Exotic world of ESG derivatives

Published on 12 November 2021 at 13:57

Caveat emptor or Buyer Beware is once again something we would do well to remember. Investors and believers, in their rush to embrace ESG (Environment, Sustainability and Corporate Governance) the stamp of good corporate behavior and dutifully kneel at the foot of these titans of industry.

As some of the world’s biggest banks start experimenting with complex ESG derivatives, Europe’s markets regulator are correctly saying that it’s time to impose new rules to protect investors from greenwashing (I am shocked!) According to Bloomberg, the term ESG derivative “captures very different products, and each market participant seems to have their own view as to the reasons why their product is ‘ESG’,” Sadly, just because we want so desperately to believe that something has the stamp of ESG does not make its so. A brutal awakening for some but if you believe that the Street would not lie, I have some waterfront property in Arizona to sell you. Caveat emptor.



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