Don’t let the great ESG self-deception infect climate tech investing(maddyness.com)
maddyness.com
Don’t let the great ESG self-deception infect climate tech investing
https://www.maddyness.com/uk/2022/10/24/dont-let-the-great-esg-self-deception-infect-climate-tech-investing/
67 comments
I wonder if clima folks are sponsored by Russia or China to ruin the West. So far it worked in EU.
China most likely since they benefit the most. Russia doesn't really have much industry. Then again they both benefit with the destruction of the US capital markets by ESG/DEI initiatives so there is that.
TBH I wouldn't be surprised.
The obsession with renewables has hurt Europe beyond measure.
The obsession with renewables has hurt Europe beyond measure.
What hurt Europe was that nuclear power plants were closed after protests.
Renewables help.
Renewables help.
> What hurt Europe was that nuclear power plants were closed after protests.
IIRC, early European anti-nuclear protesters got some support from the Soviet Union.
IIRC, early European anti-nuclear protesters got some support from the Soviet Union.
That whole account looks like some sort of a propagandist.
Hopefully this will get investigated by dang.
Hopefully this will get investigated by dang.
This is excellent start of a debate, spot on on all points.
You know it's bad when some of the world's most environmentally damaging companies top the scores.
"When a measure becomes a target, it ceases to be a good measure"
https://en.wikipedia.org/wiki/Goodhart's_law
https://en.wikipedia.org/wiki/Goodhart's_law
The ESG push of the last 5+ years was rooted in good reasons. But the approach was wrong. In finance, ESG metrics are just factors like value, growth, momentum, etc... Those factors need to explain risk vs returns. The issue is they never did. There was never any explanatory power behind these things. Even the massive backing by asset managers like Blackrock was not sufficient enough to create demand because ESG factors were all over the place: 20 different providers with 20 different BS methodologies - mostly driven by NLP-style approach to parsing quarterly reports. Ultimately you throw in some nice words and greenwash the heck out of your report and your ESG metrics go up.
The free and open market approach prevails. And if we want to see ESG impact the world around us, we should have the free market dictate how that happens rather than Larry Fink.
The free and open market approach prevails. And if we want to see ESG impact the world around us, we should have the free market dictate how that happens rather than Larry Fink.
I would like to see not the 'free market' dictate how it happens - I would like to see companies that harm their investors end with their ceo/cfos perp walked out and arrested.
I want to see companies remember they have a fiduciary duty to their investors.
I want to see companies remember they have a fiduciary duty to their investors.
Investors live on earth. Climate change will incurr extremely high costs on anyone living on earth. Therefore it is part of their fiduciary duty to fight it for any company in the world.
In a more cynical way, ESG is a way to try to escape tougher legislations that would impact revenues in a larger way, and so is also part of the fiduciary duty in that sense.
Note that fiduciary duty already does not force companies to outsource to China even if that would save some money and increase benefits.
In a more cynical way, ESG is a way to try to escape tougher legislations that would impact revenues in a larger way, and so is also part of the fiduciary duty in that sense.
Note that fiduciary duty already does not force companies to outsource to China even if that would save some money and increase benefits.
I am happy that, in the US at least, the current legal climate does not agree with you.
In some countries, I have seen what you are saying becoming more and more pronounced. In Western Europe, specifically, you are seeing it.
I imagine the upcoming cold winter in Germany and the scramble to secure supplies at any cost for their citizens will help fix this issue.
In some countries, I have seen what you are saying becoming more and more pronounced. In Western Europe, specifically, you are seeing it.
I imagine the upcoming cold winter in Germany and the scramble to secure supplies at any cost for their citizens will help fix this issue.
Grow up, these climate changes will happen, the companies can make the appropriate changes now (early), or they can hold off and be forced to comply or die by governments.
Please follow hacker news guidelines or choose not to post. https://news.ycombinator.com/newsguidelines.html
Or, since your account is only 88 days ago, I guess create a new account.
I don't bother replying to the "substance" of troll comments.
Or, since your account is only 88 days ago, I guess create a new account.
I don't bother replying to the "substance" of troll comments.
The fact that Texas, heart of O&G country, is a leader in renewables is a perfect illustration of the free market at work
ESG has affected texas too. our grid is a laughing stock, subject to energy rationing multiple times a year and held hostage this summer by currency miners. we have to delay maintenance on fossil generation to compensate for the wind not blowing enough. the state is divesting from ESG in retaliation
The point of companies are to make money. As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend.
The article is right in a way - ESG is infecting companies.
I do not want a company I invest in to "weigh in" on political issues [1]. I do not want to see banks put in racial quotas in order to get preferred rates [1]. I do not want to see a 'restorative decolonial' approach to ESG in companies [2].
For gods sake, I do not want laws to change to remove a companies requirement of a fiduciary duty so they can adopt more esg goals [3].
When did saying "I invest in a company for profit related reasons" turn into such a big boogey man.
[1] - https://corpgov.law.harvard.edu/2020/06/17/using-esg-tools-t...
[2] - https://www.linkedin.com/pulse/anti-racism-esg-just-might-sa...
[3] - https://www.esginvestor.net/reforms-needed-to-free-investors...
The article is right in a way - ESG is infecting companies.
I do not want a company I invest in to "weigh in" on political issues [1]. I do not want to see banks put in racial quotas in order to get preferred rates [1]. I do not want to see a 'restorative decolonial' approach to ESG in companies [2].
For gods sake, I do not want laws to change to remove a companies requirement of a fiduciary duty so they can adopt more esg goals [3].
When did saying "I invest in a company for profit related reasons" turn into such a big boogey man.
[1] - https://corpgov.law.harvard.edu/2020/06/17/using-esg-tools-t...
[2] - https://www.linkedin.com/pulse/anti-racism-esg-just-might-sa...
[3] - https://www.esginvestor.net/reforms-needed-to-free-investors...
> I want to see increased valuations... increasing dividend
> For gods sake, I do not want [environmental, social, or governance] goals
When did saying "I invest in a company for the endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" turn into such a big boogey man?
> For gods sake, I do not want [environmental, social, or governance] goals
When did saying "I invest in a company for the endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" turn into such a big boogey man?
When did "profit" equate to "endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" in the first place?
If a nice looking quarterly report is set as the single overriding goal above all other goals, it will by definition override all other goals, time horizons and externalities.
Which it practically never is, right? How many companies have you seen selling off 100% of their assets to maximize this quarter's results?
When finance abstracted Capital to the point that Wall Street became an end onto itself, and every justification for amoral financial behavior was levied as fiduciary responsibility, that is when US Business became the equivalent of an out of control Cancer. The US American form of capitalism is an exploitative Ponzi scheme, which is ironic considering the Christianity that is supposed to be afloat. In a more mature and moral society Capitalism would not be the Jack Booted Thug we have manifested. Plain fact: the human race is not as mature as it thinks it is.
Nobody cares about "fiduciary responsibility" in this case. CEOs are not required to maximize profit for their shareholders. If they'll go right ahead and say that in public, you can safely say the lawyers aren't warning them about it.
https://www.businessroundtable.org/business-roundtable-redef...
https://www.businessroundtable.org/business-roundtable-redef...
You should know that an appeal to follow ESG practices is likely to be found illegal right?
I know references and facts arn't as fun as emotional pleas and comparing investing for financial growth to cancer... but lets try it anyway?
> in May, under the banner of promoting ESG, nearly 50% of Travelers Insurance shareholders asked the company to break the law. Full stop. Specifically, about 47% of its investors backed a shareholder proposal that would have caused the company to collect and consider race when writing insurance policies, in direct violation of state law. [1]
> “Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda. [2]
> "As fiduciaries, trustees must act in ways that financially benefit the trust and its beneficiaries. Trustees who fail to do so are liable for damages to the beneficiaries, and may face additional legal penalties. The social and environmental goals involved in ESG investing create a greater potential for violations of fiduciary law by introducing motives for investment choices outside the traditional definition. Are trustees selecting ESG-focused mutual funds because they believe they are suitable investments, or do they merely hope to make the world a better place by deploying capital under their control according to socially pressured or personally held beliefs?" [4]
Of course, that doesn't stop well meaning fools from trying to change the definition of words to make what they are doing not illegal.
> As the landscape for investment changes, so too does the notion of fiduciary duty. The processes and approaches used to guide investment decisions have evolved over time in response to changes in the generally accepted understanding of market behavior. We are again at an inflection point. As the evidence and rationale behind addressing material and business related impacts of ESG factors in the investment process further develops and is increasingly accepted, so does our understanding of these factors through a fiduciary lens. [3]
[1] - https://www.washingtontimes.com/news/2022/oct/24/is-environm...
[2] - https://www.texasattorneygeneral.gov/news/releases/ag-paxton...
[3] - https://www.intentionalendowments.org/fiduciary_duty_is_not_...
[4] - https://www.palisadeshudson.com/2022/07/an-esg-investing-haz...
I know references and facts arn't as fun as emotional pleas and comparing investing for financial growth to cancer... but lets try it anyway?
> in May, under the banner of promoting ESG, nearly 50% of Travelers Insurance shareholders asked the company to break the law. Full stop. Specifically, about 47% of its investors backed a shareholder proposal that would have caused the company to collect and consider race when writing insurance policies, in direct violation of state law. [1]
> “Our states will not idly stand for our pensioners’ retirements to be sacrificed for BlackRock’s climate agenda. [2]
> "As fiduciaries, trustees must act in ways that financially benefit the trust and its beneficiaries. Trustees who fail to do so are liable for damages to the beneficiaries, and may face additional legal penalties. The social and environmental goals involved in ESG investing create a greater potential for violations of fiduciary law by introducing motives for investment choices outside the traditional definition. Are trustees selecting ESG-focused mutual funds because they believe they are suitable investments, or do they merely hope to make the world a better place by deploying capital under their control according to socially pressured or personally held beliefs?" [4]
Of course, that doesn't stop well meaning fools from trying to change the definition of words to make what they are doing not illegal.
> As the landscape for investment changes, so too does the notion of fiduciary duty. The processes and approaches used to guide investment decisions have evolved over time in response to changes in the generally accepted understanding of market behavior. We are again at an inflection point. As the evidence and rationale behind addressing material and business related impacts of ESG factors in the investment process further develops and is increasingly accepted, so does our understanding of these factors through a fiduciary lens. [3]
[1] - https://www.washingtontimes.com/news/2022/oct/24/is-environm...
[2] - https://www.texasattorneygeneral.gov/news/releases/ag-paxton...
[3] - https://www.intentionalendowments.org/fiduciary_duty_is_not_...
[4] - https://www.palisadeshudson.com/2022/07/an-esg-investing-haz...
> You should know that an appeal to follow ESG practices is likely to be found illegal right?
Are you against companies following the G in ESG? "Opposing ESG" is literally asking for "companies with bad governance". Which is why anti-ESG banks are run out of the house of their CEO with a drinking problem.
https://archive.ph/bM9LW
Of course, the "your ESG fund is against my fiduciary duties" people are also the "you need to invest in my state's fossil fuel companies" people regardless of whether that's a wise investment.
https://a4de8bd9-8c02-4b69-8f48-7792cfcaf8fd.usrfiles.com/ug...
Are you against companies following the G in ESG? "Opposing ESG" is literally asking for "companies with bad governance". Which is why anti-ESG banks are run out of the house of their CEO with a drinking problem.
https://archive.ph/bM9LW
Of course, the "your ESG fund is against my fiduciary duties" people are also the "you need to invest in my state's fossil fuel companies" people regardless of whether that's a wise investment.
https://a4de8bd9-8c02-4b69-8f48-7792cfcaf8fd.usrfiles.com/ug...
Arguments aside, completely unrelated to substance, that’s a scary looking link. What were you trying to link to? I enjoy conversing about the substance of arguments but I’m not clicking that. Any help?
Both the links are me trying to not link paywalled news stories (or Matt Levine columns) even if they have friendlier URLs.
It’s a directly linked Blackrock PDF. Safe :)
And what's "funny" is that the same person will then worry about AI destroying the world because of the "paperclip problem".
https://en.wikipedia.org/wiki/Friedman_doctrine
"there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
In a way, you could call this the Corporate/Investing equivalent of effective altruism. Generate as much profit as possible and let employees/shareholders use that cash to support the causes they choose.
"there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
In a way, you could call this the Corporate/Investing equivalent of effective altruism. Generate as much profit as possible and let employees/shareholders use that cash to support the causes they choose.
If the company kills people in the process of generating as much profit as possible, it should be stopped. You are saying it should be stopped by the 'rules' which clearly means that governments should be forcing rules that focus on the ESG objectives? That seems like a dangerous path to walk. Any intelligent business manager knows that it is better to act early and in ways you choose than to be forced down a road you don't want later.
As opposed to what?
Having the companies pretend to go woke and stop killing people? Self regulating for profit entities that are socially responsible.
In what world would that work. Regulations exist for a reason.
Having the companies pretend to go woke and stop killing people? Self regulating for profit entities that are socially responsible.
In what world would that work. Regulations exist for a reason.
>The point of companies are to make money.
You need to deliver value to get money. If people with money want the world improved, you must improve the world to get their money.
> I do not want a company I invest in to "weigh in" on political issues [1]
If people want companies doing political things and you do not do political things, they won't give you their money.
> I do not want to see banks put in racial quotas in order to get preferred rates.
Then don't expect "racial" people to put money in your banks and make you money. Don't expect people who care about racial diversity to put money in your bank. They have a choice.
> As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend.
Then demand your company responds to the needs of the people whose money you want. Companies aren't entitled to make money. They must respond to peoples' values and needs.
"Valuations" isn't just a metric. It reflects the value of the company to people. If the company doesn't reflect its customers' values, its valuation won't increase.
You need to deliver value to get money. If people with money want the world improved, you must improve the world to get their money.
> I do not want a company I invest in to "weigh in" on political issues [1]
If people want companies doing political things and you do not do political things, they won't give you their money.
> I do not want to see banks put in racial quotas in order to get preferred rates.
Then don't expect "racial" people to put money in your banks and make you money. Don't expect people who care about racial diversity to put money in your bank. They have a choice.
> As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend.
Then demand your company responds to the needs of the people whose money you want. Companies aren't entitled to make money. They must respond to peoples' values and needs.
"Valuations" isn't just a metric. It reflects the value of the company to people. If the company doesn't reflect its customers' values, its valuation won't increase.
You forget the time-aspect in your statement about Money being a company's sole purpose.
A bar may want to make money this month, and alcoholism be damned.
An investment fund with a thirty-years horizon of commitments to future retirees must want to make money in a way that does not compromise the commitment to still make money in thirty years, and must be able to prove that it is watching that.
A bar may want to make money this month, and alcoholism be damned.
An investment fund with a thirty-years horizon of commitments to future retirees must want to make money in a way that does not compromise the commitment to still make money in thirty years, and must be able to prove that it is watching that.
> The point of companies are to make money. As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend.
There are companies that have other primary goals.
There are companies that have other primary goals.
> There are companies that have other primary goals.
Here's the thing, they dont. You are buying into their BS.
if "ESG" was important, why didnt these companies do it for decades? "ESG" has become the latest trend, and they are simply jumping on the bandwagon.
We have banks in canada with massive marketing campaigns pitching "ESG". These very same banks have invested BILLIONS in the oil and gas sector.
This clear conflict of interest (investing in oil/gas while pitching ESG) has come to the inevitable conclusion.
A request to the competition board over false advertising.
https://www.vancouverisawesome.com/highlights/rbc-competitio...
So to your point, which is it? Do these bank care about the environment or about its profits? If it is the environment, it seems being the world leaders in lending money to non-environmentally-friendly industries doesnt agree with that position.
EGS is a marketing tool, not much more.
Here's the thing, they dont. You are buying into their BS.
if "ESG" was important, why didnt these companies do it for decades? "ESG" has become the latest trend, and they are simply jumping on the bandwagon.
We have banks in canada with massive marketing campaigns pitching "ESG". These very same banks have invested BILLIONS in the oil and gas sector.
This clear conflict of interest (investing in oil/gas while pitching ESG) has come to the inevitable conclusion.
A request to the competition board over false advertising.
https://www.vancouverisawesome.com/highlights/rbc-competitio...
So to your point, which is it? Do these bank care about the environment or about its profits? If it is the environment, it seems being the world leaders in lending money to non-environmentally-friendly industries doesnt agree with that position.
EGS is a marketing tool, not much more.
True. They are private companies, not Public. I am fine with this.
It is interesting to see this opinion so high up when it is abstracted, but as soon as you drop down to specifics in something like tech you get mountains of complaints about Google abandoning "don't be evil" or ad-tech companies in general being cancerous companies that harm society. If it were really all about the bottom line then these companies would be among the very best companies in the world. They make a shit load of money!
> It is interesting to see this opinion so high up when it is abstracted, but as soon as you drop down to specifics in something like tech you get mountains of complaints about Google abandoning "don't be evil" or ad-tech companies in general being cancerous companies that harm society. If it were really all about the bottom line then these companies would be among the very best companies in the world. They make a shit load of money!
I think the determining factor is: is the issue politically contentious or not?
A lot of the "evil" things Google, Facebook, or some random ad-tech company does are things that are commonly condemned by people across the political spectrum. All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1].
[1] It should be noted that "politically contentious" thing may not be addressing a particular issue itself, but rather a particular proposed solution to that issue.
I think the determining factor is: is the issue politically contentious or not?
A lot of the "evil" things Google, Facebook, or some random ad-tech company does are things that are commonly condemned by people across the political spectrum. All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1].
[1] It should be noted that "politically contentious" thing may not be addressing a particular issue itself, but rather a particular proposed solution to that issue.
> All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1].
Indeed, ESG has join the boogeymen CRT, woke and cancel culture of the right wing elite's puppet show.
Indeed, ESG has join the boogeymen CRT, woke and cancel culture of the right wing elite's puppet show.
> Indeed, ESG has join the boogeymen CRT, woke and cancel culture of the right wing elite's puppet show.
Come on. Your comment is actually a fairly good example of a kind of bad faith political tactic that I see quite a bit of nowadays: presenting other-side disagreement as fake or manufactured, often as the bailey of a fallacious motte-and-bailey argument.
All of those things you list are actual points of political/ideological disagreement, and all political movements, left and right, typically feature "elite" efforts to surface and popularize issues like that. Doing that is pretty much the literal job description of activists, activist organizations, and opinion columnists.
Come on. Your comment is actually a fairly good example of a kind of bad faith political tactic that I see quite a bit of nowadays: presenting other-side disagreement as fake or manufactured, often as the bailey of a fallacious motte-and-bailey argument.
All of those things you list are actual points of political/ideological disagreement, and all political movements, left and right, typically feature "elite" efforts to surface and popularize issues like that. Doing that is pretty much the literal job description of activists, activist organizations, and opinion columnists.
You seem to have become mistaken - I am talking about a companies fiduciary duty to shareholder and maximizing long term shareholder value. You are talking about popular sentiment.
> For gods sake, I do not want laws to change to remove a companies requirement of a fiduciary duty so they can adopt more esg goals [3].
What's wrong with people trying out different kinds of organizations, and likeminded people investing in them?
> When did saying "I invest in a company for profit related reasons" turn into such a big boogey man.
Nobody is trying to prevent you from investing how you want; you are the one who wants to stop others from investing how they want.
What's wrong with people trying out different kinds of organizations, and likeminded people investing in them?
> When did saying "I invest in a company for profit related reasons" turn into such a big boogey man.
Nobody is trying to prevent you from investing how you want; you are the one who wants to stop others from investing how they want.
Let’s fast forward in financial regulation knowledge with a question perhaps.
Why do you think the sec had to require that directors and executives have a fiduciary responsibility to shareholders? Why are executives fined and jailed when they violate this?
Those answers should explain why there is an incentive to not allow public investable companies to fuck with their investor money in a way that isn’t necessarily in their best interest. If they want to do that, you can invest in private companies that the mom and pop investor can’t get hoodwinked into.
Why do you think the sec had to require that directors and executives have a fiduciary responsibility to shareholders? Why are executives fined and jailed when they violate this?
Those answers should explain why there is an incentive to not allow public investable companies to fuck with their investor money in a way that isn’t necessarily in their best interest. If they want to do that, you can invest in private companies that the mom and pop investor can’t get hoodwinked into.
Shouldn't you welcome the changes?
Unless it's mandated, everyone going for those things should be seeing worse outcomes, e.g. banks discounting fundamentals and including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they?
You'd just need to invest into companies that are explicitly not focusing on ESG. Of course, there's probably some concern that it'll be normalized and the government goes "well, now that half of companies are doing it voluntarily, we can just force the other half to also do it so it's fair", but that aside it sounds like it should provide a good signal for you where not to invest.
Unless it's mandated, everyone going for those things should be seeing worse outcomes, e.g. banks discounting fundamentals and including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they?
You'd just need to invest into companies that are explicitly not focusing on ESG. Of course, there's probably some concern that it'll be normalized and the government goes "well, now that half of companies are doing it voluntarily, we can just force the other half to also do it so it's fair", but that aside it sounds like it should provide a good signal for you where not to invest.
In a way it already has lead to worse outcomes. For example, ESG campaigning has successfully discouraged investment in oil and gas production especially in democratic Western countries. The result of this is that there's now insufficient production capacity and prices and profits have gone sky-high for the companies that do have any, whilst companies in the rest of the economy have seen costs go through the roof. (Russia's actions didn't help, but the energy supply was looking pretty dicey even before that.)
The political result of this is that campaigners and journalists have accused the companies that are producing fossil fuels of profiteering, blamed them for the fact that energy and everything produced using it is so unaffordable (rather than blaming those who refused to invest in more production), and called for windfall taxes to take away and redistribute those supposedly-undeserved profits. Most of Europe is actually carrying out those windfall taxes too. If it wasn't for that political intervention, those who excluded fossil fuel production from their investments would be losing out and those who didn't gaining, as they arguably deserved, but governments are putting their hand on the scale and tilting returhns towards what ESG campaigners say they should be rather than what the markets give.
The political result of this is that campaigners and journalists have accused the companies that are producing fossil fuels of profiteering, blamed them for the fact that energy and everything produced using it is so unaffordable (rather than blaming those who refused to invest in more production), and called for windfall taxes to take away and redistribute those supposedly-undeserved profits. Most of Europe is actually carrying out those windfall taxes too. If it wasn't for that political intervention, those who excluded fossil fuel production from their investments would be losing out and those who didn't gaining, as they arguably deserved, but governments are putting their hand on the scale and tilting returhns towards what ESG campaigners say they should be rather than what the markets give.
But that's then working as designed, isn't it? You're not limited to investing in Western countries that have deprioritized power production. If that'll lead to worse outcomes, investing in a country that doesn't follow their ideology should get you better returns.
> Most of Europe is actually carrying out those windfall taxes too.
Sure. Don't get me wrong, I think it's stupid. But, and that's a pretty important but, the population has elected the politicians suggesting these things (and the ones before them who made the decisions not to invest in oil and gas and nuclear power), and the population has empowered the journalists (or their companies) running those campaigns. It seems to be what people really, truly want.
You'll just need to set your indicators one level further up. A country that is fundamentally wrong in capital allocation and prefers to bail out citizens and industry via tax money instead of investing into infrastructure will have worse outcomes. Taxes will have to rise at some point, industry will leave etc, so you'd invest in a different country where they're not following the same ideology.
Sure, it would be easier if people didn't do stupid things, but I doubt you'll be able to convince them.
> Most of Europe is actually carrying out those windfall taxes too.
Sure. Don't get me wrong, I think it's stupid. But, and that's a pretty important but, the population has elected the politicians suggesting these things (and the ones before them who made the decisions not to invest in oil and gas and nuclear power), and the population has empowered the journalists (or their companies) running those campaigns. It seems to be what people really, truly want.
You'll just need to set your indicators one level further up. A country that is fundamentally wrong in capital allocation and prefers to bail out citizens and industry via tax money instead of investing into infrastructure will have worse outcomes. Taxes will have to rise at some point, industry will leave etc, so you'd invest in a different country where they're not following the same ideology.
Sure, it would be easier if people didn't do stupid things, but I doubt you'll be able to convince them.
> For example, ESG campaigning has successfully discouraged investment in oil and gas production especially in democratic Western countries.
Can you provide proof?
This post would disagree: https://www.vancouverisawesome.com/highlights/rbc-competitio...
"The report, which surveyed 60 banks around the world, found RBC had increased its investments in fossil fuel projects to nearly $38 billion from over $19 billion in 2020."
Nearly doubling your investment in fossil fuel projects makes it seam like "ESG" has done nothing to "discourage investments".
The bank named in the article has a "ESG" division as well.
So if you want to be environmentally friendly, they are the bank for you. If you want to open a new fossil fuel well, they are the bank for you...
Can you provide proof?
This post would disagree: https://www.vancouverisawesome.com/highlights/rbc-competitio...
"The report, which surveyed 60 banks around the world, found RBC had increased its investments in fossil fuel projects to nearly $38 billion from over $19 billion in 2020."
Nearly doubling your investment in fossil fuel projects makes it seam like "ESG" has done nothing to "discourage investments".
The bank named in the article has a "ESG" division as well.
So if you want to be environmentally friendly, they are the bank for you. If you want to open a new fossil fuel well, they are the bank for you...
So, the bad effect of ESG is less investment in oil and gas?
Do you have examples of how ESG is bad for someone who thinks thats a good thing?
Do you have examples of how ESG is bad for someone who thinks thats a good thing?
If you're allowed to include second order effects, I think that's obvious to many in Europe right now, energy prices exploding, driving very high inflation, making people poorer, making winter look much more threatening, and generally creating destabilization.
I don't believe you'll find many who will openly say that that's what they wanted when they said they wanted fewer investments in oil and gas.
I don't believe you'll find many who will openly say that that's what they wanted when they said they wanted fewer investments in oil and gas.
... The 2022/2023 winter in Europe and the balkans should help solidify that in your mind. Germany lost its pipeline to Russia where it was sourcing its natural gas because they did not want to produce it locally. This directly caused them to start competing on the international scene for its gas.
Where do you think this 'surplus' of gas is coming from? Its not 'spare capacity' that was sitting around... its coming from poorer countries that can't compete for the same gas due to the price Germany is now willing to pay.
Consider Bangladesh and the political unrest because of the rising fuel prices. [1]. For gods sake, they had a nationwide power blackout that lasted 7 hours. Why? Because the gas supplies were being usurped by Europe. [2].
> Now with Russia-Ukraine war squeezing supply, the richer European nations are getting dibs on whatever is up for grabs. With winter and a cap on Russian fuel imports approaching, European buyers will look to stock up on even more LNG.
Maybe we disagree - but I would say that widespread starvation and energy blackouts impacting the populations of developing countries directly related to ESG policies is pretty damn bad. The road to hell is paved with good intentions - look down.
[1] - https://www.voanews.com/a/inflation-unrest-challenge-banglad...
[2] - https://qz.com/power-hungry-europe-is-leaving-developing-cou...
Where do you think this 'surplus' of gas is coming from? Its not 'spare capacity' that was sitting around... its coming from poorer countries that can't compete for the same gas due to the price Germany is now willing to pay.
Consider Bangladesh and the political unrest because of the rising fuel prices. [1]. For gods sake, they had a nationwide power blackout that lasted 7 hours. Why? Because the gas supplies were being usurped by Europe. [2].
> Now with Russia-Ukraine war squeezing supply, the richer European nations are getting dibs on whatever is up for grabs. With winter and a cap on Russian fuel imports approaching, European buyers will look to stock up on even more LNG.
Maybe we disagree - but I would say that widespread starvation and energy blackouts impacting the populations of developing countries directly related to ESG policies is pretty damn bad. The road to hell is paved with good intentions - look down.
[1] - https://www.voanews.com/a/inflation-unrest-challenge-banglad...
[2] - https://qz.com/power-hungry-europe-is-leaving-developing-cou...
> Germany lost its pipeline to Russia where it was sourcing its natural gas because they did not want to produce it locally.
I think you skipped over a few steps here and lost me.
Germany, which doesn't have much gas, "lost" a pipeline due to ESG investment metrics? Or only built a pipeline that it then "lost" due to ESG?
Either way, that's not something I recall happening.
I think you skipped over a few steps here and lost me.
Germany, which doesn't have much gas, "lost" a pipeline due to ESG investment metrics? Or only built a pipeline that it then "lost" due to ESG?
Either way, that's not something I recall happening.
Don't be purposefully obtuse - its not helpful to anyone and just makes you look like a troll.
Germany did not want to produce oil/gas locally due to concerns about environmental impact. Instead, they decided to import it from Russia. With the Russia pipeline destroyed, they are now competing for these same 'dirty resources' on the global scale resulting in widespread suffering in the developing world.
If you are going to imply that you didn't understand this as the meaning of the statement, I think its pretty telling.
Germany did not want to produce oil/gas locally due to concerns about environmental impact. Instead, they decided to import it from Russia. With the Russia pipeline destroyed, they are now competing for these same 'dirty resources' on the global scale resulting in widespread suffering in the developing world.
If you are going to imply that you didn't understand this as the meaning of the statement, I think its pretty telling.
I generally do not welcome things which make the investing landscape worst for the suburban investor. If I saw half the companies start a new youtube series called 'We snort half of our investors cash every monday!' I wouldnt laugh, I would be calling the sec.
> banks ... including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they?
if a bank is including a racial markup, it may be because they believe there's more risk with that loan (which must be made up via said mark up).
If it's actually true that such a loan is riskier, then the bank acted correctly.
if it was actually wrong - that a racial mark up was unjustified financially - then a competitor bank that correctly makes this conclusion would offer the lower, correct rate, thus capturing said racial group as customer away from the more discriminating bank!
if a bank is including a racial markup, it may be because they believe there's more risk with that loan (which must be made up via said mark up).
If it's actually true that such a loan is riskier, then the bank acted correctly.
if it was actually wrong - that a racial mark up was unjustified financially - then a competitor bank that correctly makes this conclusion would offer the lower, correct rate, thus capturing said racial group as customer away from the more discriminating bank!
> If it's actually true that such a loan is riskier, then the bank acted correctly.
Oh my god. We are not going to speed run racial discrimination in lending products again. Once is enough for me. This is actually specifically illegal.
> "What are the U.S. fair lending laws? Fair lending laws in the United States prohibit lenders from discriminating based on specific protected classes (such as race, color, national origin, and religion) during any aspect of a credit transaction." [1]
[1] - https://www.investopedia.com/the-history-of-lending-discrimi...
Oh my god. We are not going to speed run racial discrimination in lending products again. Once is enough for me. This is actually specifically illegal.
> "What are the U.S. fair lending laws? Fair lending laws in the United States prohibit lenders from discriminating based on specific protected classes (such as race, color, national origin, and religion) during any aspect of a credit transaction." [1]
[1] - https://www.investopedia.com/the-history-of-lending-discrimi...
I wonder if that law has had any impact on the issue? Have there been any followup studies to verify that the targeted groups did indeed become more creditworthy?
You know I never checked. I mean it seems obvious it would but I don’t recall seeing a study.
Honestly though a study like that may be banned from most research houses as it can fall into a bad spot. What happens if the study found it didn’t help. :/
I feel like the regulations here are good regardless. I don’t Want someone to be penalized specifically because of their race.
Honestly though a study like that may be banned from most research houses as it can fall into a bad spot. What happens if the study found it didn’t help. :/
I feel like the regulations here are good regardless. I don’t Want someone to be penalized specifically because of their race.
Companies are not actually 100% soulless profit-making machines and are very capable of choosing other priorities over making what seems to be free money.
Sometimes these other priorities are "being racist" or "letting John Lasseter harass all the women at Pixar". But it's obvious just because of how many companies stay in their industry. GameStop still tries to sell you games even if that's not so profitable anymore. They don't just switch to selling heroin.
Sometimes these other priorities are "being racist" or "letting John Lasseter harass all the women at Pixar". But it's obvious just because of how many companies stay in their industry. GameStop still tries to sell you games even if that's not so profitable anymore. They don't just switch to selling heroin.
I admit I'm really struggling to get on board with "it's fine for companies to be racist so long as they make more profit, actually".
Much of it is empty marketing. It’s another way to attract investment. Just as the idea crypto currency was used as a way to attract investment.
People do the things that will bring investment. Those things are t always solidly economic reasons.
People do the things that will bring investment. Those things are t always solidly economic reasons.
The problem is companies prioritize profits over humanities basic needs like a functioning planet and climate.
Regulation should really be the solution imo. The cost of ruining the climate should be higher so companies are forced to change their practices. But if the government is incapable or unwilling to regulate it and you still invest in them in order to make money, then what you're really saying is
"I'm going to invest in this company for profit related reasons even if the company is willing to destroy the planet in order to make more profit"
Which deserves a negative response imo.
Regulation should really be the solution imo. The cost of ruining the climate should be higher so companies are forced to change their practices. But if the government is incapable or unwilling to regulate it and you still invest in them in order to make money, then what you're really saying is
"I'm going to invest in this company for profit related reasons even if the company is willing to destroy the planet in order to make more profit"
Which deserves a negative response imo.
I think Cullen Roche is correct when it comes to ESG:
> 2) The secondary market is a bad place to enact change. The intelligent defense of ESG is “by reducing the demand for a stock we can increase its cost of capital and impact its operating performance.” This is true to some degree, but I think this is dramatically overstated. For instance, the firms in the S&P 500 are all large established firms that have more than enough capital to finance their operations. They aren’t using the secondary equity markets to fund their operations. In fact, most firms have so much capital that they’ve been net buyers of stock in the last 50 years. So, this puts the cart before the horse. The better way to think of public companies is to think of them like horse betting. We can bet on the horses, but secondary market purchases are just private exchanges, not cash issuance to firms. As a result, betting on the horses doesn’t change the outcome of the race. Similarly, our secondary market purchases and sales have a far smaller impact on the firm’s operations than we might think.[1]
> 3) ESG investing puts more money in the hands of bad actors. Point 1 is the most basic arithmetic of markets. A smart indexer decides to own all the firms in the market because we don’t know which firms will perform better or worse. So, when you reduce exposure to certain firms because they aren’t aligned with your moral views then you increase the odds that you’ll earn a lower return. This means that someone else is earning a higher return and potentially investing more of that money into the causes you don’t believe in. You are, in essence, choosing to earn a lower return thereby funding the very types of people you might disagree with.
* https://www.pragcap.com/my-view-on-esg-investing/
There seems to be decent evidence for Point 3 that ESG generally gives lower returns:
* https://www.pwlcapital.com/sustainable-investing-how-will-it...
So if an oil tycoon can get extra returns, he can then 'invest' some of those returns in funding astroturfing campaigns and false studies to cause confusion about climate change, thus helping to keep climate initiatives at bay. People who ESG invest may have lower returns and so may have fewer resources to fight against the oil tycoon.
> 2) The secondary market is a bad place to enact change. The intelligent defense of ESG is “by reducing the demand for a stock we can increase its cost of capital and impact its operating performance.” This is true to some degree, but I think this is dramatically overstated. For instance, the firms in the S&P 500 are all large established firms that have more than enough capital to finance their operations. They aren’t using the secondary equity markets to fund their operations. In fact, most firms have so much capital that they’ve been net buyers of stock in the last 50 years. So, this puts the cart before the horse. The better way to think of public companies is to think of them like horse betting. We can bet on the horses, but secondary market purchases are just private exchanges, not cash issuance to firms. As a result, betting on the horses doesn’t change the outcome of the race. Similarly, our secondary market purchases and sales have a far smaller impact on the firm’s operations than we might think.[1]
> 3) ESG investing puts more money in the hands of bad actors. Point 1 is the most basic arithmetic of markets. A smart indexer decides to own all the firms in the market because we don’t know which firms will perform better or worse. So, when you reduce exposure to certain firms because they aren’t aligned with your moral views then you increase the odds that you’ll earn a lower return. This means that someone else is earning a higher return and potentially investing more of that money into the causes you don’t believe in. You are, in essence, choosing to earn a lower return thereby funding the very types of people you might disagree with.
* https://www.pragcap.com/my-view-on-esg-investing/
There seems to be decent evidence for Point 3 that ESG generally gives lower returns:
* https://www.pwlcapital.com/sustainable-investing-how-will-it...
So if an oil tycoon can get extra returns, he can then 'invest' some of those returns in funding astroturfing campaigns and false studies to cause confusion about climate change, thus helping to keep climate initiatives at bay. People who ESG invest may have lower returns and so may have fewer resources to fight against the oil tycoon.
ESG is a trash index