Reblogged:Is ESG Fraud Finally Coming Into Focus?

[Gus Van Horn blog]

At Issues and Insights is a piece titled "'Woke' Asset Managers Rip You Off -- Using Your Money," which explores the trend of large investment funds refusing to invest in some sectors -- or buying enough shares in major corporations to become able to "pressure ... management to shoot their own business in the head."

Chances are, you have either never heard of this at all, or when you did, it flew under your radar as ESG, another abbreviation thrown around as if our discourse had no more significance than the letters in an alphabet soup.

Those few who bother to check will learn this stands for "Environmental, Social, and Governance." Given that environmentalism has thoroughly saturated the culture already, most people will lose interest at this point: And so the poison will go unnoticed as just so much anodyne quasi-aspirational fluff.

Whether that's intentional or not, if you read the piece, you will see that this might well be what the pushers of ESG want, because these investment managers are "applying these non-financial factors as part of their analysis process" when they should be maximizing returns on your money.

The editorial puts it more bluntly, although not bluntly enough, when it discusses what these people are doing to our energy sector:

Will the likes of the ironically-named BlackRock make your investments and our economy go up in smoke? (Image by Adrem68, via Wikimedia Commons, license.)

Asset managers cite ESG funds' strong recent performance, claiming climate "risks" and "repricing" of fossil-fuel assets make them superior investments. But those phenomena are at least in part of the firms' own making, as they destroy the value of fossil fuel reserves and production -- a number of asset managers now outright refuse to invest in coal, for example, and thereby bid up the value of climate-sensitive assets. This self-dealing outright violates managers' fiduciary duty to shareholders holding fossil-fuel interests and other asset classes that depend on the sector, not to mention workers in pension funds they manage or advise. [bold added]

This comes after also noting that these crooks endanger energy reliability and will cost workers in these sectors their jobs.

This analysis is incomplete, but it is a good start, and I am glad to see this issue getting more attention.

I would recommend that anyone passing by who does find this interesting listen to energy activist Alex Epstein's excellent podcast on the subject, "The destructive Power of ESG," whose program notes outline it as follows:

Alex Epstein interviews Yaron Brook about the origins, rise, and unprecedented power of today's anti-fossil fuel ESG movement in investing.

They cover:

1. Larry Fink's latest influential letter
2. The shareholder value theory of the purpose of a corporation
3. What's wrong with the "stakeholder value" theory of the purpose of a corporation
4. How government coercion increases the power of the ESG movement
5. How the culture gives the ESG movement most of its power
6. What companies can do to fight back against the anti-fossil fuel ESG movement?

Yaron Brook is a former finance professor, an investor, Executive Chairman of the Ayn Rand Institute, and host of The Yaron Brook Show.

Two highlights of that interview were the culpable role of state pension funds in this mess, and Epstein's solicitation of help in doing something about this problem.

-- CAV

Link to Original

[Doug Morris]

I heard something on NPR yesterday.

I got the impression this is happening mainly in the U.K., but a Google search indicates Apple and Alphabet are doing it too.

Apparently some companies are paying their CEO's bonuses to run the company "ethically", which is taken to mean according to ESG.  The story did not mention anything about anyone questioning or challenging this equation of "ethically" with according to ESG.  It did mention some people questioning the practice for other reasons.

One criticism is along the lines:  Isn't it part of the job to do things ethically?  Why pay a bonus for it?  If you have to pay a person a bonus to be ethical, is that the kind of person you want as a CEO?

Another criticism suggests that this is a ploy to increase CEO pay without catching as much flak from the people who think CEO's are paid too much.

 

 

[merjet]

ESG advocates nominated an alternative slate of directors that included four new people to join the ExxonMobil board against the wishes of the Chairman-CEO and the other directors. The nominees were picked by a small hedge fund, Engine No. 1, that owns only 0.02% of ExxonMobil shares. Three of its nominees won.  Three large public employee pension funds -- CalSTRS, CalPERS, and New York State Common Retirement Fund -- probably voted all their millions of shares for the new candidates. 

https://www.forbes.com/sites/bobeccles/2021/05/18/dear-exxonmobil-i-see-a-bad-moon-rising-for-you/

https://www.fastcompany.com/90641041/the-inside-story-of-how-tiny-hedge-fund-engine-no-1-just-reshaped-exxons-board

One of the new directors worked at the U.S Department of Energy and has worked for wind power companies.

Edited June 12, 2021 by merjet