Elon Musk Claims ESG Is A “Scam” and A Way to Avoid Forever Chemicals, Citing Climate Change and Y2K As Examples

The majority of the criticism is directed at the three words that are represented by the acronym “ESG,” which are “environmental, social, and governance.” 

ESG is used in conjunction with standard financial analysis in order to take into consideration “externalities” that were previously neglected. Some examples of these are carbon emissions, diversity in boardrooms, and employee satisfaction. Regrettably, environmental, social, and governance (ESG) investing is sometimes incorrectly referred to as a “woke” style of investing that introduces a “socialist agenda” into financial markets.

It seems that more and more people in authoritative positions are behind these foolish attacks. Elon Musk recently tweeted that “ESG is a scam” after Tesla was removed from a major ESG index for a lack of disclosure around key environmental and social issues and allegations of racism on the factory floor. 

The reasons for Tesla’s removal included a lack of disclosure around key environmental and social issues and allegations of racism on the factory floor. Peter Thiel, a prominent venture entrepreneur and the creator of PayPal, gave a speech in April in which he referred to ESG as “a hate factory” and linked the organization to the Chinese Communist Party. 

Even Mike Pence, who had previously held the position of vice president of the United States, joined in on the criticism, claiming that “liberal activist investors are forcing private companies to adhere to ESG investing principles, elevating left-wing environmental, social, and corporate governance goals over the interests of the business.”

The majority of these attempts appear to be designed to gain political favor with a certain group of people. These remarks made by Musk are consistent with Musk’s more recent support of right-wing ideology. Thiel delivered his remarks at a Bitcoin conference, where attendees, who must have been unhappy about the criticism that cryptocurrencies are receiving for their huge carbon footprint, were likely listening. 

Pence was delivering his remarks at an oil and gas conference in which investors seeking to decarbonize their portfolios were grilling company leaders with difficult questions. It should not come as a surprise to us that investors in unsustainable assets are feeling the heat and that they would fight back with indignation against a movement that makes them accountable for the pollution they are causing.

However, not all of the criticisms are political in nature and use broad strokes. Insiders in this industry are providing me with more sophisticated criticisms. In a recent TEDx address, Tariq Fancy, a former chief investment officer for sustainable investing at BlackRock, referred to divestment from fossil fuels as a placebo and compared it to the practice of providing wheatgrass juice to a cancer patient. 

After disregarding the threat posed by climate change during a presentation at a conference and telling us what he truly thinks, Stuart Kirk was removed from his position as head of responsible investing at HSBC. He said, “Who cares if Miami is six meters submerged in 100 years?” For a very long time, Amsterdam was submerged to a depth of six meters (or twenty feet), and that was a very pleasant area.

It is not surprising that these remarks have produced quite a commotion. They demonstrate that many huge financial firms are only giving sustainable investment lip service, and we shouldn’t mislead ourselves into thinking that they are in it to transform the world. They are just paying lip service to sustainable investing. Since maximizing profits is still the end goal, sustainable investors need to be aware of the possibility of greenwashing and perform adequate research before investing.

These comments also demonstrate that there is a significant lack of skilled workers in the industry of sustainable investing. It is clear that Fancy and Kirk do not have any prior training in environmental studies, systems thinking, or sustainable practices because of this. If we think that a worldview that prioritizes business can assist us in resolving issues related to sustainability, we are deceiving ourselves. Although Fancy and Kirk have done an excellent job pointing out issues in the responsible investment business, they do not provide much in the way of potential remedies.