Investment managers and investors have been increasingly paying more attention to Environmental, Social, and Governance (ESG) factors as they build their portfolios in recent years. ESG factors consider the ethical implications of their investments in addition to their financial returns. However, Utah’s state treasurer, David Damschen, has come out in favor of a different approach, calling ESG a “Satan’s plan.”
Damschen made the controversial comment in a meeting of the State Board of Education in January 2021. In the meeting, Damschen said that he believes the ESG approach “tries to push a political agenda on to investors; and if it’s not agreeing with the agenda — the radical agenda, in some cases — then it’s not going to be acceptable.” He went on to say that ESG is “not something I personally agree with.”
Many of Damschen’s colleagues in the finance world were outraged by his comments. Some said that ESG investing had become mainstream and was no longer part of any “radical agenda.” They questioned whether it was appropriate for the bearer of a state office to publicly denounce the practice. Others maintained that ESG was an important factor to consider for investors, as it helps identify companies that are taking a proactive stance on important ethical issues.
Despite the criticism, Damschen is standing by his comments. He insists that ESG is too often used as a tool to push political agendas and that “governance” does not take into account other important considerations. He has said that he will explore other methods of investing that are more in line with his personal views, but did not provide further details.
In the end, it seems unlikely that Damschen’s comments will have a lasting impact on the practice of ESG investing. The field has grown significantly in recent years and is only expected to continue to grow. Still, his comments serve as a reminder that ESG is still a controversial topic and that there are many different opinions on how to approach ethical investing.
