Wheeling, West Virginia Correspondent — Some of these metrics track genuine long-term risk that any serious investor should price. Others are reputational screens that move capital according to institutional preference.

When a handful of asset managers apply those screens across trillions in assets, they move corporate behavior in ways ordinary shareholders can’t check, and the shareholders in question frequently hold index funds they didn’t choose the composition of.

Both effects are occurring. The disclosure improvements are real. So is a layer of non-financial judgment in allocation, and the political character of a good deal of the framework isn’t deniable anymore.

Prescott Valley, Arizona Correspondent — The measurement of certain environmental and governance risks has genuinely improved and that’s worth acknowledging before the criticism.

The problem is definitional. The three letters cover things with nothing in common — a physical climate exposure that’s a genuine risk to an asset, a governance structure that’s a genuine risk to a shareholder, and a set of social criteria that are contested political questions.

Bundling them under one label and one fiduciary justification is how the contested part borrows the credibility of the measurable part.

Separate them and most of the argument resolves.

Orange County, California Correspondent — I evaluate these for a living, so let me be technical.

The ratings are inconsistent. The correlation between the major providers’ scores for the same company is low — around fifty or sixty percent depending on the study, against about ninety-nine for credit ratings. That means the raters are measuring different things and calling them the same thing.

An input that unreliable can’t be a fiduciary basis. It can be a preference expressed through an intermediary, which is a legitimate product if it’s sold as one.

My position is disclosure of methodology and of tracking error, not prohibition. Let people buy the screen if they want it. Make them see what it costs.

Sheffield, Jamaica Correspondent — The developing-world consequence is worth raising because it runs opposite to the intention.

Capital withdrawing from fossil fuel projects withdraws from ours as readily as from anyone’s, and my region did not build the carbon stock in question. What that produces is a higher cost of capital for energy infrastructure in places with the least of it.

There’s a second effect. The reporting burden required to score well is substantial, and a company in Kingston cannot produce it at the cost a company in Frankfurt can. So the screen selects for large firms in wealthy countries and describes the result as sustainability.

I’d want that counted honestly by people who believe in the project, and most of them have not.

Tyler, Texas Correspondent — If a fund uses other people’s savings to run a politics that couldn’t pass a legislature, that isn’t improved corporate behavior. It’s a workaround.

Some environmental honesty in a disclosure is fine. A social score that penalizes a lawful energy job in East Texas is a veto without a vote.

Texas passed a law this year requiring the state to divest from firms that boycott fossil fuels, which is the same instrument aimed the other direction. I’d note that without much satisfaction. Once capital allocation becomes a political weapon, both sides get one, and my clients end up dealing with two sets of screens instead of none.

Knoxville, Tennessee Correspondent — Utilities already live under statutes and don’t need a second one from a ratings firm.

The distinction I’d hold is between engineering prudence and fashion. Pricing physical risk to a substation is prudence. Penalizing dispatchable generation without accounting for what happens when the wind stops is how you get a winter problem, and Texas had one in February that killed a couple of hundred people.

That event is the argument. It wasn’t caused by a rating, and it’s what happens when reliability stops being scored.

Long Island, New York Correspondent — Fiduciary duty is a legal standard and it’s being stretched.

The Labor Department has flipped its position on this twice in two years, which tells you it’s a political question being litigated as a technical one.

My view is narrow. If the product is a political screen, market it as a political screen and let a saver choose it. Don’t market it as prudence while it underweights a lawful business, and don’t mandate it into a default option in a plan where the participant never selected anything.

The default is where this gets decided and almost nobody is watching it.

Cheyenne, Wyoming Correspondent — If they want to save the world with my pension, they can print what it costs.

Improving behavior is a statute. A score is a preference.

Don’t mix them on the same glossy page and call the result a fiduciary judgment.

Owatonna, Minnesota Correspondent — As a former planner I’d say the client conversation is the tell.

People ask for these funds and they mean something specific and personal — they don’t want to own tobacco, or they don’t want to own a weapons manufacturer. That’s a legitimate preference and it’s been available for forty years under a different name.

What’s new is scale and compulsion. A screen chosen by a saver is one thing. A screen applied to an index that a saver holds because it’s the default in their plan is another, and the second one has been growing faster.

Novi, Michigan Correspondent — From the operating side it’s mostly a reporting burden and it’s getting expensive.

We now answer questionnaires from customers, from lenders, and from three rating firms, and they ask for different data in different formats about the same facilities. None of it has changed a manufacturing decision.

What has changed decisions is the customer requirement. When an automaker tells a supplier it needs a carbon number to keep the business, that moves. The rating didn’t do it. The purchase order did.

Las Vegas, Nevada Correspondent — This industry gets scored on the social letter and the scoring has nothing to do with risk.

Some of it’s fair. Labor practices are a real exposure and a property with a bad relationship with its workforce is a worse investment.

Most of it is a boutique in another time zone deciding whether an industry is respectable. That isn’t analysis and dressing it as analysis is the objection.

Clermont, Florida Correspondent — My clients are small firms and they’re starting to feel this through their lenders and their large customers rather than through investors.

That’s the transmission mechanism nobody describes. A twelve-person professional practice doesn’t have investors. It has a bank and three big accounts, and both are now asking questions it costs money to answer.

Whether the criteria are good or bad, the compliance cost lands hardest on the firms with no compliance department, and it operates as a barrier to entry that the people designing it would be horrified to have created.