This week, Microsoft co-founder and philanthropist Bill Gates discussed his opinion on the idea that businesses over-hype their commitment to environmental, social, and governance (ESG) values in an interview with CNBC.
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Gates told the outlet that while determining whether a company meets sustainability requirements is difficult, it’s still important information that investors need to have to support technologies to help fight climate change — i.e., don’t throw the baby out with the bathwater.
“The part that I believe in is where you accelerate the innovation. To me, it’s not so much who you don’t invest in but who you do invest in,” Gates said to CNBC.
Gates is also the creator of Breakthrough Energy Ventures, a climate investment firm, which he started in 2015.
The idea of “ESG” funds, which supposedly focus on environmental or social goals, has come into the spotlight lately.
Notably, Elon Musk publicly criticized a prominent ESG index after it removed his electric car company, Tesla, (which had to do with factors including allegations of racism at his factories), but kept six oil businesses.
The SEC has also recently proposed rules to increase requirements on funds that claim to have a certain focus, like ESG funds, and more regulations for ESGs specifically.
Gates seemed to push back on the idea that the requirements are worth nitpicking about, even though he acknowledged there is a lot of “controversy” about how to measure if a company is meeting environmental requirements.
“The whole measurement thing is a little immature,” he said. “The field is going to get mature on that.”
The SEC has proposed that investment funds that name themselves a specific way (such as an ESG fund) must spend at least 80% of their money, on that focus (previously, it was just a suggestion) for example.
“There is a way to measure it, and it should be one of the factors people look at when they invest in companies,” Gates said adding that “a lot of investors really do want to get” information related to sustainability incentives.
