With wealth managers flocking to meet the demand for investments aligned with ESG (environmental, social, governance) standards, some companies hastily plaster false sentiments of sustainability, social impact, and diversity as the forefront of their business. Be weary, don't fall victim to this public relations charade.
100% of our Investments to Make a Social Impact
Take pride knowing 100% of the loans made through Mobility Trust's investment fund serve communities in need. By environmental and governance standards, we stand by a sustainable mission led by professionals rich in diversity of race, religion, and thought. What we do isn't influenced by a trend, but the core of who we are and always have been. Unfortunately, not all companies are so transparent.
Caught in the charade
The Wall Street Journal recently published an article exposing a possible misinformation regarding a supposed ESG trailblazer. The former chief of sustainability for Deutsche Bank's asset management arm, DWS Group, Desiree Fixler brought attention to purported false claims of ESG integration. DWS notified investors in their annual report that environmental, social and governance concerns are at the heart of everything it does and that its ESG standards are above the industry average with over half of its assets under management ($540 billion) run through ESG integration. However, according to internal sources they have struggled to define or implement an ESG strategy with only a small fraction of the investment portfolio applying the integration.
Harmful Effects
It is worrisome when this ESG public relations charade occurs. "Posturing with big statements on climate action and inclusion without the goods to back it up is really quite harmful as it prevents money and action from flowing to the right place." Fixler comments. Since Fixler's exposé, DWS has lost $1.35 Billion to their market cap.
The purpose of ESG
It is important to flag companies that spread misinformation as it abuses the full effect and credibility of ESG. The purpose of ranking ESG factors is so investors have a broad understanding of a company's risks, accomplishments, and community impact. Knowing the heart of the companies you invest alongside establishes a compassionate relationship founded upon trust and integrity. For the sake of minimizing risk and understanding the face value of your investments, make sure to take a close look at the companies in your portfolio.
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