There’s a new acronym that young professionals in finance are saying these days. No, it’s not a new pop song lyric or Saturday Night Live skit. It’s called “ESG” and it stands for “Environment, Social and Governance,” a new form of woke, progressive investment strategy that is increasingly becoming popular on Wall Street. In fact, it is becoming so popular that many Main Street investors like you and me may have our pensions, retirement savings and mutual funds already invested in these ESG schemes without us even knowing about them. SO what is ESG and why do you need to know about it?
According to Investopedia, “environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.” In essence, ESG modeling is used to “screen investments based on corporate policies and to encourage companies to act responsibly.”
What they don’t tell you is that Wall Street portfolio managers at some the nation’s largest firms are allegedly using our hard earned savings and investment dollars to fund ESG schemes at the expense of Joe the investor who can and should have his pension investing in companies and funds based on economic fundamentals like cashflow, sales, overhead, profit margins, and growth. One target of ESG practices is the fossil fuel industry, which is a major economic engine for states like Texas, Louisiana, Kentucky, West Virginia, among others.
Word has reached Capitol Hill, however, and Republicans are preparing to take on ESG investing and financial services more broadly in the 118th Congress. The message from GOP lawmakers to big financial firms: stop appeasing progressives with ‘woke’ business practices, continue financing fossil fuels and cut ties with China. GOP Senators are already targeting law firms who are apparently advising clients on ESG investing. In November, Senators Chuck Grassley (R-IA), Tom Cotton (R-AR), Marsha Blackburn (R-TN.), Mike Lee (R-UT), and Marco Rubio (R-FL) sent a letter to 51 law firms detailing the possible antitrust violations the law firms’ clients may commit if they pursue ESG initiatives.
The letter advises the law firms that they and their clients should preserve documents relevant to the clients’ ESG practices in preparation for Congress’s oversight of antitrust violations due to ESG collusion.
“The ESG movement attempts to weaponize corporations to reshape society in ways that Americans would never endorse at the ballot box. Of particular concern is the collusive effort to restrict the supply of coal, oil, and gas, which is driving up energy costs across the globe and empowering America’s adversaries abroad,” the Senate letter states.
“Over the coming months and years, Congress will increasingly use its oversight powers to scrutinize the institutionalized antitrust violations being committed in the name of ESG, and refer those violations to the FTC and the Department of Justice. To the extent that your firm continues to advise clients regarding participation in ESG initiatives, both you and those clients should take care to preserve relevant documents in anticipation of those investigations,” the lawmakers warned.
State’s are getting in on the anti-woke ESG action too. For example, Governor Ron DeSantis’ (R-FL) administration is looking at ways to divest state pensions from those very financial firms. “If Larry (Fink) and his friends on Wall Street want to change the world, they should run for office, start a not-for-profit and go donate to the causes they care about. But using our cash — the state of Florida’s cash — to fund BlackRock’s social-engineering projects isn’t something Florida ever signed up for,” Chief Financial Officer Jimmy Patronis (R-FL) said when announcing his states’ intention to divest from BlackRock. Should Republicans use their new power in the House to push back against woke ESG? Do your own research and let us know what you think in the comments.
Bob Carlstrom is President of AMAC Action
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