Reward ESG Performance (An ESG ETF example)

By Roy Snell

Most people associate solar and wind stocks with environment, social, and governance (ESG) related exchange traded funds (ETF).  Most ESG investors understandably want to avoid stocks like oil and gas.  The question becomes, what about all of the stocks “in the middle.”  Are there no other ESG worthy stocks?  Extremists would have you believe there are a few good companies and a few really bad companies, and none of the rest matter.

Before I get to the real point, I want to throw a controversial point out there.  Until we stop buying fossil fuels… fossil fuel companies there will be.  Now, we could just discount them all or try to motivate them to have strong ESG programs and improve their environmental footprint.  And let’s not forget… they could all improve their social and governance impact as easily as any other company.  Why not try to motivate them and recognize their ESG efforts?  Let’s not be blinded by hate.

Enter JP Morgan.  They have an ESG EFT, the “Climate Change Solutions EFT”, which includes companies such as Deere, Eaton, General Motors, Carrier, Johnson Controls, and Samsung.  The point is that all companies impact the environment, and some are trying harder than others.  It’s easy to complain about any company.  They all have their faults.  But some are committing more resources to ESG than others.   Why not recognize their ESG efforts even if they are not alternative energy companies?  Don’t we want all companies to do better environmentally, socially, and from a governance perspective?  Will the companies “in the middle” want to try harder if we take the activist’s perspective that alternative energy companies are the only ESG worthy and investable companies?  And the rest don’t matter.  Extremism is rarely helpful, in the long run.

Let’s not forget social and governance issues that all companies impact… for better or worse.  The environment is important, but it is not all we want to improve.  We need to broaden our perspective about the need for ESG.  Let’s try to motivate every company to become better from an ESG perspective.  It’s time to fight back against the extremists who, in their anger, are not thinking about all the progress we can make from an ESG perspective.  Let’s do more research and fact-finding about the ESG acumen of all companies.  Let’s recognize any effort to improve ESG that we can.  Even dare I say… the fossil fuel folks?