24 Jan The World According to Brian Moynihan
BlackRock CEO Larry Fink was not the only finance-world bigshot to speak last week at the World Economic Forum’s annual conference at Davos – not even close. And while Fink’s gripe session about how ESG has become “ugly” and “personal” may have generated the biggest headlines, for our money, the most important presentation by an American finance professional was that given by Brian Moynihan, the CEO of Bank of America.
For any number of reasons, Moynihan attracts far less attention and scrutiny than does Fink, but that doesn’t mean that he is any less a threat to free and fair capital markets and the free exchange of ideas. Indeed, while Fink draws much of the fire of opponents of ESG, Moynihan may be even more pernicious and destructive a force than his better-known fellow traveler.
For years, Moynihan has worked directly with Klaus Schwab and the WEF to create international standards to impose on corporations, presuming to usurp the power of investors to judge a company’s worth and the power of voters worldwide to determine their nations’ policy agendas. As the chairman of the WEF’s International Business Council, Moynihan has – in conjunction with Schwab – ceaselessly endeavored to compel corporations to bend to the will of the “Davos Elite.” And last week, while Larry Fink was busy whining, Brian Moynihan could hardly control his excitement:
Bank of America Chief Executive Brian Moynihan said Wednesday that current efforts to produce a set of official global standards on ESG issues were vital to “align capitalism with what society wants from it.”
In 2020, Moynihan — who is also chair of WEF’s International Business Council — and WEF founder and chair Klaus Schwab worked with the big four accountants to create a set of common stakeholder metrics for companies to follow.
He said it was now important to “go to the official side” and was supporting the new International Sustainability Standards Board set up by non-profit the IFRS….
On Wednesday’s panel, IFRS Chair Erkki Liikanen said that since setting up the board they had consolidated their work with that of other groups with niche expertise, and were working on a final standards publication to be released in the middle of 2023.
This is due to comprise a set of general non-financial sustainability disclosure requirements for companies, and a set specifically on climate. Liikanen said it would then need adoption and endorsement around the world.
Moynihan also said it was crucial that sustainability and ethical standards became official and global.
He said informal standards-setting meant companies could hide poor sustainability practices “further down the stream” of their supply chains or divest certain assets, or else claim they are too small to carry out checks.
But with standardized, cross-jurisdiction rules that are part of companies’ annual reports and audited, he continued, “then frankly, an investment manager, a consumer, society, others can sit there and say, here’s a line that is acceptable and you’re either above it or below it.”
“If you’re below it we shouldn’t do business with you, and if you’re above it, tell us how you’re making progress along these important things.”
“Which, at the end of the day, will align capitalism with what society wants from it and get us going faster.”
Now, we know that all the acronyms get a bit confusing, but the IFRS, to which Moynihan now defers, is the blanket organization. It has created ISSB, which will issue final standards and be the global arbiter. The Task Force on Climate-Related Financial Disclosures (TCFD) created a framework that has been incorporated into the ISSB and will constitute the largest part of its final disclosure rules. For those of you without photographic memories, we discussed the TCFD a couple of months ago, in a piece in which we described Michael Bloomberg’s efforts to make himself the greatest Bond Villain of all time. All of which is to say that Brian Moynihan explained last week that he and Klaus Schwab are now firmly aligned with Team Bloomberg in the effort to fleece American corporations.
Beyond that, we think Moynihan’s discussion bears greater examination for a couple of reasons.
First, you will note the combination of arrogance and cluelessness that characterizes the CEO of the second-largest bank in the world. Moynihan thinks it’s important for corporations to be held to certain standards – “here’s a line that is acceptable and you’re either above it or below it….If you’re below it we shouldn’t do business with you….” That’s fine, we suppose, but what gives him the right to determine where that line is, what is or is not “acceptable?” Clearly, this is a values-driven assessment. Why should any of us normal, non-elite, non-billionaire Americans assume that the Bloomberg-Davos crowd’s values reflect our own or, as they seem to believe, are better than our own? Why would Moynihan believe that his values are more relevant than ours or that anyone, anywhere should defer to him on these questions? In short, who the **** does he think he is?
We know, for example, that BoA is big on racial equity and “racial re-education.” We know that Moynihan, like his friend Schwab, is worried about sustainability and the transition to a net-zero economy. And yet we also know – via its 3rd Quarter 13 F filing – that BoA’s asset management arm has almost $1 trillion in assets under management, and its largest single holding is Apple. You know Apple, right? The company that is tied at the hip to the Chinese Communist Party, that has been credibly accused of benefitting from slave labor in Xinjiang province, that uses lithium batteries made with cobalt mined by child slaves in the Congo, that is aggressive about union-busting among its U.S. employees, that has stores in countries where it’s a capital crime to be gay, etc., etc., ad nauseam.
Why would anyone think that Brian Moynihan has any clue what companies WE should or shouldn’t do business with, when he’s up to his eyeballs in Apple? Again, just who the **** does he think he is?
A second thing to notice about Moynihan’s Davos discussion is his cavalier use of the term “capitalism.” He appears to believe that the concept is malleable, that it can change to meet different value structures and accomplish different, pre-determined ends.
Now, we’ll be the first to concede that “capitalism” can be a little hard to define conclusively, but in this case, that’s beside the point. When assessing the capitalist bona fides of an economic system, it’s useful to think of the inverse of Justice Potter Stewart’s description of pornography. “We know what’s NOT capitalism when we see it.” And the type of public-private partnership advocated by Moynihan, Schwab, and the rest of the Davos glitterati is NOT capitalism. It is, in truth, the textbook definition of corporatism.
Moynihan says that he intends to “align capitalism with what society wants from it.” Not only is that NOT how capitalism works, but he has no idea what “society wants from it.” All he knows is what the financial and political elites want from it, which is for the masses to be both satiated and sedate.
There is little question that Larry Fink is the perfect foil for the pushback against ESG. He is, after all, the guy who pushed ESG into the financial mainstream and who insists that he is the sole arbiter of what does or does not meet the sustainable investment threshold.
At the same time, however, Brian Moynihan is likely a better, more accurate embodiment of what we mean when we use the term “woke capital.” He is a corporatist functionary, fully convinced that the values he and his ilk embrace are not only better than yours (and ours, and everyone else’s) but also more likely to save us all from ourselves.