Saturday, June 17, 2023

Does investing in Green Firms help the environment?

Freakonomics: NO
Green firms tend to be services firms. So, think Spotify, Prudential, Goldman Sachs, Allstate, MetLife, American Express. Silicon Valley Bank, which recently collapsed, is one of the greenest firms in our sample, which makes sense. How can a bank pollute that much, right? ... If it gets easier for these green firms to access capital, their environmental impact barely changes.
Instead consider investing in Brown Firms:
My analysis shows that brown firms are the firms with the greatest scope to change their environmental impact. So, in addition to investing in brown firms, it might be helpful to engage with their management.
CITE: Hartzmark and Shue, "Counterproductive Sustainable Investing."

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