BAE1034 English for Business Studies

Trimester 2110

A Critique on “Investing green is harder than you'd think”

Submitted to
Abdul Rahim Abd Rahman

Group (Section) : FOB 7

No Student’s Name Student ID

1 Lee Zhe Xuan 1181200629
2 Yoong Jin Long 1181201722
3 Toh Shi Chi 1181203083

29 October 2021
1.0 Introduction

i. Title

In this assignment, the business article that we choose to write a critique essay
title is known as Investing green is harder than you'd think.

ii. Author

Next, the author of this business article is Anneken Tappe. Based on my

research, Anneken Tappe is a senior writer at CNN Business, covering financial
markets.

iii. Publication

Furthermore, the publication details for this article are updated on August 16,
2021. It's a CCN Business article that's available online.

iv. Reference
Tappe, A. (2021, August 16). Investing green is harder than you'd think. Retrieved
from https://edition.cnn.com/2021/08/16/economy/green-investing-stocks-
etf/index.html.

v. The intended audience

After studying the whole business article, I know that the intended audience
for this article is investors – investors all around the world. Investors always look and
understand before they invest. This article can give enough information to the investor
to understand if they are interested in investing in green. Investors are the ones who
give money in exchange for ownership of part of the business, and a business can
grow well and work comfortably with investors. When investors see this article, they

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will decide and reinvestigate green investing. Furthermore, a small part of those listed
companies is also included as the intended audience, which includes big tech, Tesla,
and many new organisations that put climate and socially-aware investors first.

2.0 Summary

ESG Investments is a fund that focuses on the environmental, social and

governance actions of companies. The ESG label is designed to make it easier for
investors to make green investments and to give an easy way to allocate funds to good
causes. Other than that, exchange-traded funds (ETF) focusing on sustainability and
climate change abound. ESG funds tend to favour ESG valuation over impact.
However, this label may not mean that all entrepreneurs in an ETF are qualified in all
respects.

There are four problems with ESGs. The first problem is that ESGs and ETFs
avoid weapons manufacturers, tobacco entrepreneurs or coal and oil sands,
entrepreneurs. It still gives access to technology stocks such as Apple and Amazon in
the US stock market. The second problem is that the electricity for Tesla's electric
cars is still generated by natural gas or coal. It has an impact on the environment. This
makes them continue to make money on gasoline-fuelled cars. Moreover, another
problem for Tesla is that the CEO has a lot of governance issues. He has had
misleading tweets and other violations. The third problem is that Bitcoin and other
new technologies are becoming an issue. The electricity needed to charge zero-
emission vehicles is also needed to fuel the bitcoin mining process. Batteries are
another similar challenge, as they use other non-renewable resources. The fourth
problem is making money. ESG investments do not solve all the problems in
business, environment or other areas. However, investors' decisions still have an
impact.

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3.0 Analysis

3.1 Author’s point of view

The author’s point of view is that green investment is more difficult to

integrate into an established company than the world sees. In the content, the author is
supporting the points given by Levy, Hale and other celebrities who appear in the
article. The author argues that a mature company already has its production model,
materials used, and waste produced. To attract ESG investors, mature entrepreneurs
must make improvements to the company’s environmental, social, and governance
aspects to align with the ESG fund’s objective. However, the authors contend that the
ESG designation is only a concept. However, ESG issues should be considered while
evaluating firms. As a result, not all of the firms in an ETF may be included in an
ESG fund. It is extremely impossible to follow all ESG investment objectives.
Satisfying one of the ESGs would require giving up the other two. The authors claim
that one of the aspects of ESG investments is to make money, but that the major focus
is on environmental, social, and governance issues. ESG investment is approached
from a four-factor viewpoint by the writers.

3.2 Author’s Purpose

It is an informative article. The author informs the reader by being illustrative.

It is clear from this article that there is a great deal of information provided by the
people involved. The author intends to provide stronger evidence to prove the author's
point. The author's aim of writing the article is to inform the reader of the difficult
circumstances, challenges, and problems associated with green investments like ESG
investing. Furthermore, the author aims to convince the reader that investors have a
difficult choice to make between E, S and G. By investing in one, one often has to
sacrifice the other. That is why the ESG label can't be completely fulfilled. In other
words, not being able to fully meet it means that a lot of problems can arise. Through
the article, the author wants to show the reader that there are many problems with
green investment. In the article, only four problems are mentioned: Big Tech, Tesla,
new technologies and new problems, and making money. However, there are still
many questions that have not been written in the article. Beyond this, the authors aim

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to give readers an understanding of why large companies can be a barrier to green
investment. Investing is not just about getting paid back for your investment and
making money, but also about making investors understand how the money invested
is being used. It is mentioned in the article “people concerned about how their money
is being used”. Furthermore, entrepreneurs are allowed to make a small contribution
to society and the environment. The article mentions “As investors, we have to invest
in the future we want to see”.

3.3 Tone

The author's overall tone indicates that his work is serious. It is clear from the
article that the author has a degree of formality and refrains from using commonplace
terminology. The author employs a vocabulary that is both rich and evocative. There
is a mention in the article that "funds are an increasingly popular trend for people
concerned about how their money is being used. It sounds great, but it's
complicated.". Furthermore, the article stated: "This puts climate and socially
conscious investors in a tough spot". The author shows her seriousness in her writing.
The author expresses her viewpoint and incorporates facts supplied by those involved
to more properly reason that the author's viewpoint is persuading and correct. The
comment I gave is that I think the author is a serious and judicious person. The author
has gone through the words and information that some of the people involved have
said and analysed and written in his own article.

3.4 Facts and opinion

The author stated in the article "Amazon has been criticised for blocking
employee efforts to form unions".  According to facts, in a statement on Monday 2
August, RWDSU President Stuart Appelbaum said "Throughout the NLRB hearing,
we heard compelling evidence how Amazon tried to illegally interfere with and
intimidate workers as they sought to exercise their right to form a union. We support
the hearing officer's recommendation that the NLRB set aside the election results and

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direct a new election." (Sara Ashley O'Brien, 2021). Hence, the author's content is
accurate and well-supported by evidence.

The author’s opinion in the article "That essentially forces investors into tough
choices between the E, the S and the G". According to analyst Dan Ives, Tesla has
reduced its carbon footprint every year for the past decade. However, there are also
plenty of governance problems at Tesla. "CEO Elon Musk, who spent much of the
pandemic denying the risks of Covid-19 and railing against lockdown orders. Musk
has been punished multiple times by the Securities and Exchange Commission for his
misleading tweets and other violations. " Hence, the author's opinion is correct. The
evidence is adequate to convince the reader that choosing to satisfy E causes problems
with G.

4.0 Evaluation

4.1 Validity

After reading this article, we can know that the arguments are logical and
well-reasoned with good support and explanations. The ESG label is meant to make
investing green easier by giving investors a simple way to allocate their money to
good causes. As an example, from the article, Jon Hale, the director of sustainability
research at Sustainalytics, told CNN Business that the label starts with the idea that
ESG issues should be included when evaluating companies. Recently, the focus has
shifted to the impact of the company’s products and services. Many ESG funds focus
more on ESG valuation rather than impact. This is why a comprehensive ESG
designation may not mean that all companies in the ETF meet the standard in all
aspects.

4.2 Objectivity

In my opinion, the objectivity of this article is neutral. The arguments written

into it are supported by information and evidence and comparisons between two or

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more companies, as well as expert opinions or testimony. For example, the director of
sustainability research at Sustainalytics, Jon Hale, said that the label started with the
idea that ESG issues should be included when evaluating companies. Recently,
however, the focus has shifted to the impact of the company's products and services.
After reading this article, we can see that there is no bias in the article. For example,
in question 1, Big Tech, the author compared the two big companies, Apple and
Amazon. Before she compared the two companies, she briefly introduced the two
companies. In the comparison and explanation, the readers are also given detailed
explanation and analysis, and there is no partiality in the comparison.

4.3 Credibility

This article is on the CNN website and its author is Anneken Tappe. Anneken
Tappe is a senior writer at CNN Business, converting financial markets and the US
economy. Before CNN, Tappe covered currencies, Brexit and emerging markets at
MarketWatch in New York, and wrote about leveraged finance for Debtwire in New
York and London. She began her career writing about the European private equity
industry in London. Tappe holds a Master's degree in Philosophy from the London
School of Economics and a Bachelor's degree in European Studies from The Hague
University. Based on all the above, we can be sure that the arguments are believable
and convincing.

5.0 Conclusion

Based on my understanding after going through this business article, I

completely agree with what the author is talking about. Author Anneken Tappe has
said the truth about why investing in green is harder than we had thought. Many
things need to be concerned about when investors try to invest in green investing.
Based on my study of the article, it is more of a barrier than we think for investors.

Green investing is the act of putting money into companies that have
environmentally friendly practises and long-term business models. Green investments

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come in many different shapes and sizes, so you can find the investments that fit your
values and financial goals. Since green stocks may have a built-in advantage, what are
some of the investments that investors are not doing so well? As the article said,
finding green investments is challenging. Investors often have to do a lot of research
to figure out if a company is truly committed to positive environmental policies and
action.

To back up my decision to agree that the business article is suitable for the
intended audience, there are many related and meaningful reasons available to support
my answer. As the article said, many big organisations put climate and social
consciousness into the hands of those investors who want to join the community in
investing in green. In this article, the author explains what happened to the current
green investing community that has been ruined by companies in the wrong way.
They burn coal to fuel power plants, which is weighing on the effectiveness of
climate-friendly alternatives like electric vehicles.

Lastly, many impacts and barriers are caused by green investing, but the
strong mindset and strong optimism mindset will give them the motivation to
overcome and make the investor clearer about what they are going to invest in. When
we get cocky with investing, we take on too much risk. We start looking for bigger
gains, which are normally followed by even bigger losses. That’s why this article is
suitable for them to check out before they join the community of green investing.

6.0 Appendix

Investing green is harder than you'd think

Writer's name: Anneken Tappe

Date of publication: August 16, 2021

Publisher: CCN Business

New York (CNN Business) ESG investing — funds that are conscious of companies'
actions on the environment, society and governance — is an increasingly popular

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trend for people concerned about how their money is being used. It sounds great, but
it's complicated.

The ESG label is meant to make investing green easier by giving investors a simple
way to allocate their money to good causes. And, indeed, there are plenty of
sustainability- and climate change-focused exchange traded funds available.

But it's still not the catch-all stamp of approval you'd expect.

The label started with the idea that ESG issues should be included when valuing a
business. More recently, however, the emphasis has moved to the impact company's
products and services have, said Jon Hale, director of sustainability research at
Sustainalytics.

"A lot of ESG funds are oriented more toward the ESG valuations rather than the
impact," he told CNN Business.

That's why the blanket ESG designation might not mean all companies in an ETF are
up-to-snuff on all fronts.

"You can't tell just from the label. You actually have to figure out what they're doing,"
said Hale.

That essentially forces investors into tough choices between the E, the S and the G.
Invest in one, and you often have to sacrifice another. This puts climate and socially
conscious investors in a tough spot.

Problem 1: Big Tech

For example, ESG ETFs stay away from weapons manufacturers, tobacco companies
or firms in the coal and oil sands businesses but still give investors access to the
controversial golden geese of America's stock market: tech stocks.

Big Tech companies like Apple (AAPL) and Amazon (AMZN) make up a big chunk
of these funds. They're included because both of these companies have made
commitments to run net-zero carbon supply chains and operations in the next decades.

That doesn't mean they're carbon-neutral now. Amazon's ultra-fast delivery options
come at an environmental cost, for example. Last year, when online shopping went

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through the roof as people tried to avoid exposure to Covid-19, Amazon's carbon
emissions grew by 19% — even though the business reduced its overall carbon
intensity.

As for Apple, though the company is working on getting the carbon intensity out of its
mostly Asia-based supply chain, it's not there yet. Apple's manufacturing contributed
more than two-thirds of its carbon footprint last year, according to the company's
environmental progress report. Apple also includes the use of its products by
consumers in the company's carbon footprint, which accounts for another one-fifth.

Both Apple and Amazon particularly struggle with the S and the G as well: They
continue to face scrutiny over the treatment of their Chinese factory and essential
warehouse workers, for example. Amazon has been criticized for blocking employee
efforts to form unions.

Facebook (FB) is also represented in ESG funds, despite the criticism from
governments and individuals about the company's impact on society.

Problem 2: Tesla

Another mainstay in thematic ESG funds is electric car maker Tesla (TSLA).

From an emissions point of view, electric cars are an obvious choice for a climate-
conscious investor. But electricity that fuels electric cars is still generated using
natural gas or coal, and the environmental impact of battery production is less well
known. That's leaving a coal stain on Tesla's China expansion.

Also hurting Tesla's record: the company's history of making billions on selling
regulatory credits to other car markers, allowing them to keep making money on gas-
fueled vehicles.

"Everything is a tradeoff," said Elizabeth Levy, portfolio manager at Trillium Asset

Management, told CNN Business, and consuming anything, by definition, is using up
some resource. But while we might not know as much about battery production as
about the impact of oil extraction, batteries still win the direct comparison, Levy said.

Tesla has reduced its carbon footprint every year for the past decade, said Dan Ives,
analyst at Wedbush Securities, who covers the company.

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But the environment isn't Tesla's only issue. CEO Elon Musk, who spent much of the
pandemic denying the risks of Covid-19 and railing against lockdown orders, also has
plenty of governance problems, too. Musk has gotten punished multiple times by the
Securities and Exchange Commission for his misleading tweets and other violations.

Most recently Musk stirred things up on social media and on television about
cryptocurrencies, which moved the market sharply. Tesla also disclosed it invested
millions in Bitcoin — only to later say it canceled plans to accept the cryptocurrency
as payment because of its immense carbon footprint.

"Trying to find the perfect company is impossible," said Ives. "Realistically, no

company is going to check every box. But if there are five boxes and [a company]
checks four, that's significant."

Problem 3: New technologies, new problems

Bitcoin and other new technologies are part of a new ESG issue: an insatiable hunger
for electricity.

The same power needed to charge zero-emissions vehicles is required to fuel the
Bitcoin mining process, in which computers solve complex puzzles to create new
"blocks" on the blockchain and thus unlock new coins. Bitcoin has come under fire
over environmental concerns regarding the high energy use of the mining process.

Natural gas, a common source of energy for electricity in the United States, is less
polluting than oil from an emissions point of view, but much of the world still burns
coal to fuel power plants, which is weighing on the effectiveness of climate-friendly
alternatives like electric vehicles as emissions savers.

For ESG investors this raises the question what environmentally friendly technologies
are actually green through and through.

Batteries are another such conundrum because they use other nonrenewable resources,
materials that are found in only a handful of places on earth, such as lithium and
cobalt.

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The Democratic Republic of Congo is the world's biggest producer of cobalt, for
example, where the industry also includes child workers. That doesn't seem compliant
with the S and G in ESG whatsoever.

Tesla announced last year it would ditch cobalt in its battery production, a plus on the
social and governance side that would also reduce their cost.

Problem 4: Making money

Another trade-off is performance.

Funds aimed at sub-genres of ESG, such as BlackRock's (BLK) iShares Global Clean
Energy ETF (ICLN) or the Invesco Solar ETF (TAN), just haven't done very well this
year after soaring in 2020. Both ETFs are down some 20% for the year, while the
S&P 500 (SPX) by contrast has gained nearly the same percentage.

So for ESG-conscious investors who want to see a handsome return, the broader funds
might still be the best way to go.

ESG investing doesn't do away with all problems in business, environmental or

otherwise. But investor decisions still make a difference.

"As investors we have to invest in the future we want to see," Levy said.

That means understanding the depth of the commitment companies are making to
reach their ESG goals and how they can actually be held accountable.

"That's one of the reasons ESG investors such as ourselves are pressuring the SEC to
require climate disclosures," which would standardize that kind of reporting, Levy
added.

Shareholder activism surrounding ESG issues is also becoming more common.

"Companies are starting to realize that they have a fairly sizable amount of ESG-
minded investors in their investor base," said Hale, the Sustainalytics sustainability
research director. And that's "doing some good in terms of shifting corporate behavior
toward operating with sustainability in mind."

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7.0 Reference

i. Rack, M. (No date). Articles by Anneken Tappe | CNN Business Journalist |

Muck Rack. Retrieved from https://muckrack.com/deathstarecon/articles

ii. OECD. (2014). Overcoming barriers to international investment in clean energy*.

Retrieved from https://www.oecd.org/investment/investment-policy/level-
playing-field-for-green-energy-investment.htm

iii. Chen, J. (2021). What Is Green Investing? Retrieved from

https://www.investopedia.com/terms/g/green-investing.asp

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