One can say this about a lot that relates to politics but with ESG it is just incredibly unproductive. Even the most ardent global warming denier can see the value in building sustainably. On the social front, understanding the social effects of government programs funded by municipal bonds cut deeper as segments of the population believe the existence of some programs is anathema to begin with. But the act of analyzing their efficacy should be something all members of a civil society strive for.
While not an early adopter to ‘ESG’ as a whole, I was engaged in ESG, impact and public finance before most regular market participants. That is because I was one of the early employees of a start-up called Neighborly that, among many things it was trying to do, the firm was trying to introduce municipal bonds into the sexy world of impact investing.
That was 2015, just a few months after the “first” green muni bond was issued in the District of Columbia. As is the case with anything new that comes to public finance, a lot of people entered the space with stars (and dollars signs) in their eyes and soon find out that the world of public finance is beast that for good and bad reasons, is unique and very hard to break into. Green, blue and whatever has made advancements in the space and I think it has generally been a net positive for the industry.
What we did not expect, and should have in retrospect, is how ‘ESG’ would become politicized to such a degree. The goals of such politicization have nothing to do with the merits of the arguments for better transparency and sustainability of government policy. The goals of these politicians and advocates is profit and the next election.
Take Ron DeSantis - who still points to his support of the Everglades during his first gubernatorial run as proof of his support for the environment. This ‘hero for the wetlands’ in the state conflicts massively with his move to essentially ban the rating agencies from considering rising sea levels when looking at the credit implications for communities in the state. This insanity has long-term implications that are not good for people thinking about future generations. DeSantis’ bond guy, like a good yesman, hammers home the Everglades argument whenever asked about climate change in the state at any public gathering of public finance officials.
This piece may not add much new to the dialogue around ESG and public finance but for those passerbyers, I hope this clues you in.