What does 'ESG friendly' really mean? I FT

Synopsis

ESG investment refers to companies that focus on environmental, social, and governance issues, fundamentally changing the investment landscape. Investors are motivated by various factors, including a desire to support companies that will change the world, minimize harm to communities and ecosystems, or protect their portfolios from negative impacts. However, determining which companies deserve the label of being ESG friendly is complex. For instance, Tesla, known for its electric cars, raises questions about its environmental impact due to nickel mining for batteries and the source of electricity used for charging. Additionally, Tesla's $1.5 billion investment in bitcoin has been criticized for its environmental damage, as highlighted by Bill Gates. Most investors today opt for passive investing through index tracking funds, which can include ESG-focused indices, complicating the decision-making process for those wanting to invest in environmental progress.