Environmental, Sustainability, and Governance?
Most Americans are just barely beginning to hear about ESG and don’t have clarity on what it really is, let alone what kind of an impact it will soon have on nearly every aspect of their lives if it isn’t stopped dead in its tracks.
ESG stands for Environmental, Sustainability, and Governance, as defined by groups and individuals pushing a far left-wing agenda on the world populace, primarily through financial services. While it sounds in many ways harmless and to some, even positive, its impacts on the market will be devastating and our ability to live our lives as we see fit, greatly harmed.
What is an ESG score?
An ESG score is basically a social credit score placed on a business or individual by some outside entity, whether it be a rating agency or a bank, in order to determine which businesses and individuals are towing the proper ideological line.
This system minimizes or completely ignores financial performance and risk in order to prioritize behaviors valued by the radical left. It is being used to change corporate behavior, which will inevitably force changes in private behavior. As of 2020, 82% of large US companies had ESG systems in place. Ultimately, it is the politicization of commerce and a tool to dangerously distort free markets.
Misallocation of capital oftentimes leads to the destruction of the most important, efficient and necessary industries, and the elevation of less attractive businesses that are prioritized by artificial metrics. What we’re then left with is less efficiency, less cost-effectiveness, and less attractive companies or industries to serve the public.
The past as an example
It wasn’t so long ago that a portion of our banking system was hijacked by political ideologues to inject a social justice agenda into lending decisions; it didn’t end so well then and it doesn’t look like it will fare any better this time. In fact, those manipulations resulted in the near complete collapse of the housing market and subsequently, the near collapse of our entire economy.
This time around, the malinvestment is occurring through decisions made by large fund managers responsible for investing hundreds of millions, or even trillions, of dollars entrusted to them by others for maximum return. They are turning around and using those funds to literally change the nature of society through a political agenda the people apparently aren’t willing to vote for. If we were, we would. But we haven’t. This allows private actors to bypass democratic systems and processes in order to push an agenda that wouldn’t be accepted any other way.
Many of these fund managers aren’t even hiding what they’re doing, while making these investment decisions for large organizations and governmental entities. In other words, in many cases, it is our own money being used to weaponize our financial system against us.
Capitalism is market freedom, while ESG is force. Both our government and market systems are distorted through the implementation of these metrics.
What role does the US government play?
It’s bad enough that large market players are doing this but even worse, it looks as though government is actually interfering in ways that make it appear as though these changes are being driven by private entities. Government has such a regulatory hold on business that it’s easy to understand how the priorities of big government can easily become the priorities of big business. But ultimately, it shouldn’t matter. Forcing ideological behavior is not the role of private industry any more than it is the role of government.
For instance, when extraction industries are discriminated against by investors wielding massive power with our money, based on ideological factors rather than demand, this leads to less supply and higher prices. In an already growing inflationary environment, this means more expensive electricity to heat our homes, gas to run our automobiles, and diesel to ship our products to the store.
There is no place in the United States of America for any sort of social credit system. The market allocates resources according to demand from the people, and that system has served us well for over 200 years. Our political, economic, and cultural norms must be protected and respected, and we should all be able to agree that all forms of discrimination are destructive and should never be tolerated.