As 'ESG' Falters, the Left Seeks to Rebrand

As Clarice Feldman has explained here at The Pipeline, the Wall Street enthusiasm for ESG (environmental, social, and governance) investing is already starting to wane. Which means the greens will go back to the drawing board, and will bring it back again under a new name. ESG is mostly a cover for "climate change" and social-justice activism, and as such its real agenda is to divert private capital to politically-favored causes, such as “green” energy and disguised redistribution schemes benefitting favored client groups like Black Lives Matter.

Investment funds that follow the ESG mantra are suffering from sub-par investment returns, and suddenly fear shareholder lawsuits for failing their fiduciary duty to maximize returns. Moreover, the attempt to enshrine ESG by regulation through the Securities and Exchange Commission (SEC) is running into political opposition on Capitol Hill and appears vulnerable to legal challenge. Suddenly the biggest boosters of ESG investment, and especially de-investing in oil, natural gas, and coal production, are backtracking, with J.P. Morgan CEO Jamie Dimon telling Congress last week that cutting off credit to fossil-fuel production would be “the road to hell” for America. Late in the week the state of Louisiana announced that it was pulling all of its assets invested with BlackRock, one of the prime cheerleaders of ESG.

On the "road to hell."

ESG is likely to persist, however, on account of its unseriousness and malleability. Several traditional domestic oil producers, like heavy fracking user Diamondback Energy, have received high ESG ratings from the third-party gatekeepers of ESG seals of approval through the simple expedient of buying “carbon offsets” and pledging themselves to be fully carbon-neutral . . . someday. Think of it as the environmental version of St. Augustine’s famous intercessory petition, “Lord, make me chaste—but not yet.”

ESG should be regarded as the third iteration of the left’s attempt to co-opt corporate America, which they otherwise hate, under the banner of “corporate social responsibility” (or CSR). CSR attempts to blur the lines between shareholders and “stakeholders,” that is, self-appointed advocates who want businesses to serve some special “social” interest as defined by the advocacy groups. But such “stakeholders” have neither a tangible “stake” in the businesses they mau-mau, nor do they represent anyone but themselves.

Roll back the calendar about 20 years, before the term ESG was coined, and you find the same essential idea marching forward in the business community under the slogan “triple-bottom line” (or BBB). This was the hey-day of “sustainable development,” and it was proposed that in addition to the traditional accounting measures of profit-and-loss, businesses should formally include new accounting measures of “environmental and social performance.” Exactly what these accounting measures might be were never specified with any rigor.

"Sustainable" green heaven for you and for me.

Important voices in corporate America immediately rolled over for this flim-flam. PricewaterhouseCoopers published a “sustainability survey” of 140 major U.S. corporations, arguing that “companies that fail to become sustainable–that ignore the risks associated with ethics, governance and the ‘triple bottom line’ of economic, environmental and social issues–are courting disaster.” The triple bottom line, PwC concluded, “will increasingly be regarded as an important measure of value.”

The CEO of Monsanto at the time, Robert Shapiro, wrote that “We have to broaden our definition of environmental and ecological responsibility to include working toward ‘sustainable development'." This groveling did nothing to reduce the Left’s hatred of Monsanto, or prevent endless lawsuits against Monsanto for the sin of producing Roundup and other useful products.

Perhaps the most egregious corporate suck-up to the CSR/BBB nonsense was Enron which, it is conveniently forgotten today, was the environmental lobby’s favorite energy company right up to the moment it imploded partly because its fraud was based on the hope that it could dominate trading in artificial “markets” for greenhouse gas emissions credits. (Enron was a cheerleader for the Kyoto Protocol that the U.S. Senate had indicated it would never ratify.) In January 2001, a Bear Stearns analyst cited Enron’s planet-friendly orientation in concluding: “We believe that Enron should be compared to leading global companies like GE, Citigroup, Nokia, Microsoft, and Intel, and that its valuation reflects this eminence.” The Bear Stearns note predicted Enron’s stock was going to $90 a share, but in less than 12 months, Enron was bankrupt and its shares worth zero. (And we all know what happened to Bear Stearns.)

There was even a “Dow Jones Sustainability Index” (DJSI) formed in 1999 to track the performance initially of 300 supposed BBB companies, though a close look at its composition found that there was less than met the eye. The DJSI added and deleted companies on their list with surprising frequency, with criteria that confessed to being politicized. Its process of sustainability analysis included reviewing “media, press releases, articles, and stakeholder commentary written about a company over the past two years.” (Emphasis added.)

The DJSI still exists, even though there are now several ESG indices competing with it. Despite its flexible criteria, the DJSI lagged the Dow Jones Industrial Average significantly. Over the last decade it has achieved an annual return of 5.2 percent, while the DJIA has returned 15 percent per year, and the S&P 500 14.8 percent. There is no compelling statistical evidence to validate that “socially responsible” corporations are more profitable or are better investments than companies not on the green bandwagon.

The best commentary on “corporate social responsibility,” no matter how cleverly defined, still comes from Milton Friedman’s observation made sixty years ago in Capitalism and Freedom:

Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible. This is a fundamentally subversive doctrine. If businessmen do have a social responsibility other than making maximum profits for stockholders, how are they to know what it is? Can self-selected private individuals decide what the social interest is?

You'll own nothing and be happy.

As we can see with this long-term perspective, “sustainable development” and the “triple-bottom line” gave way to “Net-Zero” and ESG, which are just like “sustainable development” in that their imprecision allows for lots of cheating and self-serving definitions by both government and the private sector alike. ESG will likely start to fade from public view, and eventually the left will come up with some new term replete with with its own jargon and imaginary concepts. And as before, craven and gullible business leaders will fall for it, and the cycle will repeat itself.

Money Talks, Woke 'Batgirl' Environmentalism Walks

"Cut the crap." That's what the money men have started to say to the Leftist ninnies who have gotten used to telling them what to do. It's getting fun to watch.

The best example is the ruthless work being done by David Zaslav, CEO of Warner Bros. Discovery. Upon taking the reins of the newly created entity -- a product of the merger of the two corporations -- Zaslav wasted no time pulling the plug on the company's $300 million CNN+ streaming service just three weeks after it had launched! Everyone could see that CNN+ was off to a rocky start, but the quick hook was clearly meant as a company-wide warning to anyone who thought he/she/it wasn't expendable.

Since then, Zaslav has made it known that he wants CNN to get back to its hard news roots, rather than indulging in the fanatical progressive bilge that has characterized its programing for many years. The other day he fired one of the faces of the network, Brian Stelter, and cancelled his show Reliable Sources, known mainly for reliably repeating the Democratic Party's every talking point.

Stelter: so long, Tater.

Zaslav also sent shockwaves through the entertainment industry when he cancelled the release of Batgirl, a multimillion dollar superhero flick (of course), because it was way overbudget and test audiences were hating it. Zaslav's options were to either write a blank check for rewrites and reshoots or else just to put the whole project down as a tax write-off, guaranteeing it would never see the light of day. He chose the latter. And that despite Hollywood's shrieking that it was a "bad look" to cancel a superhero movie with a minority woman lead. But that was the point -- for Zaslav, the race-swapping, female empowerment angle meant nothing. He only cared about whether it would make money, and the answer was no.

Similarly, JPMorgan Chase CEO Jamie Dimon made waves recently when he spoke in defense of investing in oil and, especially, natural gas. Speaking to a gathering of journalists and investors Dimon asked rhetorically, “Why can’t we get it through our thick skulls" that American oil and gas production can help us hit emission reduction targets, and thus ultimately is good for the environment. Continued Dimon, "because of high oil and gas prices, the world is turning back on their coal plants. It is dirtier.”

Of course, environmentalist policies and anti-fossil fuel ESG investing trends are a big reason for those high prices. And, as Joan Sammon has discussed here at The Pipeline, Dimon's own company has been one the biggest proponents of the ESG fraud. Still, in this instance, he's absolutely right -- our present energy crisis, which can be blamed as much on our ruling class's fanatical devotion to so-called renewable energy as on Russia's war in Ukraine, has left countries throughout the world searching desperately for reliable alternate energy sources, and the one they've landed on is coal, the consumption of which is projected to return to 2013 levels by the end of the year. Transitioning from coal to natural gas, made possible by the fracking revolution, has led to America leading the world in emissions reductions since the turn of the century. The transition from natural gas to wind and solar has, in practice, meant the triumphant return of coal.

Look what's back.

Environmentalists quickly responded to Dimon's statement by claiming he cared more about his company's investments than the environment. But the obvious response is -- why can't it be both? Dimon knows that his company has been transitioning away from the resource sector mainly to appease the activist class, which is bad for both his bottom line and emission reduction targets. When the economy is booming, he can afford to indulge them. But in the face of an impending recession, he has to start speaking some hard truths, even if it pisses off some culture warriors.

Keep it up boys, its good for the crybabies to be told "no" every once in awhile.