(February 2021)
When the average investor conceptualizes an ESG investment they are picturing diverting funds to a growing new wind energy company or a carbon-neutral delivery service. The reality is that technology companies comprise a bulk of ESG investment, and not because they are green in an intuitive sense but because they have little need to pollute. Here is an example of how that plays out: Asia captured 83.33% of emerging market ESG investment because of its heavy tech weighting. Taiwan Semiconductor Manufacturing, Tencent, and Samsung are the big tech companies generating returns for Asian EM ETFs over other regions.
(New York)
FINSUM + Magnifi: As an investor, this is very important to remember. It is not that all companies in ESG portfolios are trying very hard to be green, it is just that some sectors—like tech—are inherently more environmentally friendly than others. This is quite interesting as it means the growing demand for ESG could actually cause some of the underlying asset classes to rise in value.
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