Mr. Palihapitiya speaks to a couple of important concerns: he believes ESG is great marketing for banks and asset managers, and he’s not convinced about the timeliness of outcomes through activity by asset managers in particular. Ok, there must be some doubt about the willingness of banks to support green bond issuance while providing finance to fossil fuel companies, and concerns about green washing in asset management.
On the other hand, perhaps these views are a miss-characterization of the intent of both asset owners and regulators who want ESG incorporated into the stewardship of financial assets, as well as the rationale for an asset manager to adopt ESG thinking into research processes.
Mr. Palihapitiya concludes by urging investment with actual impact on issues such as climate change which he says he believes in. Sure. But is this really so removed from thinking about ESG considerations and how they might impact capex spending, future free cash flows and valuations and thus ultimately the impact on a company’s cost of capital? I would have thought that examining business practices and relevant externalities through the lens of ESG thinking would be positively embraced rather than thought of as fraudulent.