It’s Tough Taking ESG Investors Too Seriously
An emerging-markets ETF that invests based on political, economic and civil freedoms and has outperformed should have no trouble attracting assets, but it does.
China stocks have hit a rough patch.
Photographer: China Photos/Getty Images
At its core, the environmental, social and governance movement allows people to take a stand against policies and practices that don’t align with their values. Don’t think fossil fuels are good for the climate? Then divest of oil drillers and frackers and use the proceeds to back renewable energy initiatives. Believe corporate boards need to be more diverse? Then avoid those companies that lack representation by women and minorities at the highest levels.
Where ESG investors seem to draw the line is with authoritarian government regimes. How else to explain the lack of interest in the Freedom 100 Emerging Markets ETF? Managed by Perth Tolle, the exchange-traded fund’s investments are weighted according to measures of political, economic and civil freedom. Countries that score higher get a bigger weighting in the fund, and those with a lower score, such as Russia and China, are excluded. The theory is that countries with greater economic -- and other -- freedoms will outperform less-free countries over time.