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The Greater Good

This movement pushing ESG policies (Environmental, Social & Governance) has to be called out for what it is and in my strongly held opinion, needs to be halted.  Consider the following sample of ESG mandates:

•    Signing up for the Global Compact (see www.unglobalcompact.org)

•    Setting targets for corporate “sustainable issues”

•    Goals for “environmental innovation”

•    Corporate Board structures

•    Targets for gender equality

Look, I could, but I won’t, go on forever with the bullet points.  Various organizations associated with this movement list measures/goals/mandates that range in number from just over 400 to well over a thousand. Watch the following video for a description of the major ESG pressure points: https://youtu.be/f6WbiWiDiPA

I spend my work life immersed in finance and economics but when I read most of this gobbledygook, I don’t have the faintest idea of what they’re talking about or how one would comply – assuming that was one’s desire.  If the video wasn’t enough then I urge you to read the United Nations Global Compact piece cited above to get a real flavor of what’s going on.  I don’t know about you but I never signed up to invest in companies that are being controlled, de facto by the United Nations.

Listen, this whole deal has already reached a point to where big, money center banks (JP Morgan, Bank of America, etc.) are now refusing to lend to legitimate companies like private prison operators because, effectively, the target company’s business is not “politically correct” (see Fitch Ratings news 12/11/2019 Bloomberg news).  This falls under the “S” -for Social - part of the ESG acronym.  I don’t even understand how this targeted discrimination in lending is legal.  

Going further into the “Social demands”, and I’m not interpreting this, they’re dictating loud and clear the gender, racial and cultural makeup of a company’s board and workforce.  Forget about details like experience, competency, education and required skill sets, right?

Proponents of this movement need to be told to mind their own business.  Buy your own company and run it like you want and that includes buying enough shares of a public company to have a voice on the board or voting control.  I’ve always stated that the greatest social good a person could do is to start a business and create JOBS.

Hey folks, this whole movement strikes me as just another derivative of that old economic form that is Socialism where private ownership of productive assets is “allowed” but some other group in authority (normally government) dictates how the assets will be used. 

These mandates would be the equivalent of a new tax or regulation and have the obvious effect of reducing profits unless passed along to consumers in the form of higher prices.  Are the funds in your 401(K) being negatively affected by this?  Is your pension being threatened by this movement? If the answer is yes, are you okay with that?

I’m reminded of that old allegory about the person showing up at your front door and announcing they’re from the government and “here to help”. I’d advise telling these new-age social justice warriors to take into consideration the impact pushing their cause will have on the American economy and the everyday investor.   

mike