The Challenges of ESG Investing in Space

Last month, I had the opportunity to participate in a panel discussion on the future of environmental, social, and governance (ESG) investing in the private space industry. The event, which focused on the “S”—the social factors—in ESG, included panelists with diverse backgrounds in law, finance, and engineering. The video recording of our discussion, hosted by Space and Satellite Professionals International (SSPI), is below. (Audio of the event is now also available as a podcast episode.)

During the conversation, I emphasized a few general points that apply not just to the space and satellite industry, but all firms confronting the demands of ESG theory:

• A company selling a legal product isn’t at a moral disadvantage relative to the rest of society just because it’s a for-profit institution. It doesn’t have to buy back its societal legitimacy with philanthropy or new “social” initiatives.
• Recent conversations about enlightened or responsible investing often assume that these concepts are new and cutting-edge, but that’s not the case. The phrase “ESG” itself is already over 15 years old, and the ideas behind it are much older. The phrase “corporate social responsibility” goes back to the 1950s; serious debates about corporations having obligations beyond shareholders and profits go back even further.
• Many ESG initiatives are assumed to be always desirable, with the only question being whether they can be profitably integrated into a firm’s general operations. But there are plenty of ESG-themed policies that are not good ideas on their own. Especially in the “social” realm, many topics are controversial and involve difficult tradeoffs.

Thanks to co-hosts Joseph Fargnoli and Louis Zacharilla, the staff of SSPI, and my fellow panelists for a great discussion. Each industry will need to feel its way through the evolving trends in ESG theory and regulation in its own way. It’s great to see such a smart team taking these issues seriously.

For more background on ESG investing and the threats and opportunities it represents, see my study “Environmental, Social, and Governance Theory: Defusing a Major Threat to Shareholder Rights” from May 2021.