ESG RIP: Review of Terrence Keeley’s 'Sustainable'

Terrence Keeley’s burial of ESG commences with an acknowledgment of sin. Specifically: contrary to the ESG investment postulate that shunning so-called sin stocks is good for society and boosts investor returns, sin stock exclusion does neither. “Social activists seem impervious to one common-sense principle of finance: adequate funding is invariably found when the underlying commercial activity it supports is broadly legal and generates acceptable returns.” Academic studies evaluating investor returns show that it is often better to be “bad” than “good,” and sin shares have historically outperformed the broader market, their higher dividends benefiting investors who chose not to divest.