The left is fond of claiming that racism is systemic, occurring everywhere and affecting all operations of society. There’s no evidence of that, but there’s plenty of evidence that Wokeness is and that the Biden administration is playing an outsized part in it. And you are and will continue to pay dearly for this politically and financially.
Environmental Social and Governance (ESG) investing—investing which ignores long standing rules requiring fiduciaries to maximize returns—is favored by this administration. That this vague method of evaluating investments makes it impossible to monitor the efficacy of the fiduciaries’ competence is a bonus. Nor does its record in picking companies with great environmental, social and governance policies hold water. If you doubt me, please note that BlackRock which leads the ESG parade is a major stockholder in Norfolk Southern, the railroad which recently contaminated East Palestine, Ohio, apparently because BlackRock deemed it a good investment from an environmental and governance standpoint.
Use at your own risk.
On May 20, 2021 Biden signed Executive Order 14030 “allowing plan fiduciaries to consider climate change and other environmental social and governance factors when they select retirement investments and exercise shareholder rights such as proxy voting.” The Labor Department followed up on the Executive Order with a rule permitting encapsulating the Order’s directive.
In February Congressmen Andy Barr and Mike Braun moved to block the rule and their joint resolution passed both the House and Senate with Democrats Joe Manchin and Jon Tester joining the Republicans to kill it. Nevertheless, Biden proudly announced he had vetoed the Bill, reflecting his view that retirement fund fiduciaries should advance his political interests with your retirement funds. His veto means that 150 million people have their retirement accounts at risk.
The veto comes ironically after America’s wokest bank, Silicon Valley Bank (SVB), just went bankrupt. It had proudly bragged that it worked with 1,550 companies “in the climate technology and sustainability sector.” Woke investing in green energy was encouraged by the Biden $1.2 trillion “infrastructure bill.” As Kim Strassel of the Wall Street Journal reports these were basically “subprime business loans.” These startups often had no products or services anyone wanted to buy and had no credit profile. The money SVB lent them remained on deposit with the bank, which used it to buy government bonds. SVB then valued those bonds at their value at maturity though rising interest rates made it necessary to cash them in earlier at a substantially lower price.
Simultaneously Credit Suisse had to be rescued by investors. While there is less publicly available information on its woke investments, its webpage proudly boasts of its ESG direction: “We want to make sure that everyone feels a sense of belonging. Prioritizing inclusion contributes to our success by helping out colleagues focus their talents on business challenges not on overcoming disadvantages.”
It’s hard to take issue with Manchin’s criticism of the veto:
This administration continues to prioritize their radical policy agenda over the economic, energy and national security needs of our country, and it is absolutely infuriating, West Virginians are under increasing stress as we continue to recover from a once in a generation pandemic, pay the bills amid record inflation, and face the largest land war in Europe since World War II. The administration’s unrelenting campaign to advance a radical social and environmental agenda is only exacerbating these challenges.”
Not only does the record show that ESG investing is less profitable than investing where fiduciaries are held to traditional standards like capitalization, profitability, foreseeable prospects for risk and reward, but this governmental policy if followed means whether or not you like the "green new deal" and the even murkier “social justice” you will be investing your money and staking your future in it.
A fool and his money...
Who will score the ESG scorers who can use these powers to make or break any industry or company they chose? It’s like three-card monte actually—companies get an infusion of cash they are not likely to receive if fund managers use traditional investment standards, the loaned money remains on deposit with the lender, the lenders funnel the money back to accommodating politicians and lobbyists, I expect that the borrowers kick in, too, and the grift goes on. SVB’s charitable contributions may not have included over 70 million dollars to Black Lives Matter as some have reported, but did go to “related: groups like these:
- A 2021 pledge to “invest more than $50 million” over five years into SVB’s Access to Innovation program, which works to connect people who are often underrepresented in the “innovation economy” — including women, blacks and Latinos — with hiring, mentorship, educational and networking opportunities.
- A $20 million donation the bank said would be used to support COVID-19 relief; a needs-based scholarship program; economic development; and diversity, equity and inclusion efforts.
- A 2-to-1 matching campaign the bank created in 2020 for employees who donated their money or time to social justice organizations.
- A $250,000 allocation from the Silicon Valley Bank Foundation to support grants for social justice organizations where bank employees volunteer.
A prominent Black Lives Matter organization, Black Lives Matter Global Foundation Network, told PolitiFact in a statement that the Black Lives Matter movement includes thousands of organizations, so there is no way for the group to say with certainty whether Silicon Valley Bank donated to any one of them.
Nineteen Republican governors, led by Florida's Ron DeSantis, have announced an alliance against using ESG standards for investing. The Heritage Foundation reports that 13 states have proposed new bills to restrict ESG score implementation. Meanwhile, the House was unable to override Biden's veto.