In recent months there has been growing awareness about the detrimental nature of the environmental, social and governance construct known as ESG. Using the pretense of social diversity and environmental protection allegedly needed to repair damage caused by capitalism, ESG represents an expanding threat to many industries, to the larger corporate culture and increasingly, to America itself.
The ESG construct creates competing frameworks, reporting systems, and scoring systems for environmental and social reporting—but without quantifiable economic measurements or metrics. While presently focused on publicly traded companies, ESG is being used to evaluate private companies and eventually even individuals, thus creating a social credit score not unlike what Communist China uses to oppress its citizens.
While the origins of ESG reach back over two decades, with the initial funding by the World Economic Forum (WEF) of the Carbon Disclosure Project (CDP), the network that grew from that initial effort consists predominantly of governments, non-profit organizations, and large publicly traded companies and their capital and banking partners. Together they have created a validation feedback loop that promotes political and social change using the capital markets—other peoples’ money—to re-direct investment capital toward companies that align with the political and social worldview of ESG activist profiteers.
Though touted as a non-political effort, but sounding conspicuously ideological, the progenitors of ESG assert,“ without the intervention of non-market entities such as the state, international organizations and social forces, capitalism as an economic system simply will not safeguard our planet."
While the legality of re-directing investor capital to achieve political and social outcomes has yet to be adjudicated, there is no question that banking and asset management firms intend to force political change.
In 2017, BlackRock CEO, Larry Fink, said he intended to change the direction of corporate America. “At Blackrock we are forcing behaviors,” he said of the company’s ESG scoring approach. “You have to force behavior, and if you don’t force behavior whether it’s gender or race or any way you want to say the composition of your team, you’re going to be impacted.”
By incentivizing companies with the prospect of higher management and consulting fees, and the ability to direct the capital toward companies in their portfolios that reflect their politicized world view, investor "best interest" is sacrificed. Best interest, a legal obligation, has never been part of the calculus of the ESG gangsters. Knowing that markets and democratic institutions would never offer them a path to their vision of the world, they need other peoples’ capital to force the creation of their dark, unfree world.
While profit-making would still not make ESG social scoring any more acceptable, the current capital re-orientation efforts have been unequivocally disastrous for investors. In June, BlackRock posted a stunning $1.7 trillion loss of investor capital, the largest loss ever for a single firm in a six-month period. Helping BlackRock achieve these disastrous outcomes was Unilever, run by Alan Jope. The consumer-goods giant put its sustainability plan to a shareholder vote where it passed with 99.6 percent shareholder support. Let’s hear it for groupthink!
At the time Jope said he credited BlackRock with leading the support and described the investment firm as "one of the finest commentators on sustainability and what companies should be doing.” Not surprisingly Jope was recently fired. Investors don’t agree with BlackRock’s Fink, Jope or the WEF. Jope’s tenure began in 2019 and he immediately began parroting the WEF’s stakeholder capitalism spiel and espoused the same ESG mandates promoted by BlackRock.
Through this alignment of overly interested global actors and self-interested financial services actors, the ESG construct has been able to get a footing in the boardrooms of publicly traded companies. But needing to create the perception of upholding fiduciary obligations, "stakeholder capitalism" has become the philosophical underpinning ESG. By expanding and conflating shareholders (investors) with stakeholders (everyone else), the activist class believes it can perpetrate an anti capitalist slight-of-hand: changing a free society into a centrally planned and controlled society.
According to WEF Founder, Klaus Schwab, "stakeholder capitalism" is a system in which private corporations are moral trustees of society and work for the benefit of everyone. Stakeholder capitalism is celebrated by BlackRock to Bank of America and from the WEF to Wall Street. Certainly not groups one thinks of as “working for the benefit of everyone.” Toward their centrally planned end, Bank of America CEO Brian Moynihan said, "to uphold the principles of stakeholder capitalism, companies will need new metrics. For starters, a new measure of 'shared value creation' should include 'environmental, social, and governance' (ESG) goals as a complement to standard financial metrics. Fortunately, an initiative to develop a new standard along these lines is already under way, with support from the 'Big Four' accounting firms and the International Business Council.”
Unconcerned about the rights of investors, and feeling triumphant over publicly traded companies, ESG activists are now more assertively turning their sights toward private equity and even individuals. While many of the largest private equity firms have already willingly begun to report their ESG data, many still do not. According to CDP’s strategy document:
Accelerating the Rate of Change: 2021-2025… businesses, including private companies, need to overhaul their operations and ensure they will remain viable within environmental boundaries. Governments must set the example and provide the regulatory environment that supports and encourages responsible corporate action.
The message is clear: do what you’re told or you will not be permitted to participate in their centrally planned society. From publicly traded companies to private companies, the activists class intends to control everyone, including individuals.
Those efforts are already beginning. Bans on natural gas-powered stoves and heating systems in California and Washington State for new construction are already in place. But even closer to home are the new generation of appliances. Some features are only available through an app the owner must upload on their phone. No app, no access to those feature. More creepy still are pregnancy tests. Traditional indicators like +/- or single versus double bars have announced to women for years of the impending arrival of a crumb cruncher. In the new world of social scoring, however, those tests now offer a “result reader” that is available through an uploaded app on her phone. Slowly changing the behavior of consumers will allow these societal score-keepers to more easily track an individual’s carbon footprint.
Many legal challenges loom against ESG advocates and the firms that do their bidding. As in previous conflicts throughout history, victory isn't won simply by the efforts of businesses, but rather by individuals willing to defend the lines of liberty and personal autonomy.