ESG, or Environmental, Social & Governance, according to the conservative author, Karen Schoen, is a United Nations-created government control project whereby lending institutions will now rate companies on Environmental, Social, and Governance, not merit and quality of product and fiduciary responsibilities.
"This mirrors the CCP (Chinese Communist party social credit scoring system. Don't comply, you get no loans or contracts. "
The effect is that ESG-oriented investment firms like BlackRock rank investment corporations by how they meet NON-profit criteria, such as diversity efforts, focus on being "green", etc. Thus those firms ranking high in ESG scores are setting objectives that do not result in profits, thus their return on investment will be reduced. The problem is that usually corporation boards are required to focus on fiduciary responsibilities like making profits. Thus if a government or private employee pension fund is ESG focused, their investments will be lower than normal profit-focused organizations.
Sources have said the whole ESG movement was started when leftist radicals could not get government legislators or managers to focus on "green" projects, so they started up the ESG movement to push corporations into "going green".
Some of the negative results caused by ESG is that if a lending institution ranks loan applicants by ESG scores, they may cut off funding to well-run firms that earn higher profits and focus on BUSINESS objectives instead of environmental and social justice goals.
Many investors are resisting the liberal ESG movement, and the main source of their views is ESGhurts.com by the Heritage Action organization.
Primary Resources on Dangers of ESG:
https://esghurts.com/examples - created by the Heritage Foundation - this examples page has many article links
Florida and Governor Ron DeSantis now prohibits any ESG-driven investments by Florida pensions and other investment accounts.
Just search in Google on "FL ESG DeSantis" and you will find numerous articles about DeSantis prohibiting investments of employee pension funds in any ESG-ranked corporation or investment vehicles like bonds. A good example is to prohibit giving investment management contracts to ESG-driven investment firms like BlackRock or Vanguard, leaders in the ESG movement.
This Fortune article describes DeSantis's actions: https://fortune.com/2023/02/13/ron-desantis-esg-municipal-bonds-woke-agenda-florida/
Issues I have seen:
I am a retired Fortune 500 Internal Audit manager. An internal audit blog for internal audit professionals, https://internalaudit360.com/, is constantly pushing webinars on ESG, encouraging internal auditors to review how they can become more ESG-ranked. (which means lower profits vs liberal objectives). If you search their site on "ESG" you can see all the articles they have published on ESG. They even have an article on the major international public accounting firm, KPMG, offering ESG consulting.
It is also my belief that ESG-ranked funds are less productive or efficient and it is a way to drive investment dollars to them without profitability being the reason.
They have even registered readers for online ESG webinars by European firms. I believe this ESG concept is being pushed worldwide into professional associations to the detriment of stockholders.
I have also seen where chapters of the International Institute of Internal Auditors (IIA - based in Maitland, FL) such as Orlando, are having seminars on ESG, while refusing to allow an ESG critic, like myself, to speak to balance out the issue.
Forbes, the Business Magazine, writes on why 25 "Republican-led" State governments are moving to PROHIBIT investments by their pensions and funds into ESG-focused, low-profit firms. "According to PwC, ESG assets are expected to eclipse $33 trillion by 2026—commanding some 21.5% of total assets under management."
"In August, a group of 19 state attorneys general wrote a letter to BlackRock's billionaire CEO, Larry Fink, claiming the firm's ESG practices are detrimental to their state pensions, and in the following months Republican-led states including Florida, Missouri, and Louisiana—collectively pulled more than $3 billion out of BlackRock pension funds, citing the ESG policies."
And, major international public accounting firms like Price Waterhouse Coopers (PwC) are pitching ESG consulting services to firms who want to move to ESG, not profit-focused, goal setting. They say it is to build value, but that is in the eyes of "green" programs, not a good investment.
And, the Federal Agency ruling over investments and securities, the SEC or Securities and Exchange Commission, has rules for disclosing ESG criteria for publicly held companies. You can read many notices they have issued, including releases on public companies that did not follow their ESG disclosure rules. We can now see why public accounting firms are active in ESG consulting, in order to ensure publicly held companies meet the ESG disclosure filings.
Conclusion:
It is fine if the owner of a corporation wants to reduce profits to focus resources on liberal programs like ESG, and DEI (Diversity, Equity & Inclusion), but to me, it is unethical to do it with investor or pension funds expecting full fiduciary responsibility. So if you have a pension or investments, do you want them to be focused on building revenues or building green projects? If your pension or investment firms are "managed" by a firm, do you know if they invest your funds in lower-return ESG corporations, or not? Did you get a disclosure notification or choice?
I feel sorry for union and employee pension participants in liberal states that push ESG. That means their funds will earn less to fund retirement than non-ESG funds. Additionally, if their investments do not earn expected returns, either the employer or employee will be forced to increase contributions to make up for investment shortfalls, OR, the pension fund goes bust and the Federal agency that bails out failed pension funds will take a hit with taxpayer funds.
This ESG initiative is just another plank in the liberal objectives of breaking up society and making them dependent on the government.
Vance Jochim - FiscalRangers.com
Created by Vance Jochim of FiscalRangers.com on Feb. 25, 2023
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Vance Jochim
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YouTube Channel "FiscalRangersFlorida"
