Yeah, I agree with you. This episode rankled because:
a) it assumes there is one pot of money to draw from. There may be one aggregate sum, but it's made up of many investors with their interests and goals.
b) the research compared funding going to brown companies with funding to, say, accounting firms. That's an irrelevant comparison, invalidating the research. If funding is going to services companies, that's another discussion of simply misallocation of ESG opportunities. The funding needs to compete against brown technology or it isn't useful at all.
c) the biggest one for me is where the funding gets spent. You could allocate $35 trillion to brown companies but that doesn't mean they'll spend it on innovation. They won't. CF and Engine 1 even stated this in the episode! They'll spend it on carbon capture to continue business as usual. THAT's the reason investors started moving away from brown in the first place.
This episode was disappointing as Freakonomics seemed to push a contrarian theme rather than hearing their own guests prove the idea was irrelevant.