Is it time to break up ESG? This green investor says yes

Environmental, sustainability and governance-focused investing (ESG) has surged in popularity in recent years as investors increasingly look beyond the financial performance of companies.

However, critics say the acronym lacks precision, and simply lumps three good things together into one easy-to-spout buzz word used to justify higher fees on financial products.

“In terms of an investment thesis, I find it very foggy,” Tom Rand, author of the book Climate Capitalism, told Yahoo Finance Canada’s Editor’s Edition.

“Those are three very separate categories,” he added. “It means that companies can have really good governance, have a 50-50 gender split on your board, have people that don’t look like me in positions of power... and now you’ve checked your ESG box, but your emissions doubled. I think it’s confusing.”

According to a survey released on Wednesday, most Canadian investors say companies cannot be trusted to hit their environmental, sustainability and governance (ESG) goals.

Got a question for Tom Rand? Email Jeff.Lagerquist@yahoofinance.com and let him know what interests you in the world of clean energy and technology.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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