In the United States, the ESG economy is not coming back

comment

In America, any discussion of the environment has turned into political fodder and one of the latest maneuvers by the unelected elites is the attempt to implement an uncompromising ESG investment monitoring policy.

What is ESG?

ESG investing focuses on investing in companies that score high in the following tenants: the environment; social responsability; and corporate governance. For a proper explanation of what ESGs are, let’s look at the definition of MSCI, the index giant. MSCI has a widely accepted ESG rating system. For clarification: E stands for environment, S stands for social and G stands for governance. The guidelines are as follows:

“Under the environmental dimension, key issues include: contribution to climate change a company’s use of ‘natural capital’ (such as biodiversity and the supply of raw materials) pollution and waste management use of green technologies and energy renewable;

In the social sphere: health, safety and development of the human capital produced and consumer safety; relations with the community; social opportunities;

Under governance: fairness and responsibility of corporate governance, transparency and ethics “.

Companies are evaluated on the basis of their participation in the aforementioned categories. The higher the rating, the more compliant a company is. Companies that score lower on ESG ratings and indices may have less access to finance, or perhaps lending rates are higher.

A good modern example of what happens when confronted with room ESG monitors is the current lack of funding available for US fossil fuel companies. However, Apple scores very high scores largely from Apple’s adoption of California tax and social justice, no matter the fact that the company creates countless plastic waste, is a big emitter, and has related issues. to the workforce.

Because ESG won’t work in America

In places like Europe, ESG has worked quite well, but Europe has a smaller land mass than the United States and a larger population (740 million people). Europe must be full of resources. In America, we also need to be more enterprising, but this will not be achieved by a government mandate.

In the US, the ESG economy simply doesn’t come back. America still doesn’t even have a carbon credit system, how irrational it is to think that ESG monitoring can be implemented with global success.

In August On January 30, 2022, Allison Schrager of the City Journal wrote about the bursting of the ESG bubble, stating: “For a while, ESG seemed like a good bet and the values ​​looked low. In a falling market, however, the true cost of ESG is starting to reveal itself and in a more volatile and energy-scarce market, it will only become more expensive. Policy aside, few people or fund managers will tolerate funds that underperform and this may be the real reason why ESG funds have achieved. the peak “.

Allison continued: “ESG funds claim to invest in companies that meet environmental, social and governance objectives. This means that they only invest in companies that do good things for the environment, such as using clean energy or avoiding pollution, and that they adopt fair working practices, pay their employees well, and are committed to the diversity of not just their people. but also of its own company council “.

It could be the heavy and uncompromising approach; or perhaps the anti-business agenda, but add to that 50 different states with different governments and a patchwork of largely inefficient federal institutions (the EPA, the SEC, etc.) and any attempt to develop and enforce a global ESG policy in the United States it is infinitely impossible, if not completely unconstitutional.

To make matters worse, ESG has become a partisan issue in culture wars. Look no further than John Kerry, the United States special presidential envoy for climate. Kerry is a difficult puzzle; despite his public devotion to the environment, he is polarizing tremendously from his long life as a career politician and his dedication to the Davos lifestyle. Do you think the average American trusts that guy?

What about the recent Inflation Reduction Act (IRA)? The IRA, which was anything but an attempt to reduce inflation, has nearly $ 370 billion in climate and clean energy supplies. This will only further isolate the public.

Furthermore, if ESG has a future in America, it is very likely to emerge from the leadership of the private market. Take multibillionaire heir Lukas Walton, for example. He is the grandson of Walmart founder Sam Walton. His investment business recently announced that 90 percent of his endowment has been transferred into “mission-related” investments, largely focused on sustainability and equity.

At best, any form of ESG funding in the United States must be a unified and compromised effort, combining right, left, polluter and green. It cannot be dictated by smart ultraliberals and religious, who have no contact with business and finance, have no contact with the environment and have no contact with the common good.

In addition to the economic fundamentals, the ESG also died from the anti-American sentiment surrounding it. The fight against climate change should not be a stepping stone into the ideology of the awake crowd. The ESG hangs in the balance on the ideologies of French neo-Marxist and postmodern thought; awakened totalitarianism has no place in America, especially in our financial markets.

In all reality, the ESG bubble has burst from a self-inflicted wound. ESG was killed by America’s problems; from the systematic corruption rooted in American business and finance and from ultraliberal totalitarianism. The US version of ESG has become a social justice bureaucracy.

Let us not forget, in the words of Helen Pluckrose, “our current crisis is not of left against right, but of coherence, reason, humility and universal liberalism against incoherence, irrationalism, zealous certainty and tribal authoritarianism”.

Next time, conservatives are accused of bad environmental policy, counterattacking by blaming America’s disjointed tribal social justice brigade for turning the environment into a partisan issue.

The views expressed in this article are the views of the author and do not necessarily reflect the views of The Epoch Times.

To follow

Chadwick Hagan is a financier, entrepreneur, author and columnist. He is the founder and director of numerous companies and is a partner of the investment banks Hagan Capital and Eaton Square Ltd. He is a member of the Royal Society of Arts and lives in Atlanta and London.

.

Leave a Comment

%d bloggers like this: