I spent yesterday in Washington, D.C., attending an (excellent) Cato conference on the rise of ESG and the future of financial regulation. ESG, as you must (surely!) know by now is an investment discipline that includes scoring actual and prospective portfolio companies against certain environmental, social, and governance standards. I’m, uh, not a fan.
You can watch the whole conference here. If a bit more than five hours is too much of a commitment, go to timestamp 4.47.00 for the Q&A with Aswath Damodaran, a professor of finance at New York University’s Stern School of Business.
Professor Damodaran is not someone to hold back on his views. I wrote about him in a Capital Letter in September 2021, and again in a Capital Letter in April. Among the comments by him that I quoted in the April Capital Letter was this:
I am convinced that there will soon be room for only two types of people in the ESG space. The first will be the useful idiots, well-meaning individuals who believe that they are advancing the cause of goodness, as they toil in the trenches of ESG measurement services, ESG arms of consulting firms and ESG investment funds. The second will be the feckless knaves, who know fully well the void behind the concept, but see an opportunity to make money. I know that those are not edifying choices, but I don’t see any good ones, other than leaving the space completely. Good luck!
I can now report that his views have not changed:
“I think the whole thing is garbage”.
“It’s very difficult to create a concept that’s empty at its source and toxic at the same time, but ESG people have managed to pull off that trick”.
“This is a concept that was born in sanctimony, nurtured with hypocrisy, and sold with sophistry all the way.”
Listen to the whole thing, and if you want more Damodaran, listen to his recent appearance with David Bahnsen on Capital Record.
Let’s just say that Professor Damodaran’s views are hard to reconcile with Michael Bloomberg’s laughable claim that ESG is “investing 101.”