02 Oct PUBLIC PENSION CORNER #59: Why is Europe Burning?
NEWS:
I. Vanguard Reports that Younger Investors are More Amenable to ESG Voting
Vanguard, the world’s second-largest asset manager and the largest manager of passive investments – has released the latest data from its Investor Choice proxy voting program, which shows that younger investors are more ESG-aligned:
Investment manager Vanguard released data from its Investor Choice proxy voting choice program for 2026, revealing that the firm’s ESG-focused voting option remains by far the most popular among younger investors, and that younger investors and female investors are selecting ESG-focused voting policies at significantly higher rates than their older and male counterparts, respectively….
Policy options available through the program include the “Company Board-Aligned Policy,” voting in accordance with the recommendations made by the portfolio company’s board of directors; “Glass Lewis ESG Policy,” voting in accordance with the recommendations of Glass Lewis’s thematic ESG Voting Policy, which follows the view that investment returns can be enhanced through a focus on disclosing and mitigating risks related to ESG issues; “Fund Proxy Policy,” voted in accordance with the proxy voting policy that has been adopted by the Fund’s Trustees; “Mirror Voting Policy,” which casts votes in approximately the same proportions as votes cast by other shareholders of the security, and; “Egan-Jones Wealth-Focused Policy,” added in 2025, which rejects ESG proposals “unless they directly contribute to revenue generation at the company receiving the proposal.”
Vanguard’s new report revealed that the Glass Lewis ESG policy was by far the most popular in 2026 with younger investors, with 38.8% of investors under the age of 30 selecting the policy, and 36.3% of those between the ages of 31 – 45, followed in both groups by the Fund Proxy policy at 29.3% and 29.7%, respectively.
II. EY Tries to Quantify Sustainability Costs
EY has published a new white paper/framework in which it attempted to put a number on the financial costs and opportunities found in corporate sustainability decisions:
EY has launched a new framework designed to put financial numbers behind sustainability risks and opportunities, as companies face growing pressure to justify climate and ESG spending in conventional business terms.
The EY Sustainability Value Bridge seeks to connect sustainability factors directly with financial performance. It focuses on how environmental and social pressures can erode enterprise value, as well as how companies can protect or create value through targeted investment….
EY divides the financial effects of sustainability into value erosion and value realization. The latter has two components. Value protection focuses on mitigating costs, while value creation examines opportunities to generate new revenue and growth.
COMMENTARY
By Stephen R. Soukup, President and Publisher, The Political Forum
“Why is Europe Burning?”
As you may have seen, read, or heard, France is burning. Literally. “Students” are upset, and so they’re burning their schools – and the cities those schools are in, and the firefighters who serve those cities, and…well, everything. I’m not entirely sure how burning everything to the ground is supposed to make the schools any better, but then, no one asked me. No one ever does.
As I say, the current bout of protests is, supposedly, about education, especially in minority areas. And while France is perpetually plagued by mass protests – a national feature for almost two hundred and forty years now – this round of unrest seems different from most of the rest, more aggressive, more uninhibited, more Robespierre-ish, if you will. That, plus the fact that France is not the only European nation presently experiencing widespread social unrest, suggests that education is not the real issue here. It is an excuse, more than anything.
A big part of the problem here is an ongoing intra-continental clash of civilizations. With a great many recent migrants from outside of Europe, a great many native Europeans upset with mass migration, and a ruling class that is, in many ways, unconcerned about the needs and wants of either of the other two factions, it seems likely that the current unrest is just the tip of the proverbial iceberg. Europe, in general, can probably expect unrest for the foreseeable future, probably at increasing frequency and violence. In short, this is the American “ruling class vs. country class” story on steroids, with mass immigration as the ostensible spark.
At the same time, it’s probably worth noting that this is an economic story as well. If France, Germany, and the UK were growing economically; if they were producing goods, services, and especially jobs, then the civil unrest would almost certainly be less prominent and less problematic than it is. A rising tide lifts all boats, as President Kennedy used to say, and it can also plaster over a great many otherwise festering social problems.
Unfortunately for everyone involved, the economic engines of growth in Europe have been idled. Germany, the UK, and France are the third, sixth, and seventh largest economies in the world, making them the second, third, and fourth largest economies in the West. And since the end of the pandemic, all three have mostly seen anemic economic growth. Germany is only now emerging from two years of negative GDP growth, while France and the UK sit just below or just above 1% currently and for the last several years. Worse still, none of the countries has had any significant job growth. Germany is currently seeing unemployment rates rise, the UK is also seeing employment fall, and French unemployment has risen for six straight quarters. All three have seen government spending rise sharply, with Germany trying (marginally successfully) to spend its way out of recession, the UK nearing the limits of its fiscal rules, and France stuck in a fiscal quagmire it may never escape. France and the UK are being hit hard by the bond vigilantes, with France among the worst in the developed world, in the midst of a serious credit crisis.
In other words, as I said, the social unrest in Europe at present likely has a significant economic component. And given that this is Europe we’re talking about, that means it also likely has an energy component.
Whether any of them will ever admit it or not, the leaders of Europe have largely created their own economic problems, and they have done so primarily by dint of their energy policies. German de-industrialization, for example, is a real phenomenon, and at its heart is an absolutely single-minded determination on the part of Germany’s leaders – especially the formerly beloved Chancellor Angela Merkel – to make the nation a global “clean” energy leader. That was an ambitious goal, and one that has proven elusive to say the least. As National Review’s erudite “Capital Matters” editor Andrew Stuttaford put it nearly two years ago:
Germany’s vital industrial sector continues to struggle as it contends with the cost of two of former chancellor Merkel’s reckless bets, the first on the availability of “cheap” Russian gas, the second on “investing” heavily in renewable energy (made more reckless still by resuming the rundown of Germany’s nuclear power stations). The net effect of these wagers has been to increase German energy costs to a degree that has endangered the ability of its energy-intensive industrial sector to compete. Talk of deindustrialization is not an exaggeration.
As if all that were not enough, the coerced transition to EVs and the opportunity it has given Chinese carmakers is destabilizing Germany’s automakers, a key element in the success of Germany’s industrial sector, in terms of both the cash they generate and the expertise they gain. Not only that, they help nourish the ecosystem of smaller industrial companies that has been another of Germany’s strengths.
And job cuts are under way.
The Germans, being hard-headed realists, would never allow such foolishness to endure for long, though, would they? They would never look at the wreckage of their energy policies and decide that rather than correcting those policies, they should double down on them. Or would they?
The government of Germany announced the release of its “Roadmap for Transitioning Away from Fossil Fuels,” setting out the country’s strategy to end the use of coal, oil and natural gas by 2045 at the latest….
In a statement announcing the release of the plan, Schneider emphasized that the shift away from fossil fuels represents “not only a climate strategy, but also an economic policy strategy”….
That’s…uhh…a strategy, I guess, albeit not a great one. For the record, the above article notes that Germany is the third nation to make such a commitment, the other two being the Netherlands and, of course, France. France has some room to maneuver, given that its grid is mostly nuclear, but that doesn’t address its agriculture and trucking needs, two very politically volatile sectors of the economy. As for the UK, its businesses are currently paying the highest prices for electricity in the world, and the cost of power for industrial businesses is FOUR TIMES HIGHER than in the United States. Two weeks ago, Britain’s energy secretary – technically the “Secretary of State for Energy Security and Net Zero” – stated that bringing those prices down is her priority. Unfortunately, she went on to explain how she intended to do so: “The sprint to clean power, by the way, wasn’t about climate, it was about affordability.” Because of course.
Long-time readers may note that I spent a great deal of time earlier this decade noting the fiduciary failures of the executives at Starbucks, who certainly appeared more concerned with advancing their political predilections than with advancing the shareholders’ return on investment. Interestingly, even the folks at Starbucks seem to have received the message that this is, ultimately, untenable:
The Financial Times reported Tuesday that Starbucks has revised or abandoned pledges to cut waste and water use in half, even as it reconsiders a goal to reduce carbon emissions by a similar amount.
The newspaper also reported that Starbucks executives focused on sustainability have been particularly hard hit by job cuts at the company over the last two years….
Starbucks’ annual Global Impact Report, the most recent version of which was published in July and updated last week, says that the company is working “to evaluate and adopt a more focused set of sustainability goals.” “In many cases, we met the goals we set. In others, we learned more about what it takes to drive lasting change across a complex, global business,” the report notes.
Oh.
The bottom line here is that those who are responsible for the well-being of others – be they elected officials, corporate fiduciaries, or investment fiduciaries – can’t be stubborn and can’t be single-mindedly dedicated to achieving ideologically tinged political ends. Their beneficiaries/constituents deserve better, legally and morally. One wonders when the politicians of Europe will become as enlightened on this matter as the executives of Starbucks. One also wonders how much of the continent will burn in the meantime.
