what’s wrong with (some) esg people?

Q: What’s the common point between PE and ESG?

A: People working on these industries rely mainly on a single thing to hold true.

In PE: Returns are superior to those of public equity on average; that’s b/c of illiquidity premium etc. etc.

In ESG: Returns are superior for high-ESG; that’s b/c it is win-win, if you do good, you do well etc. etc.

Consequence: Everyone working in these industries need to swear allegiance to these statements. Like the existence of God, it cannot be questioned. You can do and think what you want but do not question this axiom.

I have demonstrated over and over again how many people in PE go out of their way to find metrics, benchmarks etc, to make sure the axiom is ’empirically supported’.

In ESG, same thing. Problem is that stock returns are more difficult to tamper with than PE absolute and relative returns. So, ESG data providers simply change their ratings ex-post. They just look at what a stock price did and change the past rating accordingly. No-one in the industry will point this out, else the ship they are sailing sinks. Fortunately Prof. Dr. Kornelia Fabisik, CFA, PRM, Zacharias Sautner and Florian Berg exposed them. Well done!

Link to their paper:


Obscurantism needs to be defeated.

And, what’s wrong with ESG people? the biggest fraud ever in PE was someone crying that it is win-win, you do good to do well… another chap, at the help of the largest PE impact fund bribed a university to get his children in…..

Phafa Le Hardi Written by: