the demise of "ESG"
Environmental, social, and corporate governance (ESG), is an approach to investing that recommends taking environmental issues, social issues and governance issues into account when deciding which companies to invest in.
The idea behind ESG is that people, businesses, pension funds, and non-profit organizations should invest their capital in companies that are "good corporate citizens" to directly address humanitarian and environmental issues outside of the mode of government regulation. Although the ESG acronym is relatively new (becoming popular during the past five years), the idea of "socially responsible investing" has been around for a long time, centuries even.
But over the past year many investment brokers have begun to retreat from the acronym. Some Republican-led states have tried to ban ESG investing because it is viewed as anti-oil and anti-coal, and some on the Left believe ESG is a fraud because many fossil-fuel companies are nevertheless included in ESG index funds.
About a year ago there was a popular controversy about ESG investing when S&P kicked Tesla out of its ESG index, while embracing ExxonMobil. On its face, this made little sense -- how could a massive fossil fuel company be more socially responsible than the largest electic vehicle company? Since then the criticism of ESG as a concept has intensified on both the Right and the Left.
My own critique has been that ESG is mainly a marketing ploy to get people to invest in ESG index funds that charge higher fees than regular index funds. There's no logical reason why an ESG fund should charge higher fees -- how difficult is it to avoid companies that pollute more than average or pay workers less than average? Just invest in solar panels, wind turbines, and hydroelectric power --> there, you're ESG.
And on a deeper level, ESG investing implicitly endorses the entire capitalist system in which those who have excess capital get to invest it in profitable activities to grab even more excess capital for themselves. ESG sells people the myth that they can engage in this profitable capitalist system while somehow also doing good for humanity and the planet. Why does your possession of excess capital mean you "deserve" to "earn" even more excess capital? You're following a literal gospel of increasing inequality.
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Well, I also invest my excess capital via my retirement account and my play money account. So who am I to criticize capitalism. If stock prices were not in bubble territory I'd buy more stocks in the hope of increasing my retirement savings. Meanwhile I'm mainly lending my excess capital to the federal government in return for interest payments, which supports the largest and most unsustainable Ponzi scheme in human history.
The biggest difficulty of our economic and political system is how difficult it is for successful people to step off the train. As I wrote earlier this morning, I'm allowing myself 20 years to slowly approach the impossibility of actually stepping off this train.
With respect to my retirement savings, I literally have no choice but to save and invest -- even if I contributed nothing to my retirement account my employer would still deposit its share, and there is no option for allowing that cash to sit on a shelf, it has to be invested in one of the available funds. So, I play along by contributing enough to receive the maximum matching funds, and by strategizing how to safely maximize my profit.
As I played along by purchasing a house.
If it weren't for my Global Green Communism game, I'd have a comfortable retirement ahead of me in 4 years, 2 months, and 16 days. With piled up home equity and retirement savings, plus lifetime pension, federal employee health insurance, Social Security, and Medicare.
The system has worked for me, and I haven't stepped off it, while I've criticized it and voted against it.
The inherent conservatism of any economic/political system is that it works for enough people to keep it going. Under our democracy, if people aren't happy with the system they vote for a different set of leaders, who nevertheless can't change much about it, so then the people vote for another different set of leaders, etc. As long as the system produces enough economic growth to keep a slight majority happy with the system, then it continues to produce that economic growth. If it doesn't produce enough growth, people throw out the bums and expect their new leaders to restore growth.
I expect annual raises from my employer that beat inflation, don't we all?
Everybody wants to upgrade. Even Christianity is about upgrading from Earth to Heaven, from mortality to everlasting life. Believe in Jesus and you will never die.
The idea behind ESG is that people, businesses, pension funds, and non-profit organizations should invest their capital in companies that are "good corporate citizens" to directly address humanitarian and environmental issues outside of the mode of government regulation. Although the ESG acronym is relatively new (becoming popular during the past five years), the idea of "socially responsible investing" has been around for a long time, centuries even.
But over the past year many investment brokers have begun to retreat from the acronym. Some Republican-led states have tried to ban ESG investing because it is viewed as anti-oil and anti-coal, and some on the Left believe ESG is a fraud because many fossil-fuel companies are nevertheless included in ESG index funds.
About a year ago there was a popular controversy about ESG investing when S&P kicked Tesla out of its ESG index, while embracing ExxonMobil. On its face, this made little sense -- how could a massive fossil fuel company be more socially responsible than the largest electic vehicle company? Since then the criticism of ESG as a concept has intensified on both the Right and the Left.
My own critique has been that ESG is mainly a marketing ploy to get people to invest in ESG index funds that charge higher fees than regular index funds. There's no logical reason why an ESG fund should charge higher fees -- how difficult is it to avoid companies that pollute more than average or pay workers less than average? Just invest in solar panels, wind turbines, and hydroelectric power --> there, you're ESG.
And on a deeper level, ESG investing implicitly endorses the entire capitalist system in which those who have excess capital get to invest it in profitable activities to grab even more excess capital for themselves. ESG sells people the myth that they can engage in this profitable capitalist system while somehow also doing good for humanity and the planet. Why does your possession of excess capital mean you "deserve" to "earn" even more excess capital? You're following a literal gospel of increasing inequality.
-----
Well, I also invest my excess capital via my retirement account and my play money account. So who am I to criticize capitalism. If stock prices were not in bubble territory I'd buy more stocks in the hope of increasing my retirement savings. Meanwhile I'm mainly lending my excess capital to the federal government in return for interest payments, which supports the largest and most unsustainable Ponzi scheme in human history.
The biggest difficulty of our economic and political system is how difficult it is for successful people to step off the train. As I wrote earlier this morning, I'm allowing myself 20 years to slowly approach the impossibility of actually stepping off this train.
With respect to my retirement savings, I literally have no choice but to save and invest -- even if I contributed nothing to my retirement account my employer would still deposit its share, and there is no option for allowing that cash to sit on a shelf, it has to be invested in one of the available funds. So, I play along by contributing enough to receive the maximum matching funds, and by strategizing how to safely maximize my profit.
As I played along by purchasing a house.
If it weren't for my Global Green Communism game, I'd have a comfortable retirement ahead of me in 4 years, 2 months, and 16 days. With piled up home equity and retirement savings, plus lifetime pension, federal employee health insurance, Social Security, and Medicare.
The system has worked for me, and I haven't stepped off it, while I've criticized it and voted against it.
The inherent conservatism of any economic/political system is that it works for enough people to keep it going. Under our democracy, if people aren't happy with the system they vote for a different set of leaders, who nevertheless can't change much about it, so then the people vote for another different set of leaders, etc. As long as the system produces enough economic growth to keep a slight majority happy with the system, then it continues to produce that economic growth. If it doesn't produce enough growth, people throw out the bums and expect their new leaders to restore growth.
I expect annual raises from my employer that beat inflation, don't we all?
Everybody wants to upgrade. Even Christianity is about upgrading from Earth to Heaven, from mortality to everlasting life. Believe in Jesus and you will never die.