Challenge in keeping the environmental concern leads green investment to fall in dirty assets. Bloomberg Intelligence, a research firm reckons green investment on ESG (Environment, Social, and Governance) products could surpass from $35trn to $50trn by 2025. Most individual investors invest to publicly listed company as their faith to tackle climate change.
However, for as long as the polluting firms generate negative externalities. In which they are legal and duty-free. ESG in this case only outlisted its share to polluting industries.
Green investment in ESG funds status quo is claimed not doing enough to decarbonize the planet.
Public firms such as Shell for example only sold its most polluting assets to please ESG investors’ environmental targets. The tools keep working and harming the planet. This is how the institutions start to take over dirty assets.
State-owned oil titan such as Saudi Aramco for example does not concern green investors. This is because the retreat of dirty assets from capital to private companies makes environmental concern uncontrollable. Ironically, this shift becomes a global trend.
Selling dirty assets unquestionably does not help the planet, the tools are still corrupting the environment. Moreover, when it falls to the private businesses, it becomes harder to control their plan either on their environmental concerns or expansions. Changing hands from capital to private business after all worsens ESG fundamental faith on environment.
Solutions from The Economist for green investor includes imposing the raise of carbon taxes, reallocate businesses’ capital, and finally investigating dirty assets footprints.
There’s also one solution from Larry Fink world’s largest asset manager from BlackRock that green investors could hold on their shares and work together with the company to reduce emissions.
These are vital to create greener investment and avoid dirty assets.
Suggestions for the ESG investors should uphold to what makes polluters pollute less. The skyrocketing cost of capital can burden polluters by closing ESG investors’ shares.
