ESG Investing and its Discontents

September 11, 2023

35 min read

What You Need to Know

There is currently a huge debate about the appropriate role of ESG investing. We argue that, far from being an isolated topic, it is intimately linked to the big fault lines of the investment industry, i.e. active versus passive, public versus private assets, and the challenge of preserving purchasing power in a new inflation regime.

Some would argue that ESG investing will inevitably grow, while others deride it as “woke capitalism.” Neither description really rings true. Much of the potential controversy comes down to whether ESG investing requires setting extra goals other than maximizing return/risk, represents a different style of investing or is something else. There are core parts of ESG investing that do not require such extra goals. However, at the same time, we argue that many of these approaches to ESG investing are really what it means to actively invest, rather than some distinct and separate category of investing.

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The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to change over time.

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