One of the downsides of ESG investment, in the short term at least, is that it creates an opportunity for the unscrupulous. (I’ve written about this before.)

The logic is fairly simple: if a bunch of investors choose not to invest in “sinful” stocks, those stocks will be underpriced; if a bunch of investors choose not to lend money to “sinful” businesses, then the cost of raising capital for those businesses will be higher, meaning higher returns for those who lend to them. Big institutional investors have mostly moved towards ESG principles, which means that – if you’re a sociopath – you can get higher returns by consciously choosing to invest in those sinful stocks. While they’re still around, at least.

Sadly, private equity (not known for its strong ethical foundation) seems to have got the memo:

“Private equity firms are lining up to take on the dirty – and highly profitable – assets being divested by publicly traded commodity producers as the world grapples to decarbonize.

“In the latest example, private equity accounted for most of the 30 so-called western candidates that signed non-disclosure agreements in the sale of Vale SA’s Mozambique coal business, according to Luciano Siani Pires, head of strategy and business transformation at Rio de Janeiro-based Vale.

“‘The ensuing combination of high commodity prices and low acquisition costs for unwelcome assets may provide these firms the bonanza of a lifetime,’ Siani said.”