Congress stock trading records reveal truth behind ESG rhetoric

Both Democrats and Republicans ignore ESG guidelines in their portfolios despite fiery debate over climate

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(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — No one is shocked by the discovery that members of Congress say one thing and do another. Political posturing is the nearly universal rule rather than the exception.

It nevertheless is jarring to discover the extent to which politicians’ cynicism extends to how companies are rated according to environmental, social and governance (ESG) criteria.

Members of Congress say they care deeply about a company’s ESG rating, with Democrats extolling the virtues of highly-rated companies and Republicans railing against any attempt to introduce ESG into the investment process. Yet when it comes to which companies they invest in, their choices are indistinguishable.

That is the provocative conclusion of a study that in early August began circulating in academic circles. Titled “Blue vs. Red Rhetoric, Green Indifference: Congressional Stock Trading amid ESG Politicization,” the authors are Yifan Liu and Leyuan You of the Department of Finance and Economics at Texas State University.