ESG funds – green sustainable investing or a marketing gimic?

In recent months I have been looking at all aspects of my life to assess where I can lighten my ecological footprint and, within my personal sphere of influence, positively encourage global warming mitigation action.

Naturally for someone interested in personal finance, the question arises whether there are ways to invest in companies that have more progressive stances on the environment and, likewise, avoid certain firms or industries which don’t.

One approach that is becoming increasingly popular is ESG investing. ESG refers to Environmental, Social and Governance, three key factors in measuring the sustainability and ethical impact of an investment in a particular company. The concept picks up environmental concerns (eg. climate change and sustainability), social concerns (eg. diversity, human rights, consumer protection and animal welfare) and corporate governance (eg. executive pay, employee relations and compensation). All good things in my mind, and aligned with my values.

Like anything though, it is important to look beyond the surface and unfortunately ESG doesn’t necessarily mean as green, sustainable or ethical as I assumed. Digging a little deeper has me questioning whether ESG funds are materially different from other investment options, especially within an index fund. At a more fundamental level, I’m also questioning whether attempting to invest in sustainable companies makes sense or if there better ways to allocate my money and time.

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Embarking on a No New Stuff year-long challenge to keep me motivated on the journey towards longer term goals

Regular readers of my blog will recognize a number of repeating themes appearing in posts over recent months:

  • A desire for “freedom” from the weight of personal possessions and from the need for paid work (especially in an unfulfilling corporate job).
  • Acknowledgment of the value and importance of time, that we normally trade for things of little true value.
  • The lack of sustainable balance in most of our lives and in society at large. At a personal level, recalibration is needed around things like technology and social media use, TV, diet, exercise and consumerism. The bigger picture is equally out of equilibrium, with ever increasing social inequity and a willful ignorance about the ongoing damage we are inflicting on our planet and home.
  • Recognition of the need for challenge and voluntary discomfort to drive personal growth and lighten my ecological footprint.

Intellectual understanding and knowing are not enough. For change to occur, we need to take positive action and do something!

The journey towards Financial Independence can be a long, disciplined grind and we’ve set in place processes to hit our targets. We’ve also made great progress downsizing our possessions and housing. I’m still researching what effective mitigants I can put in place to reduce my personal contribution to global warming. Things are moving in the right direction but it’s a marathon, not a sprint. So how to keep motivated in the short term?

In the spirit of consuming less, spending less and hopefully learning to live with less, I’ve decided to undertake a year long challenge of No New Stuff!

The shopping ban will require avoiding sales, special offers, amazing discounts and other marketing gimmicks encouraging us to buy, buy, buy!
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Our throw-away culture needs a rethink. It’s killing our personal finances, health and planet

Maybe I’m getting old, but it feels like many things just aren’t built to last anymore. Planned obsolesence, which is a business strategy to have things fail and encourage consumers to replace them, seems to be real phenomenon. In addition, we have endless items available to us as consumers that are virtually disposable – super low cost, easily accessible and so cheap that you’re happy to buy without thinking, even if only to use once or twice. Sometimes I think things are just too affordable.

Even if something doesn’t break, we feel compelled to replace it in time anyway. Marketers employ sophisticated techniques to convince us that new is good and old is less desirable. “Keeping up with the Joneses” mentality is unfortunately common place and, as consumers, we are conditioned to buy, buy, buy.

What is the true cost of our hyper consumerist, disposable society?

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