Harry and Meghan’s ethical investment firm’s partnership is highly questionable


Prince Harry and Meghan, Duchess of Sussex, are in desperate need of the money.

Last year, after deciding to step down from active membership in the British Royal Family, they were cut off financially – and only received a mere stipend of around $ 6million to move on to “Financial independence”.

Luckily for them, they were able to quickly leverage their fame to secure lucrative content partnership deals with Spotify and Netflix, estimated to be worth over $ 100 million combined. It would seem to mean that they got a lot of money. But as Harry and Meghan settled into their modest $ 15 million estate in Montecito, Calif., With the goal of ‘living authentically’ and ‘getting back to basics’, it seems they’ve discovered that ‘they needed more money to finance their new earthy lifestyle. .

In another stroke of luck for the couple, they were able to make a major foray into the investment business. This week, The New York Times announced that it has joined Ethic, “a growing fintech asset manager in the environmental, social and governance space, as” impact partners “and investors.”

This is good news for Harry and Meghan! But they want you to know that this is also good news for you. The company co-founder said Harry and Meghan have joined “in the hopes of raising awareness on issues such as racial justice, climate change and income equality,” Bloomberg reported.

According to the Times, they also hope to be the flagship of sustainable investing:

Harry and Meghan can do ESG [environmental, social and governance] invest some of the pop culture in a way that, say, BlackRock’s Larry Fink can’t. “From the world I’m from, you don’t mean investing, do you? Meghan told DealBook in a joint interview with Harry. “You don’t have the luxury of investing. It looks so chic.

“My husband has been saying for years, ‘My God, don’t you wish there was a place where, if your values ​​were aligned like that, you could put your money in the same sort of thing?’” He said. Meghan said. They were introduced to Ethic by friends, she says.

Harry and Meghan said they hope their involvement will help democratize investing, making people – especially younger ones – more thoughtful in their choices and aware of investing in sustainable businesses. “You already have the younger generation voting with their dollars and books, you know, all over the world when it comes to which brands they pick and choose from,” Harry said, suggesting it was a natural extension to do the same with investments.

OKAY! Well, let’s talk clearly now: Harry and Meghan are trying to characterize their get-rich-deep scheme in the world of high finance as something for the public good – and that’s mostly nonsense.

ESG investing – investing in assets in an environmentally friendly and socially responsible way – is a highly questionable and sometimes downright misleading undertaking. As experts and players in the world of finance have pointed out, the ESG label is unregulated and opaque. Funds can charge clients higher fees for assets that, in fact, don’t do the ethical things they’re supposed to do. For example, fossil fuel-free funds can finance fossil fuels, in part because most people don’t actually know what investments they are holding in their baskets of funds. And because ESG portfolios are guided by such a broad and inconsistent set of criteria (ranging from employee development to health and safety to supply chains), even ExxonMobil, a large oil company, can be seen as an investment. green by the main ESG assessors.

There is a clear reason why they would go into finance: to make money, and a lot.

“There is a lot of green-washing, of wake-washing, a lot of washing in this ESG category”, Marilyn Waite, environmental program manager at the William and Flora Hewlett Foundation and author of “Sustainability at Work”, Vox’s Emily Stewart recently said.

In other words, investment funds can leverage the ESG label to charge higher fees, but benefit from the fact that they are largely held unaccountable for the actual destination of investors’ money.

And while Harry may think that these investments involve “voting” with his money on the behavior of the company, some experts say that is not actually what is happening. Lisa Sachs, who heads Columbia University’s Center on Sustainable Investment, told me that an ESG fund “doesn’t change problematic practices in our economy; it just allows an investor to build a portfolio that they are more comfortable with.

“It is very good … [but] what is worrying is having millennials or any retail investor or anybody in the economy believe that we can solve societal problems through ESG portfolios, ”she continued. “These are problems that require political solutions. “

The problem, she pointed out, is that when an ESG portfolio divests from a given company, another investor will simply take over those assets.

“Excluding certain stocks from a portfolio has no impact on the cost of doing business for that company,” she explained. ESG portfolios do not offer the scale or generally the engagement strategy required to induce struggling companies to change their management style or practices.

Sachs told me she didn’t know about Ethic before, but based on a brief overview of their website and publicly available materials, she said it didn’t look like they were offering a drastic strategy. different in their approach to ESG funds from that of other investment companies.

But maybe at some level, this whole ethical investing review is taking Harry and Meghan too seriously. We can take a step back and look at it more simply: They are two intelligent and capable people who are extremely wealthy and unfathomably socially connected. They have spoken time and time again to raise voices that are not being heard and to make the world more inclusive. But there is a clear reason why they would go into finance: to make money, and a lot.

Dressing them up in this last concert as something virtuous and socially conscious is a diversion. Their hope of masking their marketing role for this business as democratization – for a population that can barely afford to save money for a minor emergency, let alone invest – is an insult to our intelligence. There are a million things this powerful couple could have chosen to do with their money, and they chose to make more money.

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