Is Investing in ESG WOKE?
In this article, Tanya Khotin explores ESG ratings, the political divide, the perception of WOKE, and the need or want to choose a side.
For years, since values-based Socially Responsible Investing (SRI) has morphed into Environmental, Social, and Governance (ESG)-factor investing, we said that ESG was just a screen…
We insisted that it was NOT about values – it was about looking at all the possible ways in which externalities (like paying people too little and abusing them in other ways) would become internalized over time (like having to fight a unionization drive at your company).
We told people — it’s not whether you believe in climate change; it’s whether you believe in weather (or rather, in the impact of its increasing volatility on crop yields).
Don’t worry — we said – you don’t have to pick a side. “We can all do well by doing good!”
We did say quietly that ESG, if followed to its logical outcome, should make the world a better place. But in the meanwhile, it was just a good investing strategy!
And in the interim, we ignored little things like legal and illegal corruption at company and country levels … (and by legal corruption, I mean lobbying and massive PR work to influence public opinion…)
We ignored when in exchange for supporting GOP candidates for office (the same GOP candidates that got us the SCOTUS line-up, J6, unchecked mass killings, overturning of Roe, etc.), Corporations got lower/no taxes, less enviro and labor regulations, less / no oversight of anti-monopoly practices, and everything else they wanted.
ESG ratings didn’t (and don’t) capture whether a company is making commitments that its lobbyists work hard to ensure the company couldn’t possibly meet (Net … ahem … Zero).
We ignored a minor piece of logic – that the only way the world becomes a better place is if its governing bodies make it so, by governing in the interests of the public.
If ESG doesn’t even try to capture the political process in its methodology, if it continues to steer clear of the enormous role that corporates, whose stocks and bonds we screen in ESG terms, play in how our government is elected and then in whose interests it actually governs, ESG cannot make the world a better place.
Put simply, if ESG does not cover politics, it is not just any screen; it is a smoke screen.
Key points include:
- Definitions of WOKE
- ESG smoke screens
- Legal and illegal corruption
Read the full article, ESG defined as “Woke” and unwelcome in Red states, leaving us with the right – and obligation – to choose…, on LinkedIn.