Sept. 6, 2022

The Unforeseen Consequences of ESG Investing


The focus on Environmental, Social, and Governance (ESG) investing has grown in recent years as more investors are looking to put their money into companies that align with their values. While this investment can positively impact the world, some unforeseen consequences come with it, especially in a tight supply chain.  

In this episode, Greg and Doug talk about the recent updates on markets and economies. Focusing on the impact of the increased price of energy, they speak about the result of Europe's shift towards renewables, the unforeseen consequences of ESG investing, and the risks associated with ESG investing in a tight supply chain.


Key Takeaways

  • [00:34] - Recent updates on markets and economies.
  • [04:46] - How the rising cost of electricity in Europe affects the global economy.
  • [08:36] - Doug's thoughts on international and domestic market returns.
  • [12:50] - Why investing in the US is still a better option.
  • [14:31] - ESG investing and its unforeseen consequences.
  • [18:58] - Why policymakers and investment committees need to revisit ESG guidelines.
  • [22:15] - Risks associated with ESG investing in a tight supply chain.
  • [24:07] - The impact of energy price increases on emerging economies.


Quotes

[16:56] - "There are these unforeseen consequences for many of these ideas that sound good in theory, like shifting to renewables. But there are potential causes and effects, like national defense concerns and what Europe is going through right now." - Greg Stokes

[18:24] - "The whole collective idea behind renewables is fabulous, but the idea of getting ahead of yourself from a policy perspective is not prudent." - Greg Stokes

[22:15] - "In good times, ESG seems great because you're not sacrificing anything. But in a supply chain crunch when energy is scarce and commodity investment has been low for a long period, those that didn't fall for the policy of the day are the ones that come out on top." - Doug Stokes


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Disclosure

The information in this podcast is educational and general in nature and does not take into consideration the listener’s personal circumstances. Therefore, it is not intended to be a substitute for specific, individualized financial, legal, or tax advice. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a final decision.