Displace ESG Investing (2024 Apr)

by Barry A. Liebling

If you are an investment professional or make your own investment decisions where should you decide to put your clients’ (or your own) money? Of course, you want your investment to yield a profit. If you do not have this objective, it is not an investment.

But profit cannot be the only goal. You ought to put your money in enterprises that you admire. Or, if that is something you cannot discern, you should be careful to avoid funding businesses that you despise. For example, you should refrain from putting money into firms that you regard as criminal enterprises.

So what – besides profit – are the standards to employ in identifying the companies you will support? The American ruling class is eager to tell you what to do. The mainstream nomenklatura insist that you have two choices. The first option is to submit to progressive-left “ethics.” The modern label for woke investing is ESG which stands for Environmental, Social, and Governance considerations.

Every business enterprise can be rated according to how well it adheres to the directives of the Neo-Marxist clerisy. Does the company get on its knees and submit to the demands of climate-change (global-warming) alarmists? Does it apologize and express shame for having the dreaded “carbon footprint”? To what extent does the business regard its customers and employees as representatives of “oppressed” and “oppressor” groups? Is it pandering to those designated as “oppressed” and lambasting the unworthy “oppressors”? Does the company regard “under represented” oppressed people (with the woke-approved ethnic, gender, and sexual orientations) as unconditionally deserving leadership positions in business? Is the company taking measures to reduce the number of straight-white-males in the executive ranks?

So, according to the woke elite, you should evaluate every potential investment using the ESG template, and always favor businesses that are towing the ESG line.

And, according to progressive-left intellectual leaders, there is only one alternative to ESG investing. You can completely ignore any considerations of morality and ethics and always invest in companies that promise the highest return. Note well what they are claiming. Woke people have a permanent monopoly on all matters of business ethics. If you want to be moral, their way is the only way.

My message to healthy people who are repelled by ESG: pay attention! The leftists are attempting (and generally succeeding) in disarming you. ESG is inspired by Neo-Marxist values, and the “reasoning” behind it is fatally flawed. Think for yourselves. Utilize liberty-oriented free-market-principles of ethics that are appropriate for guiding investment decisions.

And here is some good news. An astute report by Kevin Stocklin documents a backlash against ESG. Some of the largest investment firms have been severely criticized for pushing it. Their “climate-justice, social-justice” portfolios are not performing as well as investments that are not bound by ESG restrictions. Furthermore, government officials in several Republican-majority states are threatening to pull their money out of investment firms that deliberately shun businesses connected to the fossil fuel industry. In response to critics, major woke investing institutions are quietly retreating from their policy of boasting about their dedication to ESG. Mr Stocklin accurately remarks that the progressive-leftist investors are now hiding their advocacy. He recognizes that while the firms’ management does not want to lose clients, they also have no intention of abandoning their ESG mission. https://www.theepochtimes.com/article/corporations-are-losing-the-esg-battle-forcing-them-to-hide-advocacy-5601542

The fact that the biggest players in the investment world worry about customers leaving is an encouraging sign. While they are small in number and defy the ruling class, there must be investment professionals who reject the leftist agenda and support liberty and free-markets. What should they say and do to capture the business of like-minded individuals? Boldly proclaim that their principles are sound and are diametrically opposed to ESG.

Note it is not sufficient to say, “we are not into ESG.” You have to explain what you endorse. What should an investor or investment advisor emphasize? The focus should be on exactly what the ESG people harp on. And the retort ought to describe the right way to think about the topic.

Start with the Environment. The climate has always been and always will be changing, with or without human intervention. Humans have always successfully adapted to colder, hotter, wetter, or dryer climates. With modern technology and wealth we are in a better position to adjust to shifting weather than ever before. It is certain that abundant, inexpensive energy is necessary for human flourishing. And making energy more expensive and more difficult to obtain guarantees disaster. Fossil fuels meet our needs today and in the near future. Alternative sources of energy are fine – providing they can perform effectively and economically (without government interventions or subsidies). Invest accordingly.

Go on to Social. Companies that are worthy of investment dollars embrace individualism. A company ought to treat everyone inside and outside of it fairly. A firm that has the right orientation steers away from CRT (critical race theory), DEI (diversity, equity, inclusion), or any of its related cognates. Neo-Marxism is for the collectivist opposition.

End with Governance. Executives in business enterprises ought to be recruited and promoted based on their individual performance. The official policy of a business that is acting properly is to deliberately discount to zero group memberships. All rewards and penalties should be based on individual actions, and none should have anything to do with ethnicity or sex. This describes a company that deserves investment support.

For people who value individual liberty there is a moral and viable alternative to ESG. It is time for smart investors to put their money into firms that are acting properly. While the woke elite has most of the power and prestige today, with good thinking and actions ESG can be displaced.

*** See other entries at AlertMindPublishing.com in “Monthly Columns.” ***

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