The Ramifications of Blackrock and Vanguard’s ESG Investments within the 21st Century

Abstract

In the last two decades, ESG (economic, social, governance) investing underwent rapid growth that stemmed from the adoption of movements such as the promotion of sustainable development goals under the UN, shifting focus towards embedding sustainability within the social and environmental aspects of businesses. This motive was spearheaded by investment firms such as Blackrock and Vanguard, who have poured hundreds of billions to perpetuate ESG values in the market. A multitude of scholars have done extensive research into this recent shift in financial policymaking, revealing that many large businesses have elevated their stock performance by adhering to associated investor demands, while simultaneously furthering efforts to combat environmental risks. Although many have considered these positives, other researchers have outlined corruption within the corporate push to increase investment revenue through the use of ‘green’ agendas as well. Despite the vast diversity of perspectives on the merits of ESG investing, however, there remains a lack of comprehensive dialogue surrounding the overall outlook of the issue from all standpoints. This paper aims to analyze the economic, environmental, and ethical perspectives involved in the proliferation of ESG policies in the status quo with an underlying focus on the moral value of these ventures. It is revealed that Blackrock and Vanguard’s ESG investments have ultimately degraded the effectiveness of sustainability reforms by promoting an increased focus on profits over environmentally and socially conscious developments, helping propose that additional government intervention is needed within the economy to mitigate the detrimental impacts.