ESG investing is a trend that, to us, appears to be on the decline. While it began with noble intentions, this approach relies on a shaky foundation which might not help achieve investor goals. The problem lies in the fact that the ESG factors are not clearly defined and are left up to one's own interpretation and analysis. A number of research firms attempt to assign numerical ESG scores to securities, but upon scrutiny, their methodologies are inconsistent, as are their ratings. A quantitative approach to ESG would only be successful after standardization, much like with accounting and financial statements. Standardized carbon accounting might be the first step toward a better outcome.

Rather than a quantitative method, we offer clients the choice not to support businesses to which they have a moral objection. We call this approach Ethical Investing. When establishing a client relationship, we ask them about their ethical preferences and if there are any industries or activities to avoid. The results are bespoke to each client. We then explain the feasibility of excluding certain stocks and how it might affect performance. For example, tobacco stocks have been some of the best-performing investments for decades, but many of our clients choose not to support investing in them. Additionally, we help clients understand that it is not possible to avoid certain stocks if they are included in an ETF or index fund. Our approach helps clients express their ethics while avoiding questionable investment decisions caused by arbitrary ESG rating methods.