BAML’s chief investment office has put out some comments on how to help position ESG for clients. The ESG sector is plagued by misinformation and vagueness which clouds the overall value proposition. Accordingly, the best way to approach it is to have a matter-of-fact conversation to demystify things. According to BAML, “Advisors find clients are generally looking to avoid certain areas depending on their preferences, or because they have found investments score poorly by ESG metrics; favor investments they think will benefit various social or environmental practices; or help contribute to measurable outcomes around such an initiative”. They continued “It's an opportunity to demystify the conversation and also to keep it in a dialogue, because where we find this goes awry is when anyone feels like there's a moral superiority or mandate going on as opposed to a dialogue around your personal preferences”.
FINSUM: It is easy to get lost in the world of things claiming to be ESG. The best way to approach the sector is to be specific (e.g. I want a portfolio without fossil fuels), or at least specifically vague (I only want to invest in companies with high ESG scores).