(Reuters) - A high-profile newspaper op-ed by a former BlackRock Inc executive questioned the value of sustainable investing in solving problems, prompting other industry analysts to defend the role of funds that push for change in environmental, social and governance (ESG) corporate policies. Many ESG funds have almost no impact and create “a placebo effect to delay the overdue regulatory reforms in government we need” to address issues like climate change, said Tariq Fancy, BlackRock’s onetime chief investment officer for sustainable investing, in a telephone interview on Friday. But ESG specialists fired back in defense of the sector. “Fancy provides only the sketchiest of evidence to support a rather outlandish position,” Morningstar Inc analyst Jon Hale wrote on Medium.com on Friday. For instance in his article Fancy wrote that often funds are rebranded as “green” with few important changes. Hale said he counted 64 repurposed U.S. funds that all made discernable changes to their investment approaches, though he acknowledged “there could be easily be some greenwashers” elsewhere. The debate comes as U.S. regulators look to crack down on firms overselling their ESG benefits while cash pours into sector. Fancy’s remarks reiterated points he made in an opinion article for newspaper USA Today on March 16 charging the financial industry is “greenwashing the public.” A BlackRock spokesman said the company disputes Fancy’s view and said sustainable investing “can deliver strong investment returns while also helping to address urgent social and environmental concerns.” BlackRock “strongly supports” standard-setting efforts needed to counter the risk of greenwashing, he said. FINK PREFERS SELF-REGULATION Fancy, 42 years old, joined BlackRock at the start of 2018 and stayed until September of 2019, when he said he left because of a death in his family. He returned to Toronto to run a technology non-profit he founded, The Rumie Initiative. Although he had already decided ESG investing had little influence, Fancy said he grew more concerned as the COVID-19 pandemic spread and showed the power of governments was needed to force worldwide action. He was prompted to write, Fancy said, after BlackRock CEO Larry Fink was asked by a Bloomberg interviewer in January whether stronger government regulation is needed. “I prefer capitalists self-regulate,” Fink said. That position and the marketing of BlackRock and other firms convinces people that a strong government response is not necessary, Fancy said. But portfolio managers are focused and judged on financial returns, not social improvements. Fancy said in a followup e-mail that his time working to bring ESG investing ideas into the mainstream “gave me a unique vantage point and was a blessing and a curse.” “The truth is the investing industry is filled with good, decent people who, in many cases, want to do the right thing, but their hands are tied to the bottom line. They are legally bound and financially incentivized to consider profits above almost everything else,” Fancy said.