A BAD IDEA
Discover more from AFP HEARTLAND COMMON SENSE Newsletter
ESG stands for Environmental, Social and Governance. It is supposed to be a set of standards for how a company operates in regard to the planet and its people. ESG is supposed to be how “woke” socially conscious investors screen potential investments. It is supposed to consider how a company performs as a steward of the planet. The problem is that ESG proponents have forgotten the people part of the stewardship goal. The Net Zero Asset Managers initiative (NZAM), is an alliance of asset managers committed to supporting net-zero greenhouse gas emissions by 2050 or sooner. Two major asset managers using ESG to screen shareholder investments were BlackRock and Vanguard. State Street was the third major ESG proponent. Vanguard quit the alliance “after a considerable period of review.”
BlackRock continues to position itself as an industry leader in ESG investing. However, asset management firms have a fiduciary responsibility to investors. Their job is to manage the funds they are given for the exclusive purpose of providing a return and paying plan expenses. This means they are required to run their plans solely in the interest of participants and beneficiaries, not go all-in on misguided climate alarm-ism “deep decarbonization policies” that are contrary to their fiduciary responsibilities. Vanguard discovered that ESG negatively impacted state pension plans and state regulators were waking up to that fact. So, Vanguard opted out. But BlackRock? Why they just decided to run a national advertising campaign showing how wonderful they are at managing pension plan investments. Do they really think a young fireman and his wife celebrating the birth of their first child want their future pension to shrink? What a bunch of Al Gore rot. We will see what the state pension regulators say about that.
The current situation in the world, in particular the Russian invasion of Ukraine has brought the fragility of the energy supply chain to the forefront. Many think that one solution is to release the great American energy industry to do its thing--find, develop and produce energy. The fossil fuel components are coal, natural gas and petroleum. They are the quickest remedy to the current situation, but they are not instantaneous. It takes years to explore and produce oil and natural gas. Building a petroleum refinery today is nearly impossible due to regulations and artificial constraints on capital, the actual goal of ESG. Nuclear has the same issues as coal--regulatory restrictions and extremely long construction schedules. California, under the whacko leadership of Gavin Newsom, is about to shut down their last nuclear power plant. Where is the power to charge all those EVs in California supposed to come from?
Consider the fact that most of America’s electrical power comes from coal. Coal is immediately available and very affordable as a fuel supply. Coal can be stored on site so it is less susceptible to supply disruptions. But no coal-fired power plants are being built in the US and existing plants are being closed down. Only China and India are building coal-fired power plants and at a record pace. They may be on to something.
ESG is just a stupid idea of the jet-setting global elite, and it is destroying America. Unfortunately, you can’t change the situation any time soon, even with an election of smarter people to high office. The problem is that the establishment leadership of both sides have accepted ESG. Some may have grown wealthy as a result. So, in case you have ever wondered, unicorns may not exist, but they sure seem to leave around a lot of crap.