As the war in Ukraine rages, finance professionals on Wall Street and in Europe recently attracted outrage by suggesting that investing in arms manufacturers should be treated as ethical investing. In the fight against tyranny, they argued that such an investment “preserves peace and global stability” and defends “the values of liberal democracies.” As such, it belongs in the increasingly lucrative investment category known as ESG, or environmental, social, and governance.

ESG is viewed as a mark of approval for socially conscious investing. If you tick a box that says you want your pension or savings to be invested ethically, whoever looks after your money will put it into ESG funds—meaning funds that hold only companies with an ESG rating.

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