The new ESG: attention addiction?

Classic ESG focuses on companies who are polluting the environment (think industrials, coal plants, etc.), with the idea of either (a) filtering out heavy polluters or (b) investing in renewables. It feels like decades of environmental pollution in the US -- and smog-filled cities, birth defects, etc. -- have slowly shifted the nationwide consensus to "minimize environmental harm." 

A long aside: Never mind a whole separate conversation of whether it's better to simply divest from the biggest polluters or engage with them; Yale professor Kelly Shue argues if we actually care about reducing absolute emissions, it's counterproductive to choke off funding to these "brown" firms. It reminds me of the wider political discourse -- is it better to cut every Trump voter out of your life or try to actually engage with a few of them? The former feels better short-term (to the individual), but the latter is better for the long-term health of the nation.

Some of the biggest public companies of the 1980s -- Exxon, GE, Chevron, DuPont, GM, Ford, Philip Morris, etc. -- were in oil and industrials. It took a few decades for the political and investing appetite to catch up to these companies. We now have a whole industry -- frameworks, consultants, you name it -- around mitigating environmental "risk" in the portfolio.

The giants of the 2010/2020s weigh heavily tech -- Apple, Microsoft, Google/Youtube, Facebook, Amazon. We already know there's a huge problem with social media addiction, and Australia has recently proposed banning social media for kids under 16. But ... I haven't seen or read much at all about "anti-virality" ESG investing. The "environmental detritus" of social media addiction is hard to see and hard to measure. But yet all the largest social media sites (be it TikTok, Instagram, Reddit, Facebook, or any others) are incentivized to keep you addicted to the platform, because more average time spent on the app means more ads served, which means more revenue. 

In my view, the problem is not just in the addiction itself but in the example it sets to start-ups. If all the biggest players are competing on keeping your attention, how can a new start-up break in without trying to make something flashier, more attractive, more addictive? Does social media become a race to the bottom? And more importantly, if you are an investor who cares about investing responsibly (i.e. more than just what's in an ESG framework), can you feel good about investing in these types of start-ups or the VCs who back them?

Ten years from now, I think we will look back and realize that a lot of this tech -- which are often great financial investments! -- is socially harmful, and I hope we will have the language, metrics, and frameworks to justify divestment or substantial engagement. I think the question of whether future investors should not invest in start-ups because of their harmful effects on society (social media addiction, but also prediction aka gambling markets, etc.) will always be a contentious discussion, but I think recognizing it as the "new ESG frontier" will push us to ask the right questions and collect the right metrics, especially as tech plays an increasingly outsized impact on society as a whole.