Why Investors With ESG In Mind Might Want To Rethink Investing In ESG Funds

In 2021, the impact of environmental, social and governance (ESG) issues became of much greater importance for investors. Inflows into ESG funds continued to increase last year, with inflows for the first three quarters surpassing those recorded for all of 2020, which amounted to $51.1 billion. By the end of 2021, inflows to ESG funds had doubled from where they were in 2020.

However, this may not be a good thing because studies show that many funds that label themselves as "ESG" aren't living up to their claims, either because of their own activities or because the companies they invest in are exaggerating their ESG-related credentials. One expert on the subject goes so far as to advise investors to avoid ESG...