S&P 500 ESG (Environmental, Social, and Governance) Index

could be, i'm mostly in dividend stocks.

 

reuters:
musks-esg-attack-spotlights-35-trillion-industry-confusion-2022-05-20

 

Only ‘social’ was slightly lower than Exxon. Worse, no objective social criteria cited. It won’t hurt Tesla as much as the funds tied to ESG.

Bob Wilson

 

In the Reuters article supplied by bisco, S&P (the folks behind the index that dropped Tesla) "declined to provide a breakdown of its ESG score of Tesla".

So the Reuters authors looked for comparable information in a shareholder report from MSCI (another prominent maker of investment indices, in competition with S&P), and found the scores they assigned for Tesla. MSCI's scores came out 9.1 E (better than industry average 6.5), 1.4 S (worse than industry average 3.5), and 5.1 G (better than industry average 3.2). Again, those were the scores in MSCI's system. I don't think we've seen the scores in S&P's system.

Tesla remained in MSCI's index, so in their system the 9.1;1.4;5.1 was enough to make the cut. Still, we see that even MSCI, a different firm with different scoring methods, also thinks something isn't beautiful in Tesla's S performance.

To be honest, until this thread, I never even knew S&P had an "ESG index" of their own. Its launch date was 28 January 2019, pretty late to the party, compared to the big boys like MSCI. None of the ESG funds I've ever been invested in use it. According to the Reuters article, ESG funds tied to S&P indices account for only $11.7B assets under management. That's 0.03 percent (three ten-thousandths) of the ESG investment market ($35T from the top of the same article.)

Because both MSCI and S&P are in the business of getting other financial firms to subscribe to their index services, chances are good that they've put in writing considerable detail about their scoring practices. I haven't looked them up. I wouldn't expect the rules to be 100% "objective", any more than I would expect that of the financial judgments being made for growth or value stocks. Their subscribers are paying them for judgments of analysts, being made according to a framework of rules.

Now, anybody who's ever set down a framework of scoring rules and then gone through applying them, say to students in a class, is pretty familiar with the feeling of going through the results and thinking "wait, I really thought Susie was doing better than that, but this scoring method doesn't show it. Do I need different rules for next semester?"

So in this story, we have one Johnny-come-lately, 3-year-old ESG index, that's behind 0.03% of the ESG market, running through their set of rules and getting an odd-looking result for Tesla, which is enough for Elon Musk to go off in tweets impugning a whole 50-year-old investing philosophy, because Elon Musk.

But you could think about the alternate-universe story. In the alternate universe, suppose S&P, or MSCI, or any index maker, says "yeah, we established our scoring guidelines and we went through them with all the candidate companies on our list, and then we thought 'hey, this score for Tesla looks odd', so we had Ralph go in and fix it."

Now that right there would be a news story. It might get nice tweets from Elon, but would probably get actual lawyers from any of the firms paying for those analyst services.

 

i guess if you eliminated hype from the scoring, and just used facts, it might be better for your investors, but maybe not.

 

It appears that S&P, and MSCI, and others, set up different sets of scoring rules they considered appropriate, and put the same facts into the hoppers, and turned the cranks, and came out with different results.

And if one ponders the basic question "why are there 7,636 different mutual funds in the US that I could invest in, including even 584 of them with ESG factors?", it's because people expect that the same facts might lead different analysts to different judgments, and people are willing to pay something for that exercise of judgment.

Suppose you are invested in a vanilla, non-ESG, "value stock" mutual fund, one whose prospectus says something like "securities the investment analyst believes are selling at a price lower than their true value."

Do you think that analyst will be "just using facts", any more than an analyst responsible for ESG scoring for an ESG index?

 

no

 

ESG and MSCI had nothing to do with my investment in TSLA. But the Munro tear downs did.

I invest in companies with good products that get better overtime, rapidly. TSLA meets my criteria so it got most of my 401k.

Bob Wilson

 

head of 'responsible' investing
business-61519111

 

Always a good idea to share the first paragraphs of a cited article:

Last week, Stuart Kirk, a leader in the bank's responsible investing team, said: "There's always some nut job telling me about the end of the world."

At the weekend, HSBC's boss Noel Quinn posted on social media that he did not agree "at all" with the comments.

The firm declined to comment on reports that Mr Kirk has been suspended.

Mr Kirk, who is global head of responsible investing at the bank's asset management division, was suspended pending an investigation into a speech he made at an event last week, according to the Financial Times, which first reported the story.

His role, which is based in London, involves considering the impact of investments on environmental, social and governance issues.
. . . ​

Bob Wilson

 

sec fines bny mellon 1.5m for misleading statements about its esg funds

ff0097c4-3f1c-49d8-8189-153fc56aeeb3

 

From the horse's mouth (no paywall):

SEC.gov | SEC Charges BNY Mellon Investment Adviser for Misstatements and Omissions Concerning ESG Considerations

 

unfortunately, dinging mellon for a million and a half is like making them buy their own lunch one day.

what did they hit musk for, 20 mil?