• About
  • Masthead
    • Editorial Board
  • Advertise
  • Join Us
  • Archives
The Wellesley News -
  • News
    • Residential halls experience maintenance issues
      Residential halls experience maintenance issues
    • Wellesley community grapples with ChatGPT’s implications
      Wellesley community grapples with ChatGPT’s implications
    • Students protest for trans and nonbinary rights
      Students protest for trans and nonbinary rights
    • News in Brief
    • Senate Report
  • Features
    • ES 300 Conducts Waste Audit
      ES 300 Conducts Waste Audit
    • Scholar-advocate visits Wellesley to discuss women and incarceration
      Scholar-advocate visits Wellesley to discuss women and incarceration
    • Diana Khoi Nguyen leads workshop and poetry reading
      Diana Khoi Nguyen leads workshop and poetry reading
    • Alumnae Spotlight
    • Faculty Focus
  • Opinions
    • Navigating Anonymity-Seeking Apps at Wellesley
      Navigating Anonymity-Seeking Apps at Wellesley
    • Trans people are not your culture war
      Trans people are not your culture war
    • The Silicon Valley Bank collapse has exposed how the government chooses to spend its money
      The Silicon Valley Bank collapse has exposed how the government chooses to spend its money
    • Staff Editorial
    • Letters to the Editor
  • Arts
    • Hozier stuns with “Eat Your Young” EP
      Hozier stuns with “Eat Your Young” EP
    • Diana Khoi Nguyen leads workshop and poetry reading
      Diana Khoi Nguyen leads workshop and poetry reading
    • “Cocaine Bear” indicates the return of camp movies
      “Cocaine Bear” indicates the return of camp movies
    • Books Before Boys
  • Sports and Wellness
    • No image
      What even is a BORG and why does it matter?
    • Indoor Track & Field Team Prepares for Outisde
      Indoor Track & Field Team Prepares for Outisde
    • What even are BORGs and why do they matter?
      What even are BORGs and why do they matter?
    • Athlete of the Month
  • The Wellesley Snooze
    • Miss Me With That Gay Shit
      Miss Me With That Gay Shit
    • Tower House Prez Emails
      Tower House Prez Emails
    • Worst Human Being You’ve Ever Met Validated by Stone Center Therapist
      Worst Human Being You’ve Ever Met Validated by Stone Center Therapist
By Micol J. Zhai OpinionsOctober 19, 2022

Greenwashing economic systems will not save our planet

"Wall Street greenwashing the economy is a dangerous distraction in the fight against climate change." Image courtesy of Unsplash

When I chose to major in environmental studies, I also chose to one day have a career that would serve the environment. I like to believe this is the case for most students who choose to pursue their passion for the natural world, if not at other institutions, then certainly at Wellesley. As I have passed the halfway mark of my college education and my graduation date becomes more visible, the question of career looms more heavily than ever. As I explored environmental careers this summer: through coffee chats, LinkedIn messages and pointblank google searches, all I saw were jobs relating to Environmental, Social, Governance (ESG).

With the climate crisis having progressed further than we ever hoped it would and pressure being put on corporations from the Securities and Exchange Commission, ESG has become a burgeoning field. The demand for ESG experts is at an all-time high across professional services, especially for finance and investment firms where ESG investing has become one of the hottest trends. 

ESG investing as a concept sounds transformative: it is a form of sustainable investing that considers environmental, social and governance factors to judge an investment’s financial returns and its overall impact. These ESG ratings, which are used to make decisions about investments, look at a wide range of factors such as carbon emissions, green energy initiatives, as well as fair labor practices and executive pay. 

The idea of corporations being socially responsible was tantalizing enough for me to consider a job in this field or at least investing in an ESG investment fund. It was only when I started researching how these ratings were done, and the nittier mechanics of this practice, that I understood how misleading the marketing was. 

At face value, it seems that ESG investing will be devoting more capital to companies that do good, thus creating an incentive for all companies to be more environmentally and socially conscious. However, ESG ratings which underlie the fund selection are based on “single materiality,” which is the impact of the changing world on a company’s profits and losses. Not the reverse. As Bloomberg puts quite clearly, “[ESG] ratings don’t measure a company’s impact on the Earth and society. In fact, they gauge the opposite: the potential impact of the world on the company and its shareholders.”

Last year, McDonald’s received an upgrade in ratings done by the MSCI. It was cited that the company reduced “risks associated with packaging material and waste.” The actions that awarded this rating included the company’s installation of recycling bins at locations in France and the U.K., both of which are countries where they would have potentially faced regulations if they did not recycle. McDonald’s, however, produces 53 million metric tons of carbon per year, a number that has been sharply increasing since 2015. To put that into perspective, the entire country of Norway produced 50.3 million metric tons of carbon last year. 

 

Despite those emissions being a direct cause of climate change, the MSCI did not see them as posing a financial risk for McDonald’s so it did not affect their ability to receive a respectable ESG rating. Appallingly, Exxon and BP are also well regarded by MSCI’s ratings. The takeaway is that as long as environmental issues and the regulations aimed at targeting them pose no threat to a company’s bottom line, ESG ratings deem them irrelevant. 

Wall Street greenwashing the economy is a dangerous distraction in the fight against climate change. This new trend being revered as a method of tackling our climate crisis has delayed and displaced urgent action needed. ESG investing sends a worrying message from the financial sector; it essentially is saying that it is okay if the environment falls to ruin because our investments will still be profitable. ESG investing is only a way to measure risks to corporate cash flows, it is not a way to promote planetary sustainability. 

While it is not my purpose or frankly my business to dissuade people from a certain career path or an investment choice, I merely hope to kindle our environmental consciousness. It is unfortunate that ESG investing is another product of regular capitalism, something born of perceptive marketing at the service of profits. But, there is a silver lining. ESG investing has created the infrastructure of a practice that could have a legitimate impact if there were robust environmental regulations that pose a financial risk when not adhered by to companies. There is potential for it to be something of substance, as long as we have the proper legislation underpinning it. Reforming corporate America will not be kind to bottom lines, but it is time for the corporations and our government to uphold social responsibility and invest in the future of our planet.

Share on

  • Facebook
  • Twitter
  • Pinterest
  • Google +
  • LinkedIn
  • Email
Previous articlePresident Johnson’s convocation speech strays from her message of diversity
Next articleA guide to MIT frats from a retired frequenter

You may also like

Sidechat and YikYak's logos on a teal background

Navigating Anonymity-Seeking Apps at Wellesley

Chalk art on Wellesley's Academic Quad Reading "Not Just Acceptance, Liberation"

Trans people are not your culture war

The letters SVB in red are crumbling to pieces

The Silicon Valley Bank collapse has exposed how the government chooses to spend its money

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

COPYRIGHT © 2023 THE WELLESLEY NEWS
Back to top