'sustainable' investments are under fire
Investors have been increasingly eager in recent years to deploy their money in a way that supports sustainability and aligns with their values —
a trend that, in theory, could leverage capitalism to help combat climate change and fight society's ills
But has the rapid rise of funds that prioritize environmental, social and governance — or "ESG" — issues actually helped achieve these goals?
German prosecutors raided the asset manager DWS and the headquarters of Deutsche Bank, its majority owner, on Tuesday over allegations of "greenwashing."
Or has it mostly amounted to a sleight of hand, as banks and investment managers repackage old products and append a "green" label so they look more desirable?
DWS faces probes on both sides of the Atlantic after a whistleblower claimed it had overstated its green credentials and misled investors.
The raid came just one week after the US Securities and Exchange Commission charged BNY Mellon's investment management division over "misstatements and omissions" about its ESG processes.
The SEC claimed that between 2018 & 2021, BNY Mellon "represented in various statements" that certain investments "had undergone an ESG quality review, even though that was not always the case."
BNY Mellon agreed to pay a $1.5 million fine but did not admit or deny the findings, according to the agency.
It's not just the suits that are coming down hard on ESG. Tesla CEO Elon Musk recently tweeted that ESG "is a scam" that's "been weaponized by phony social justice warriors."
Musk is not considered an ESG expert and has plenty of critics. But the inclusion of ExxonMobil (XOM) in the S&P index's top holdings did raise eyebrows.