Displaying items by tag: esg

The next generation of investors want diversity and green investments, but how do they want that delivered?…see the full story on our partner Positivly’s site

Millennials have had their investing horizons shaken up by a financial crisis…see the full story on our partner Positivly’s site

One of the key ways many investors are directing change with their financial decisions…see the full story on our partner Positivly’s site

Fund managers are turning to an unusual place to lead the charge in ESG…see the full story on our partner Magnifi’s site

(Houston)

Environmentally, Social and Corporate Governance (ESG) investing is getting all of the attention from both news outlets and traders, but some investors think too much attention is being diverted from fossil fuels. They argue that oil is now a sin stock, where many investors stay away because of the nature of the good (e.g. alcohol, defense, gambling, and tobacco). Sin stocks traditionally outpace the market, under the wisdom that they remain perpetual value stocks because socially conscious investors stay away, and oil ETFs are starting to outperform renewable ETFs. In reality, sin stocks don’t get their boost from value but rather higher operating margins, and oil is one of the most competitive with low to negative margins depending on how far upstream the extraction is. While oil is moving out of environmental favor it isn’t quite a sin stock yet because it also lacks the capital intensity that is common to sin stocks.

FINSUM: There are a lot of reasons to be bullish on oil right now, but being sin stock probably isn’t one. Oil can still be a value play even if that’s not how sin stocks make their name.