Ep 21 | The Truth Behind ESG & SRI
If you’ve ever felt torn between growing your wealth and doing good in the world, this episode is for you. In The F. Word’s breakdown of ESG and SRI investing, Priya Malani unpacks why socially responsible investing sounds great in theory—but often falls apart in practice. From greenwashing and inflated fees to the surprising overlap between ESG funds and the S&P 500, she shares what’s really going on behind the feel-good marketing. Spoiler: you can absolutely grow your money and make an impact—but probably not in the same place.
Tune Into This Episode to Hear:
What ESG and SRI investing actually mean—and why they often don’t deliver
The shocking truth about what’s really inside most ESG index funds
How Wall Street uses “doing good” to justify higher fees
Smarter, more effective ways to align your money with your values
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Transcription
The Feel-Good Trap of ESG and SRI
I think of SRI as the lazy way to do good in the world. If you've been torn between wanting to do good and do well financially, this episode is for you.
Welcome back to The F. Word. Today, I’m tackling ESG investing. It’s a hot topic right now, but we’re digging into what ESG and SRI investing actually mean, who it’s for, and the trade-offs you need to understand before diving in. Time to unpack the facts behind the feel-good headlines.
What ESG and SRI Really Mean
SRI stands for Socially Responsible Investing. And SRI is typically thought of through an ESG lens: Environmental, Social, and Governance.
The ESG framework gives investors criteria to evaluate whether companies are doing good in the world—not just performing well financially. Wall Street was smart with this one. They figured out how to rebrand investing through the lens of doing good. And it caught on.
Before SRI, most millennials thought investing was a get-rich-quick scheme—or just flat-out gambling. But when the messaging shifted, investing started to feel more purposeful. Suddenly, it was a way to improve the world. Of course we wanted in.
The Problem: No Standards, No Clarity
What started with good intentions turned into a brilliant marketing scheme. The biggest issue with ESG investing is that there’s no universal guideline, no official framework, no standardized certification. And the loose rules that do exist? Easy to manipulate.
There are too many shady ways for a company to qualify for an “ESG-approved” stamp. It’s lipstick on a pig.
The Hormel vs. Tesla Problem
Speaking of pigs—guess which two companies have the same ESG score? Hormel and Tesla. One packages pork. The other installs solar panels and provides internet access in underserved communities. Yet, same ESG score.
This should raise eyebrows.
ESG Is Not the Way to Drive Impact
Hate to break it to you, but there are better ways to do good in the world than trying to filter your stock picks.
This is one time you can’t kill two birds with one stone—make a profit and feel like a do-gooder. The stock market is for building wealth. Once you’ve grown your money, then go put it toward causes and organizations making a difference.
To be fair, the one thing I love about ESG investing is that it got more people interested in investing. As a marketing effort, it worked. But as a financial strategy for values-based investors? It falls short.
The Greenwashing Reality
Here’s the worst part: ESG index funds often charge more. You’re paying a premium for something that looks ethical—but isn’t.
This is called greenwashing. A company hides behind sustainability messaging or “eco-friendly” branding, but there’s no substance behind the claims.
In fact, I looked at one of the most popular ESG index funds and compared it to the S&P 500. Their top holdings? Identical—except one company. The S&P 500 held Berkshire Hathaway. The ESG version held Johnson & Johnson. Every other company was the same.
We’re talking about Amazon, Microsoft, Meta, Apple, Alphabet. These aren’t exactly impact-first businesses.
So if your expectation is that investing in ESG funds will change the world and deliver returns, you’re likely to be disappointed.
A Better Way to Align with Your Values
There is a better way to put your money where your values are.
Use the market for its intended purpose: to build wealth. If you're invested in a diversified portfolio for the mid- to long-term, you will make money. Then, use that money to drive real change.
Buy local. Support fair-trade businesses. Donate to community-based nonprofits. Use platforms like Charity Navigator, GiveWell, or GuideStar to vet the impact of your donations.
You’ll have a much greater impact that way than trying to screen Amazon out of your index fund.
So... Should You Avoid ESG and SRI?
I don’t want to knock it completely. Your intentions are good. The desire to invest ethically matters. But right now, SRI is just Wall Street’s way to charge higher fees for portfolios that are basically the same.
It makes you feel like you’re doing good—but the impact is questionable at best.
If you really want to make a difference, use your investments to grow wealth—then use that wealth to support the causes that matter to you.
The Bottom Line
If you've been torn between doing good and doing well, this episode was made for you. Maybe share it with a friend who's debating the ethics of their portfolio.
And as always, follow The F. Word for more no-BS financial advice.
See you next time.
