Why your Good Governance Fund is full of Saudi Bonds

Investors in ESG funds will end up with more exposure to Saudi Arabia than a passive investor, highlighting complexities in responsible investing. The article written by James Mackintosh on the WSJ of November 26, 2019 analyzes the difficult choices behind the selection of bonds of better emerging-market governments. There is no right answer behing the ESG scores and ratings. The ESG selection has to do with values relevant to the investors. Particularly, “when it comes to countries, the difficult decisions move into the realm of morality: Is an efficient dictatorship better than a corrupt democracy? Poor and free or rich and repressed?

The conclusion of the journalist is rather worrying remark that “instead of clear answers, though, billions of dollars are sent around the world depending on the interaction of complex scores where such judgments are avoided“.

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