Buyer Beware: Variation and Opacity in ESG and ESG Index Funds

98 Pages Posted: 23 Aug 2019 Last revised: 4 Sep 2020

See all articles by Dana Brakman Reiser

Dana Brakman Reiser

Brooklyn Law School

Anne M. Tucker

Georgia State University College of Law

Date Written: December 1, 2019


Evidence of the tremendous rise in the significance of environmental, social, and governance (ESG) investing is coming from all quarters. Fund flows into ESG investment vehicles are growing at a sustained and sometimes exponential pace. Fund complexes are rushing to design products, creating and rebranding scores of mutual funds and exchange traded funds (ETFs), including lower-cost indexed options. Industry leaders, critics, and commentators are all heralding the sea change as a shift in investing - and corporate governance - to more broadly consider environmental and social factors.

This Article provides vital context for this conversation. Its descriptive account of the ESG investment landscape drawn from hand-collected 2018-2019 data on a sample of active and passive ESG and traditional funds documents great variation in their investment strategies, portfolios, voting records, and fees. The underlying variation across funds, however, is largely opaque to consumers - who rely on the ESG acronym at their peril. Building on our case study, we examine the supply and demand side drivers fueling ESG market growth, variation, and opacity, and explore mechanisms to better match high-ESG committed investors to high-ESG committed funds, including enhanced transparency and regulation of intermediaries.

Keywords: ESG, passive, index, mutual funds, proxy, portfolio, prospectus

Suggested Citation

Brakman Reiser, Dana and Tucker, Anne M., Buyer Beware: Variation and Opacity in ESG and ESG Index Funds (December 1, 2019). Cardozo Law Review, Vol. 41, 2020, Available at SSRN: or

Dana Brakman Reiser

Brooklyn Law School ( email )

250 Joralemon Street, Rm. 814
Brooklyn, NY 11201
United States
718-780-0396 (Phone)
718-780-0376 (Fax)

Anne M. Tucker (Contact Author)

Georgia State University College of Law ( email )

P.O. Box 4037
Atlanta, GA 30302-4037
United States
(404) 413- 9179 (Phone)

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