“For example, take a look at ESG ratings from MSCI, an attempt to provide objective scores for socially aware investing. Many of the companies fall into just a limited number of industries: lots of semiconductor suppliers, banks, internet firms, software companies, and so on. I doubt you’d want a portfolio with that little diversification. (To be fair, there are a few steel producers, automakers, and other traditional manufacturers.)”

[COMMENTARY]Mr. Guido makes the usual ‘woke’ criticisms. But let’s understand that most ESG investors invest for the long run and aren’t necessarily concerned about missing out on the possible ‘short-run’ profits of say, the oil industry. Also, activist ESG investors will often invest in companies and industries with poor ESG-carbon metrics to encourage them to perform better.

It’s shown that the greatest stock capital gains can be achieved by investing in companies that start on the ‘low ESG’ spectrum and make rapid gains in their ESG activities.
ESG advocates run the risk of limiting their choices of investments | Retire on Track, by Evan Guido, November 14, 2022, Herald-Tribune, USA.