What's an ESG Score?
An ESG Score reflects the impacts on the Earth's environment that a company has, and investors use it to estimate risk. But these scores are entirely corrupt, just like the Triple-A ratings in the movie The Big Short. Elon musk calls ESG scores "weaponized scams."
Right now, the organization has over 30 trillion assets under management between all the companies. In 2019 alone, 17.7 billion flowed into ESG products.
They "watch over companies and observe the behaviour of the CEO and employees to make sure they practice business ethics" (they decide those pre-determined business ethics).
In Latin America, some mines use slave labour with high ESG scores. Gasoline companies like ExxonMobil have average ESG ratings. So clearly, there's an issue and lots of corruption in the rating system.
The organization is trying to set a new shared set of standards to make everyone report more accurately in the future. However, companies have back-door deals with those in charge of the ESG rating agencies. If the agency doesn't give a good ESG rating to the company, it will get the ESG rating elsewhere. This means the agencies are incentivized to lie, like in the movie "The Big Short."
Ignore ESG scores when investing and do the research yourself.