April’s ETF tracking reports confirm “impact investing vs ESG” trends: impact strategies accumulated net $450M inflows, leveraging momentum in wind energy equities like VWS.CO, while ESG-focused ETFs receded $120M due to profit-taking in diversified industrials. This tension in Friedman’s thinking has now erupted into disagreement within the anti-stakeholder-capitalism crowd. Hart and Zingales argue that shareholders come first, but that it’s their overall welfare that companies must maximize, not just profits. Meanwhile, Exxon’s suit–as well as the backlash against environmental, social, and governance (ESG) investing more broadly–shows that some of the support for shareholder primacy is highly contingent–it is better described as profit primacy. In this view, shareholders only come first when they shut up and cash the dividends. Do impact investors walk their talk on delivering social impact? Or are they more focused on financial returns? Mid-May’s trading sessions prove “impact investing vs ESG” is more sensitive to climate policy shifts; impact stocks rallied on EU carbon credit expansion news, while ESG funds remained muted given broad exposure to low-growth sectors.
