ESG Investing – Environmental Gift or Grift?

Wall Street and Washington are ebullient over Environmental, Social, and Governance investing. Despite the sector's lackluster performance this year, investment funds are gung-ho over companies that adhere to undetermined ESG standards. But while The Street might want to bring Davos values to the United States, Florida Governor Ron DeSantis (R) is not looking to invest in this progressive agenda.

DeSantis Draws the Line on ESG Investing

DeSantis and fellow trustees of the State Board of Administration (SBA) approved a resolution to eliminate ESG considerations from state pension funds. Under this new plan, the Sunshine State will direct Florida's fund managers to invest state money that prioritizes the highest return on investment for taxpayers and retirees instead of "the ideological agenda" of the ESG investing movement. Moving forward, these considerations will no longer be a part of how fund managers make financial decisions for the $186 billion fund.

“Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity," the governor said in a statement. “With the resolution we passed today, the tax dollars and proxy votes of the people of Florida will no longer be commandeered by Wall Street financial firms and used to implement policies through the board room that Floridians reject at the ballot box. We are reasserting the authority of republican governance over corporate dominance and we are prioritizing the financial security of the people of Florida over whimsical notions of a utopian tomorrow.”

This comes soon after the governor pushed legislation that would update the state's Deceptive and Unfair Trade Practices statutes to ban "discriminatory practices" by financial institutions using ESG social credit score measurements. Moreover, DeSantis has also advanced efforts to ensure civil servants vote in the best interests of voters' values rather than embrace the principles of "the ESG mania taking hold of Wall Street and Washington."

What Is ESG Investing?

In 2006, the United Nations' Principles for Responsible Investing (PRI) report mentioned ESG and how it could be integrated into the pecuniary evaluations of businesses. At the beginning, dozens of investment firms with $6.5 trillion in assets under management agreed to incorporate ESG principles into their framework. This number has since ballooned to $80 trillion.

Before the coronavirus pandemic, the World Economic Forum (WEF) homed in on "socially responsible investing" in a report titled "Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution." The authors aimed to establish a new stakeholder capitalism initiative by putting together 22 quantitative core metrics, as well as 34 sub-metrics that emulate the UN Agenda 2030.

ESG proponents desire companies to embrace left-leaning criteria to advance "sustainable development goals." But most of the objectives are pretty vague, from "climate action" to "responsible consumption and production." Put simply, it is an à la carte menu of progressive goodies held up by the pillars of “people, process, and product.”

Hypocrisy, Thy Name Is ESG

It is safe to say that ESG is nothing more than a politicized tool to ensure the financial markets fall in line with the rest of the bobby-soxers on Team Klaus Schwab.

Tesla Motors CEO Elon Musk went as far as calling it a "scam" that has been "weaponized by phony social justice warriors." He made these remarks when the electric vehicle maker – a company that attempts to transition the world to a green economy – was eliminated from the S&P ESG Index. Perhaps S&P was offended by Musk's tweets and memes.

In addition to metastasizing into a left vs. right subject, it has also transformed into nothing more than a marketing slogan. "Greenwashing" has become a chief problem behind this ESG blitzkrieg, with firms more focused on disguising their businesses as being green rather than going green in order to attract some green. As Liberty Nation reported earlier this year:

"Last year, a Schroders Institutional Investor Study discovered that nearly two-thirds of professional investors identified greenwashing as a notable difficulty when selecting sustainable investments. In addition, an April Harris Poll survey for Google Cloud found that 58% of companies admitted to committing greenwashing. In the United States, that figure climbed to 68%. Moreover, two-thirds of C-suite leaders worldwide wondered if their firms’ sustainability initiatives were authentic."

What is even more comical about this indoctrination campaign is that everyone has been concentrating on the "E" without any regard to the "S" or "G." So, for example, institutional funds dumped money in Russia's state-owned Gazprom, dismissing a wide array of human rights concerns. The investment community continues to pour hundreds of billions of dollars into China, although the nation's depravity toward the human population has been under the spotlight.

The State’s ESG Nudge

Legendary economist Joseph Schumpeter averred that the greatest democratic institution is the market. This is true until the federal government intervenes and pushes the marketplace in a particular direction. President Joe Biden and his administration have established the foundation for the federal government to legitimize and advance ESG-based regulations. In March 2021, the White House announced updates to the Employee Retirement Income Security Act of 1974 (ERISA), which essentially placed emphasis on ESG investing. Indeed, the politicians and bureaucrats apparently need to nudge the latest grift to ensure the world toes the line of leftism.