Do people care about sustainability?

Marketing and Business in the World

Introduction

    First and foremost, you need to understand what Greenwashing and ESG is. Greenwashing is the term used for companies that only use sustainability as a marketing term. Typically these companies will only claim to be focusing on goals surrounding carbon neutrality or electrification without actually taking actionable steps towards them. These companies tend to spend more money on marketing the idea of sustainability than actually becoming sustainable. ESG is an acronym meaning "Environmental, Social, and Governance". The term is basically used as pillars of what a company should focus on if they want to promote themselves as sustainable. 

ESG Sneak 100

    As the climate crisis continues to worsen, people and investors are focusing more on companies who pledge to become sustainable to help the environment. Moreover, major financial institutions created investment funds for both retail and institutional investors (i.e. regular people and major financial institutions) based around these sustainable companies. These funds have a total of almost 3 trillion dollars invested across almost 6,000 different funds. A high percentage of these funds are just regular people who want to invest in companies that are presumably environmentally friendly and promote their ESG goals. 

    J.P. Morgan Chase has created a fund that is entirely based around the idea of investing in companies who promote ESG and sustainability. They claim that they will choose the best in class, solid, and environmentally friendly companies for the ESG fund to invest in. However, there seems to be some inconsistency with the companies being invested in by their so called ESG fund. This fund is meant to invest exclusively in companies that have a low carbon footprint or are generally environmentally friendly, but one of the main companies this fund is invested in is called Greensaif Pipelines. This company is a subsidiary of a much larger company called Saudi Aramco which is one of the largest oil and gas companies by revenue on the planet. 

    Now if you're thinking "That doesn't sound very sustainable or environmentally friendly?" You would be right! The entire purpose of the company Greensaif Pipelines is to hold the debt of Saudi Aramco who is not only bad for the environment, but lies about it. They have consistently underreported their carbon footprint for quite a few years and have recently been caught for it. However, since Greensaif Pipelines only deals with bonds of their parent company, they are technically a company with 0 percent emissions! This fact makes them a perfect candidate for J.P. Morgan's environmentally friendly investment fund!

Do people actually care?

    The question, however, still lingers, "do people actually care?". When J.P. Morgan surveyed their investors the question got it's answer. 

    Yes! Kind of... When they surveyed their customers and investors, the number one thing that people actually did care about was a high rate of return. This trait, however, was only slightly ahead of whether or not the companies had a positive social impact. So while people do care about whether or not the companies they invest in have a positive impact on the world, they care slightly more about whether or not the company is making them more money.

    It is understandable that the average person cares most about making a high return for themselves. After all, one person choosing not to invest in a certain company, especially one as big as Saudi Aramco, will not change the future of the company. If the company is consistently making a ton of money and continuously having a positive return for investors, it would be silly to sit out on the returns unless you are extremely passionate about ecological sustainability. 

Conclusion

    Overall, people seem to be okay with the idea that their investments might not be going to the most sustainable companies as long as those companies are bringing in a high rate of return on their investments. J.P. Morgan is taking advantage of this sentiment with their "ESG Fund" which is not quite as eco-friendly as they initially made it out to seem. However, if the trend continues the way it is going now, people will become less okay with this fact and should end up starting to demand more accountability of the companies that a self-proclaimed "ESG Fund" invests in.

Week 2