Fancy This: Biden Leaps to 'ESG' Defense

President Joe Biden has issued his first veto to protect a rule the U.S. Department of Labor (DOL) announced late last year that would permit investment fund managers, known as fiduciaries, to use the environmental, social and governance (ESG) construct when selecting retirement investments like 401Ks, and when exercising shareholder rights, including proxy voting. Increasingly understood  to be a political device intended to redirect investor capital toward political and social objectives deemed important to the Neo-communist agenda, Congress had passed a bill earlier this month to block the new DOL rule.

The bill was an effort by Congress to protect investors from ESG consideration because the scheme violates the legally codified obligation fiduciaries have to investors. Known as the sole interest rule, it is a well-established legal principle that requires investment fiduciaries to maximize shareholder financial returns rather than promote political or social agendas. Proponents of the DOL rule assert that ESG factors could affect investment risks and returns and therefore should be taken into account by fiduciaries. But the disregard of legal principles aside, the data itself reveals contradictory evidence to their assertion.

As the world’s largest asset management firm in the world, it was a surprise when BlackRock’s former Chief Investment Officer for Sustainable Investing, Tariq Fancy, expressed doubt about ESG being used for investment consideration: 

Our messaging helped mainstream the concept that pursuing social good was also good for the bottom line. Sadly, that’s all it is, a hopeful idea. In truth, sustainable investing boils down to little more than marketing hype, PR spin and disingenuous promises from the investment community.

Larry Fink explains it all for you.

Fancy’s analysis proved prophetic when BlackRock made history last year for sustaining the largest losses of any asset management firm ever in the first six months of the year. The ESG strategy that led to some of the losses was promoted by BlackRock CEO, Larry Fink. Fink’s often cultish focus on ESG is likely rooted in his affiliation with the World Economic Forum (WEF), the godfather of ESG that began in 2000.

Regarding Fink, a WEF Trustee board member and Agenda Contributor, many have speculated whether ESG was a concept Fink brought into BlackRock to garner control of the capital markets, or whether BlackRock shaped the WEF’s understanding of how they could use the financial sector to re-orient the capital markets and promote what has proven to be a mechanism of control. In either case, it is bad for investors.

But beyond BlackRock’s poor market performance being evidence of a contrived and misbegotten pretense, a 2022 study published by Review of Accounting Studies reveals even more about ESG. The authors discuss that while historically there may have been some indication that ESG-centric funds delivered higher equity returns, by 2022, returns on average were negative. The study concludes, “ESG funds appear to under perform financially relative to other funds within the same asset manager and year, and charge higher fees.” The authors also note, "ESG funds’ portfolio firms, on average, exhibit worse performance with respect to carbon emissions, in terms of both raw emissions output and emissions intensity (i.e., CO2 emissions per unit of revenue).”

ESG funds, it turns out, do not appear to deliver on promises for either "stakeholders" or shareholders. So: farce or a fraud?

Beginning with a 2018 White Paper entitled, Agile Governance: Reimagining Policy-making in the Fourth Industrial Revolution the WEF begins to lay out how democracy will need to be re-imagined in order to achieve control of their Fourth Industrial revolution.

As traditional policy development processes lag behind the rapid pace of technology innovation, citizens increasingly expect the private sector [tech companies] and other non-government entities to take on new responsibilities and develop new approaches to support the diversification and speed of governance. The Fourth Industrial Revolution requires the transformation of traditional governance structures and policy-making models… In this paper, we define agile governance as adaptive, human-centred, inclusive and sustainable policy-making, which acknowledges that policy development is no longer limited to governments but rather is an increasingly multi-stakeholder effort.

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As one reads their subsequent treatise on regulation, one quickly understands “regulatory agility” to mean government centralization and deconstruction of democracies. So central is the need for government regulation in the WEF-envisioned world, they authored an addendum in 2020 entitled, Agile Regulation for the Fourth Industrial Revolution: A Toolkit for Regulators. The COVID-19 pandemic has reinforced the need for speed. Across the globe, governments have been forced to fast-track changes to regulation to enable innovations… to help their economies adapt to  disruption.

So as investors and states have begun to reject the very idea of ESG, the Biden administration clearly now sees regulation as its last stand in America. While it is unlikely that Republicans can garner the requisite two-thirds of votes needed to overturn Biden’s veto, ESG investing faces unprecedented challenges on both legislative and legal fronts across the country. States have proposed bills in local legislatures, similar to the one just vetoed, and attorneys general from 25 states have filed a lawsuit against the DOL claiming that the department has overstepped its statutory authority.

As the fight continues, Americans should recognize that we are not only fighting domestic vetoes, but also international villains.