In recent weeks, we’ve often mentioned the buzz around ESG investing and greenwashing and whether—according to one claim, by a former BlackRock banker—they’re much the same thing. Regardless, the momentum behind ESG, from net inflows into new funds, to the issuing of green bonds, to the launch of new products, has been one of the financial trends of the last year.

Regulators, too, are starting to take note: the EU is in the midst of a years-long effort to define what it means to be “green”, while the SEC was recently part of a landmark probe into whether Deutsche Bank overstated its ESG-bonafides in some of its financial products.

I’ve been speaking to experts for a story I’ve been working on that hits on how we nail down ESG, and one of the more fascinating conversations I’ve had is with Dan Kemp, global chief investment officer at Morningstar Investment Management, who quickly laid waste to several stereotypes and myths about ESG investing—including who ESG-focused investors actually are.

“The characterization of ESG investors as being predominantly younger, and more geared towards women than men—that’s almost a caricature of what we’re what we’re seeing,” he said. In fact, “ESG is very broad based. And that’s evidenced by the fact that in Europe, institutions have really been leading the way,” rather than retail investors.

It’s compelling, too, to put interest in ESG investing down to rising concerns about climate change, social and racial justice, and changing ideas about the role companies should play in society.

Or, maybe…ESG funds have just been making money.

We’ve been seeing “that link between financial returns and ESG, in the way that really hasn’t been evidenced before,” Kemp points out.

Strong returns have been paired with the growth of products purporting to be ESG-based, particularly passive funds. Together, these trends have helped a corner of the investing world that’s been traditionally reserved for the investor interested in expressing a strong view either on what they want to invest in (clean energy, say), or what they don’t (tobacco, for example), explode into the mainstream.

If you take a look at some of the top holdings in popular ESG ETFs, which often rely on exclusion criteria (say, no fossil fuels), you might get a few clues why these funds have done so well recently. The names that come up tend to skew tech-heavy, fast growing, or buzzy: Tesla, Amazon, and Facebook come up again and again.

“We saw very strong returns from from companies that also had high ESG credentials. But it’s not clear that it was the ESG credentials that were driving those those high returns,” Kemp points out. “These were businesses with very high expected growth and enormous optimism from shareholders.”

There have been plenty of studies that show links between longterm financial performance and the incorporation of ESG criteria, he says. But that may be exactly it: those links are long term, and, ideally, already embedded in the best-run companies. One example we discussed is the “G” component, or governance—and the fact that, for good asset managers and experienced investors, assessing whether a board and executive team are strong leaders and realistic about risks (including, for example, climate change) is a long established practice.

Kemp says he thinks there will always be investors who want to use their money to express a view on what should, or shouldn’t, make money. But ESG as a risk-based lens for looking at the world will increasingly be incorporated into how fund managers see companies as a whole, rather than being siloed into a certain “kind” of investing.

After all, much of this isn’t that radical at all.

“If you’re a business that’s not considering your long term social and environmental risk, are you really governing the business?” Kemp says. “These are sort of fundamental questions—around reputation, long term earnings, financial destruction.”

On another note — Fortune’s second Global Sustainability Forum is almost here! The one-day virtual conference on Sept. 28 will focus on how companies can move “from pledge to practice” and ensure businesses meet the ambitious—but vital—climate goals many of them have promised.

You can still register for the event here.

More below.

Katherine Dunn
katherine.dunn@fortune.com

CARBON COPY

China's coal

Two big climate announcements this week—including one from China. On Wednesday, president Xi Jinping said the country would no longer financially support overseas coal projects. Details were spare (as were references to coal plants inside China), but climate groups and U.S. officials are clearly hoping the commitment will be a boon to COP26 later this autumn. From 2013 to 2019, China was the world's top funder of coal projects. Al Jazeera

Biden's pledge

Meanwhile, U.S. President Joe Biden announced that his administration would double climate aid to help other countries deal with climate change. By 2024, that would bring the yearly commitment to $11.4 billion. But the pledge also serves to highlight how far short developed countries have fallen in an original commitment to provide $100 billion by 2020 in aid to help lower-income countries adapt. Reuters

Hollow targets

The corporate world is awash in climate targets. But relatively few of those targets are actually based on the scientific standards for lowering emissions, according to the Science Based Targets initiative (SBTi), which has the UN among its members. Only about a fifth of the 4,200 companies tracked were actually using science based standards, the group said, adding that "setting self-defined emissions reductions targets won’t cut it." Bloomberg

The case for "degrowth"

That GDP growth can, through technology and renewable energy, be decoupled from emissions has long been the linchpin keeping climate action and capitalism together. But some economists are now arguing that, even if such a decoupling is possible, it can't happen fast enough—and growth itself needs to end. NYT

IN CASE YOU MISSED IT

Shell to sell major U.S. shale operation to ConocoPhillips, accelerating its departure from fracking by Katherine Dunn 

After a backlash summer, ESG needs to get back in the game by Aron Cramer

U.K. energy companies now want one of those Global Financial Crisis–era bailouts by Katherine Dunn

Alarm bells ring in Italy as spiking wheat prices threaten the country’s most beloved dish by Eric J. Lyman

German elections could put a speed limit on the sacred Autobahn for the first time by Christiaan Hetzner

Short of gas, wind, and power: How a perfect storm is roiling the world’s energy market by Katherine Dunn

The U.K. went all in on wind power. Here’s what happens when it stops blowing by Sophie Mellor

CLOSING NUMBER

9

The number of deaths—out of 14 caused by Hurricane Ida—that were attributed not to the storm itself, but to power outages that dragged on after the storm finished. Two more people also died, from carbon monoxide poisoning while using generators. That grim tally backs up what many residents said about Ida: that the blackouts were worse than the storm. Now, NPR found in an investigation that the local energy company, ENO, and its parent company, didn't make the necessary investments into the city's power grid, and in fact "aggressively resisted" pressure to do so.