Many firms are changing their ESG guidelines to add defense stocks for the first time.

This fact is further evidenced in changes to the ESG guidelines for defense and weapons stocks.

According to Mark, the issue is the many gray areas of ESG. He does believe the concept of ESG is a good one, but he also thinks Wall Street has turned it into an "Amorphous blob." He noted that Wall Street keeps issuing and reissuing more and more ESG funds that aren't helping anyone but the firms and managers that create them.

"Macro factors like food and energy insecurity were created by ESG starving fossil fuels and nuclear energy from everyday business. The ESG movement happily continues to say eliminate fossil fuels and nuclear energy from everyday business. The ESG movement happily continues to encourage eliminating fossil fuels and nuclear energy, which creates a vital upheaval on some level."

The fund manager emphasized that most common ESG names are "Excessively over-owned and crowded," while those stocks shunned by ESG are "Excessively under-owned." He believes when investors seek out those underinvested, under-owned stocks, it provides a nice balance to their portfolio construction.

Mark is concerned that for many participants in the ESG ecosystem, their livelihood depends on the continuation of ESG. As a result, he believes their concern may be more about prolonging ESG using the explanation that it's for the environment or for society.

Thus, Neuman advises investors to be careful, protect themselves, and find a smart way to manage their risk if investing in ESG. He also believes investors should hedge their ESG investments, which is why he created his ESG Orphans exchange-traded fund.