Who Benefits? The Real Impact of ESG Investing

The financial sector has made a clarion call for investments in environmental and social sustainability. Businesses have therefore moved away from purely profit-driven motives towards generating wealth alongside producing social benefits. However, ESG investing is beginning to fall out of favour, not least due to the internal incoherence at the heart of its approach. Concerns are growing that ESG funds do not support the sustainable causes they purport to promote, increase the potential for conflicts of interest, and yield lower financial returns for higher management fees. These concerns give rise to several questions: Are businesses trading the pursuit of profit for the promotion of political causes? What is the role of corporations in the modern economy? Should stakeholder capitalism or shareholder investment have priority? And does ESG actually achieve its stated aims?