Earlier this week, I wrote to you about the pitfall of environmental, social and governance investing, or ESG. Thousands of investment firms have signed a pledge to follow ESG and abide by a United Nations sponsored statement of principles. The problem here is multifold.
First, your investment advisor should act as your fiduciary not an environmental activist with your money.
Second, the number of state pensions that have signed this pledge is appalling. Not only are these pensions underfunded, but the administrators are using other people’s money (retired teachers, police, and firemen etc.) to indulge in their own pet political causes.
Your investment advisor should be your fiduciary acting in your best interest, plain and simple.
Click here to read Wealth Management Pitfall: ESG, Part I.
If you are looking for a list of advisors to avoid, here’s a list of signatories to the United Nations pledge of Principles for Responsible Investment. These are advisors who have signed on to ESG.
The advisors agree to follow six principles in investing. Here they are:
- Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
- Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
- Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
- Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
- Principle 6: We will each report on our activities and progress towards implementing the Principles.
Is there anything in there about putting clients first? No.
