely does lower the cost of capital for Altria at the margin. And if your goal is to drive UP the cost of capital for a tobacco company in order to reduce the profitability of tobacco investment, then you can’t get there by reducing the cost of capital for the company.

          Now maybe there is a rationale where you can hold the stock in order to make changes in corporate governance – but the reality is that no longer works at all unless you are a majority owner. A huge tipping point where there is zero impact which then transitions to complete control.

        2. Even your basic assertion – You not buying stock in Altria means nothing to Altria. – implies that investing can never change anything. A very fatalistic notion of both markets and capitalism. And rather at odds with the belief that we should have market-oriented changes in the system in order to create beneficial changes in outcomes.

          Either things change – or they don’t.

          1. Your 100 shares or lack of will not change anything at any corporation.

            1. Those 100 share lots were how disinvestment from South Africa during apartheid started.

              Whether you agree or disagree with the goal – can’t argue the impact of it.

              1. “Those 100 share lots were how disinvestment from South Africa during apartheid started.
                Whether you agree or disagree with the goal – can’t argue the impact of it.”

                Whether you agree or disagree with the goal, only a fucking ignoramus would argue that 100 shares had any impact at all.
                Oh, look who it is!

          2. “…A very fatalistic notion of both markets and capitalism…”

            You can’t spell “realistic”?
            Unless your transaction affects the value of that equity, you’ve accomplished *zero* for your efforts.
            Even you should understand that.

  10. I have included socially responsible funds in my portfolio for many years and have no complaints. One fund that I brought to my financial advisor has done so well he recommends it to others.

    What Stossel is missing is that SR funds like any other must be researched. He could find just as many non SR funds that are bad for the same reasons he cites. He is correct if you want cheap simple funds go passive, and I do that also. But I also do my homework and invest in things I believe in.

    1. I find it hard enough to: (a) keep my capital; and (b) maybe gain a little return in good times (if any). Attempting this consumes all my (puny) research energy.

    2. “…One fund that I brought to my financial advisor has done so well he recommends it to others…”

      I’ve met people who have done really, really well for one weekend in Vegas.

      1. I have been to Las Vegas and I can tell you the city would not look that fine if people did really well and won. You go to Vegas for the entertainment not to win.

  11. A recent study by Barclays shows that while one in four investment dollars are currently in mutual funds labeled ESG, most investors do not realize that those funds are virtually indistinguishable from non-ESG-labelled funds in terms of portfolio composition or returns. Only fees differ and, unsurprisingly, are considerably higher for ESG-labeled funds — on average almost 0.75 percent vs. less than 0.50 percent for non-ESG-labeled funds.

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    1. The extra fees pay for the investor’s personal redemption.

  12. What about Nike? They have, like, all these ads and announcements and stuff and are all caring and sharing about BLM and trannies and all the, like, important stuff. But my alt-right dad says they force slave children in China to make shoes and stuff. That can’t be true, right?

    1. Yes, but they only use tranny slaves.

  13. Investing in businesses and industries that claim to promote social causes is bad investing.

  14. He is right, but it is funny because he is so nice about it. A lot of these socially responsible investments are just money grabs, or the same old thing packaged as something new. Look at advertising on different networks and news sources and you will see it quite easily. Advertisements say more about what the seller thinks of the buyer than they do say about the product. If you are concerned about global climate change, and I believe it is vey real and we will be really grappling with it in 2050, then get an economy car that gets good mileage. Save up and buy your home, and get solar panels if you love in a sunny region. If not, make sure you have good insulation. Not sexy topics, I know…

  15. While I agree that many ESG funds are marketing hype and thinly-disguised repackaging of conventional funds, “vice” funds have been around for a long time. Vice funds tend to be more volatile than the general market but on average they’ve matched or beaten the market reasonably consistently.

  16. What? You can’t question the Green religion. Facts will not persuade anyone.

    1. You cannot reason someone out of something they weren’t reasoned into.

      1. ^THIS!!!! +100000000000000…

  17. I received an lump sum from some inherited oil & Gas royalties so I bought solar panels for my house. The taxpayers gave me a $6,000 tax credit which offset my tax on the royalties. Thanks, guys. Go green on someone else’s dollar.

    1. That works until you run out of someone else’s money.

      1. ALL money is someone else’s money unless you print your own money…

        1. Now do “wealth”, twit.

  18. I’d pay extra to avoid enriching Al Gore.

  19. But the year after Figueredo Thomson began production on La Causa, Chavez declared Zuloaga a political enemy of the revolution, forcing his family to flee to the U.S.
    New year

  20. Why do opinion writers insist on trying to keep issues so simplistic? Do they really have so little respect for their readers or is it just acknowledging that most of us are too busy to question opinions that are designed to fit our biases?

    Socially responsible investing? Like every other form of investing; Caveat Emptor. It is a truism that people who want to convince you to give them your money, are not necessarily looking out for your best interests.

    That being said, the libertarians of the world (purportedly Mr. Stossel counts himself in said group) seem to want us to believe that the only proper basis for investment choice is whether or not it will make you a profit. So here is one of the questions;

    If the marketplace is supposed to be the only proper control for human interactions & using “socially responsible” criteria for investing is all a sham, does that mean that being socially responsible is bad for humanity?

    An example might be pollution controls. For most of human history, pollution has been effectively free. Sure, you had to be careful walking under 2nd story windows & watched where you stepped but that wasn’t a cost for the person dumping their chamber pot or for the horse’s owner. Then all of those government do-gooders started imposing themselves on the rest of us by telling us where we could & couldn’t dump our poop! The nerve of those politicians!

    Responsible disposal of waste products (“toxic” or otherwise) have always incurred unwanted costs to industry. Wouldn’t it be better for industry if they could just dump waste in nearby streams & let the water carry it away? Similarly with air pollution, spending resources on scrubbers & catalytic convertors adds to costs & reduces profit. The fact that air pollution might result in increased health costs & deaths for those who happen to be downwind from the pollution source is irrelevant. If you care about such things, you should just be smart enough to build your home upwind from the pollution source or you could wear a mask. As a friend once put it, only a fool urinates in his own drinking water. So tell me why I should care about your drinking water when I can significantly increase my profit by urinating in it rather than spending money building a proper latrine? If I want to make money by reprocessing spent nuclear fuel, why should I be imposed on as to how I can dispose of my waste? If I want to buy the property next to your house and dump the radioactive waste on said property, why should the government stop me? If you don’t like it, you should have bought the property before I bought it

    So the question is twofold. Should social responsibility (morality) play any part in our investment choices? I should hope so! I’d like to think that we are not yet so jaded (at least most of us) that we would consider Soylent Green a good investment. Similarly, I’d like to hope that most of us would not condone investing in firms operating with slave labor. Yeah, I’ve often quipped that the real reason we ended slavery was because we realized it was cheaper to lease labor than to own it, but that was based on the notion that at least a significant # of slaveholders were responsible enough to provide for some reasonable level of health & welfare for their slaves. Many employers who rose to prominence in the postbellum years felt no such qualms. When labor is scarce, labor is treated well. When labor is plentiful, well…..

    Secondly; if we believe that morality should play a part in our financial decisions, we then must struggle with how best to include moral factors in our financial process.
    A. You can focus on making money in whatever way you can & then using a portion of your profits to support “moral” causes in which you believe.
    B. You can invest in companies which in some way increase the “moral good” (however you might define that)
    C. You can invest in companies which you view as problematic & then use the legal processes available to you to try & “make the company more moral” in its behavior.

    All three of these approaches have been used by investors for decades.
    Why wouldn’t financial advisors use the concept of “social responsibility” in their marketing programs? The degree to which they deliver on their marketing is a question every investor needs to answer for themselves. Isn’t that what the free market is all about?

    It seems unlikely that Mr Stossel is intent on helping investors to make difficult decisions on how to more effectively apply their moral criteria to their investments. Is he upset that some firms use the phrase “socially responsible” in their marketing? Or is he upset about the notion that humans should act on “socially responsible” criteria? I suspect it is more likely that Mr Stossel is more interested in “owning the libs” since political combat is more in vogue than actually resolving the issues faced by modern society.

    1. A well thought out comment. Also a good question about Stossel motives. I have noted that Mr. Stossel often likes to lob out rhetorical grenades to hear the boom.

    2. “If the marketplace is supposed to be the only proper control for human interactions & using “socially responsible” criteria for investing is all a sham, does that mean that being socially responsible is bad for humanity?”

      Packed a lot of bullshit into a few words there:
      1) No, no one claims the market is the only proper control for human interactions, outside of those puling stawmen out of their asses.
      The is the name for humanity’s economic interactions, and of the many positive externalities, humanity has become amazingly wealthy as a result of keeping the government the hell away from my business.
      2) Using “socially responsible” criteria for investing is typically a sham. Humanity has begun to address eco-issues because we are wealthy; take the wealth away as a result of some bullshit claims of ‘eco-morality’, and you’ve managed to look oh, so, kool to the watermelons and probably done worse for the environment.
      3) So, yes, your bullshit ‘socially responsible’ investing is likely to make things worse.
      ————————————————
      “…I suspect it is more likely that Mr Stossel is more interested in “owning the libs” since political combat is more in vogue than actually resolving the issues faced by modern society…”

      I suspect you have more interest in pitching what YOU see as a ‘moral stance’ than at finding out what really happens. Your ‘argument’ is more of a word salad attempt at justification for a largely worthless and often harmful activity than any real examination of the issue.

  21. “charge more to sell feel-good nonsense that accomplishes nothing”

    Just charge it on the national debt – right? right? After all those peasant slaves deserve to work harder for nothing but national debt relief.

    Feel good today at someone else’s expense = Slavery is Good!

    1. “…. It’s ‘science’ not ‘slavery'”, Every ignorant Democrat voter…

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