17 Apr ESG is Everything We Feared
One of the most serious problems with the state of political rhetoric in this country is that it is patently dishonest, but nobody cares. Politicians lie, we are told. It’s just the way it is. Joe Biden can run around the country for years blathering on about how his son Beau died in Iraq or how he was arrested in South Africa trying to visit Nelson Mandela in prison – neither of which is true – and the powers that be in the media and politics just shrug and chuckle. “Oh, that’s our Joe.” Biden’s lies are cute, they say, but Trump’s lies were pure evil. And in any case, everyone in politics lies…constantly.
One of the most serious problems with the politicization of business and capital markets is that the very same political players who have encouraged and normalized shameless dishonesty in politics have brought their shtick to markets and investing. They lie and they lie and they lie, and they simply assume that no one will care because…well…why would they? Everyone in politics lies…constantly.
Consider, for example, the op-ed piece published on Friday by The Hill and written by Jesse Ferguson, “a veteran Democratic strategist, consultant, and specialist in political marketing.” Starting with the headline – “Republican nihilism on display in the war on ESG” – the entire thing is crafted specifically to deceive.
The latest example of right-wing nihilism is the MAGA obsession with ESG investments (those informed by environmental, social and governance issues) and “woke capitalism.” These MAGA Republicans are doing the bidding a narrow group of special interest polluters who want to restrict how Americans invest.
Good Lord. Where do we even begin? This has nothing to do with MAGA. It has nothing to do with polluters. And nobody wants to “restrict” how anybody else invests. This is basic stuff here. It’s hardly worth refuting because it’s so over-the-top mendacious. Anyone who knows anything about ESG knows this is insultingly stupid. But he continues…
While the debate about so-called “woke capitalism” doesn’t present a threat for Democrats, it presents an unmissable opportunity to put Republicans in a bind, reveal the nihilism they’re posing and expose their agenda as fueled by special interest polluters.
Ummm…it’s not supposed to represent a threat to Democrats. What the hell is he talking about? It’s supposed to protect shareholders. This ISN’T about partisan advantage one way or the other. The pushback against ESG is the pushback against politics, for crying out loud. Still, he continues…
Democrats must seize this opportunity to frame the conversation around people’s freedom to invest in companies that they want to support, companies that will maximize their returns and that share their values. This has nothing to do with being “woke” or overly politically correct. It has everything to do with giving people the freedom — and the information — to invest their money where and how they want.
Right. Wait. What?
This is the case against ESG, not for it. The deception here is next-level.
[W]e need to expose MAGA markets (#MAGAMarkets) for what they are. The right wing isn’t just opposed to the American people having the freedom to invest as they see fit; they’re trying to enforce their extreme ideology by threatening and even punishing American businesses that won’t promote the extreme MAGA views.
Again, this is just insane. Either this guy is thoroughly ignorant of what ESG is or he is the most flagrantly and unremorsefully dishonest hack Gaia ever made. Or, as is likely the case, it’s a little of both.
Businesses aren’t interested in environmentally responsible investing because they’ve suddenly “become woke” or “liberal” or anything like that. They’ve become interested in this type of investing because it protects the return on their investment and it’s what their consumers want to see them do.
One more time, pardon us for our confusion, but…what? Businesses are interested in ESG investing? Which businesses? Does this guy know anything at all about capital markets? Does he think that Disney, for example, is investing in ESG? Does he think that by promising to make a shift to “clean” energy “businesses” are investing in ESG?
We won’t waste your time here trying to figure out which is worse, the dishonesty displayed in this op-ed or the ignorance. It’s both. The Hill – a publication for which we have written – really ought to be embarrassed to have published something so patently false and misinformed.
Beyond that, the absolute worst part of the whole thing is the idea that this a partisan political issue, one that Republicans are fighting and that Democrats therefore must also engage. On the one hand, we’re tempted to say that we are shocked at how quickly ESG turned into a partisan issue and how thoroughly some people have embraced the idea that this is about one “team” fighting against the other one. On the other hand, this is precisely what we feared and what we warned against in the conclusion to The Dictatorship of Woke Capital:
The choice here is simple. If we as a civilization allow even the spirit of capitalism to become part of “the political” and part of the total state, then we will have order—for however long that lasts. If we resist the politicization of business and of capital markets, however; if we determine for ourselves that disorder and depoliticization are the preferable options, then we not only preserve liberty but also preserve the spirit of innovation and expression that harnesses liberty to create wealth and prosperity.
It does not matter, in the grand scheme, if the “values” advocated for homogenization of business and markets are reasonable-sounding and bear reassuring names like “pragmatism” or “neopragmatism.” All that matters is that this attempt to shift the normative discussion away from the shared morals of our civilization and to the “values” of friend-enemy dichotomy will ultimately destroy everything else in the process.
When we first met Derek Kreifels, the CEO of the State Financial Officers Foundation, our reaction to his idea about states pulling their pension and operating funds out of the hands of the Big Three passive firms (BlackRock, Vanguard, and State Street) was that it was brilliant. Not only would it serve as a rebuke to the one-size-fits-all, top-down investment practices of the ESG giants, but it would appeal not just to red states but to blue states as well. What state officials wouldn’t want to have state funds controlled at the state level and managed by firms who were compelled to keep specific state interests in mind? Who could possibly object to that? And more to the point, why would blue states not share the red states’ desire to take broader state interests into account in investing, allowing officials to meet their fiduciary obligations to all constituents, not merely pensioners?
Boy howdy were we naïve.
Because the state officials resisting the Big Three happened to be from red states, the media and political establishments couldn’t help themselves and fashioned a narrative pitting red against blue on the question of ESG. They couldn’t see the issue in any other terms. If the reds were against it, then the blues (themselves included) must be for it. How could it be any other way?
Unfortunately, that way madness lies.
ESG is not a partisan issue – or, at least it shouldn’t be. If this Jesse Ferguson person were actually concerned about “the American people having the freedom to invest as they see fit,” then he’d know that ESG – especially when forced upon the masses by a handful of massive asset management firms – is precisely the opposite of that. He’d also know that restricting the use of ESG in public investments has nothing to do with telling anyone, anywhere how to invest. The very idea is ridiculous.
But he doesn’t care. And nor does he care about accuracy and honesty. Rather, he cares about scoring partisan political points. Nothing more. Nothing less.
