Ethical investing has always looked like a type of politics and always attracted a certain type of investor.
Like free trade coffee, it has always sort of seemed like political consumption. And, again like free trade coffee, it often seemed to appeal most to the middle class left. Thus ESG has flourished most where this class is strongest: Scandinavia, Switzerland and Canada. And struggled slightly where this type of politicised consumerism is harder to find, i.e. eastern Europe.
It's partly for this reason - politics - that ETF issuers have mostly steered clear of actively picking companies based on ESG criteria. They've preferred, instead, to build rules into their indexes (i.e. no gambling companies) and let the index providers take care of the rest.
Using an index can also help keep everyone happy. It allows fund providers to tell those of a more right-wing persuasion that they, like Rupert Murdoch, are just giving investors "the news that they want". While also hinting to the maybe more left-wing half of the market that it's really them they're trying to please.
But there are murmurings that this type of approach, where ETF issuers hide behind the index, could be about to change.
Last week, Australian issuer BetaShares booted Facebook from its ESG fund (ETHI), after the Cambridge Analytica revelations came to light. It appears to have done so at its own initiation. The index provider - Nasdaq, which runs the exchange on which Facebook is listed - has kept Facebook in its other ESG-tinted indexes.
"The Responsible Investment Committee [has]‚Ä¶ determined that Facebook will be removed from the index," BetaShares said.
"The RIC provides an oversight role‚Ä¶ which allows it to take prompt action, where warranted, in cases where serious responsible investment concerns are raised".
"Facebook has historically qualified for inclusion in the Fund's index on the basis of its strong global leadership on carbon emission metrics‚Ä¶ However the company has in recent times been the subject of a number of controversies and reputational issues."
BetaShares is by no means the only issuer to view Facebook as being unfit for an ESG fund. VanEck, another Australian issuer, never had Facebook in its ESG ETF. With commentary mounting that Facebook now counts as a "sin stock" it seems at least possible that BetaShares won't be the last either.
Viewing Facebook as a corporate baddie is not new. But what is new is that an ETF issuer is taking a more muscular approach to ESG.
The prospect of ETF issuers taking an active role as moral arbiters has been raised before. After the Stoneman Douglas massacre in Florida last month, BlackRock indicated that it would talk to gun companies. Yet no issuer to date has gone ahead and pulled the plug on a misbehaving company.
BetaShares giving Facebook the flick might or might not prove a stepping stone to a more forceful ESG approach. But if it did, it would be no bad thing; in fact, it would make a certain kind of sense.
After all, if ETF providers can run products that actively pick which companies are value or have momentum, why not pick ESG as well? And if fund managers can make discretionary calls on virtually every other aspect of finance - from the contours of emerging markets, to investable debts, to economic sectors - why not ESG?
Having crusading ESG ETFs could also help with consistency. If ESG is a genuine factor driving outperformance - as many ESG ETF providers have insisted in their marketing material - why not treat it like the other factors, and list a product that actively manages it?
ESG investing drives headlines like nothing else in ETF land (witness how widely BetaShares decision has been reported). But the challenge for ESG funds is to bring assets to match the hype. As the title of a Bloomberg feature in the aftermath of Douglas ran: "Gun free ETFs are everywhere but no-one is buying".
Let's see if this changes.