We are in an age of contradictions and are fighting people who want to change our freedoms, values and priorities. If you disagree with the new morality you may be called a bigot, a homophobe, a xenophobe etc. These new morality police are called The New Puritans by Andrew Doyle in his book of the same name.
The government and more specifically the SEC are coming after corporations and colleges to come under their new moral standards. ESG or (Environmental, Social, Governance) is a new slate of rules by elites who have no problem turning our moral and cultural norms into mush. You see, it’s “your truth,” that matters and nothing else. Your truth is correct, so is hers. That is, until you don’t agree with the government’s truth. Then you are a bigot, or racist, homophobe, xenophobe and of course, an oppressor. Because oppression you see, is the worst sin of all. If you are white, or conservative it is a done deal, you are an oppressor.
Extortion by the new mob
Companies fear the extra cost and scrutiny they will face if they refuse. What is the difference between extortion, the “protection rackets” run by the mob and the selling of ESG? “Ya know Mike,” I’d hate to see somethun’ bad happen to a nice little company like this.” There is no difference. This is legal extortion. Sign up or trouble will show up. When the companies are ranked they are ranked on how well they are doing with ESG, but when I see that information and they are commonly called “ESG risk ratings.” Translate as “hey investors, this is how much risk you are taking for owning a company who isn’t going along with our rules that are needed to stop climate change and “systemic racism.” Buy at your own risk. Not being hysterical about race or climate is rapidly becoming morally unacceptable.
Threats of higher borrowing cost by lenders to non ESG companies
The other risk that they say you will have by investing in a company who refuses to be run by the government is the threat that those companies may be punishing by having to pay higher rates to get access to capital, i.e., cost of borrowing. This is just being studied, but it is clear that non-ESG complying companies are paying more interest to borrow than those that toe the line. The lenders justify this because they can call non-compliance a credit risk and get away with it. Several actions against this are in progress against this but it is ongoing.
Slides from The Coca Cola company’s ESG training.
As I touched on earlier, the owners of these companies, sometimes succeeding due to a lifelong dream and good standards, now must face forced standards that they disagrees with. Many of us may agree with the standards in principle but not agree it is the governments job to be the moral enforcers of companies.
Not fear of ESG costing them money so much as the risk of the government sanctioning them for being “bad” by fining them or restricting their access to capital.
Impact on investors
ESG mutual funds have sprung up and are growing rapidly. This isn’t due to people getting fired up about climate change or forced diversity. It goes back to a new way of changing peoples thinking. It starts with polls worded in a way that people will agree. The pollsters could ask many different questions, but here are two examples.
- If you could choose, would you prefer to invest in companies that are doing well but also trying to operate in a way that benefits society?
- If you could choose would you invest in a company who tries to maximize value for shareholders or one that tries to maximize shareholder value but spends a lot of money to promote diversity and climate change?
Two questions kind of asking the same thing but in a way to get you to react, not think.
That is also how advisors are trained when offered more commissions on sales of ESG funds. “Let’s find some great companies and then lets pick those that also benefit society!”
We are getting played by word games and the circle of lies created by pushing something, polling something, promoting the findings to get people to believe it’s a good thing.
The survey from question 1 is made public with an announcement that may read: Investors are demanding more action from the companies they own to be good global citizens. Thus, this false choice is made more and more until people actually think it’s a good idea without ever hearing it from a standpoint of what it will cost them.
An Inconvenient Truth About ESG Investing Shangai Bhagat (03/21/22) Harvard Business Review
https://hbr.org/2022/03/an-inconvenient-truth-about-esg-investing
Recent ESG Fund Underperformance And Data Inconsistency- Carrie McCabe (03-31-23) Forbes
As shareholders we can’t sit by and watch this hurt our investments for causes we don’t believe in. We need to vote our shares on issues pertaining to ESG. Every company has an Investor relations department that you can call and state your opposition to ESG.
Email me if you have questions on how to do this. I will keep you abreast of ESG issues and try to lean toward not investing in ESG companies if it helps returns.
See you soon,
Craig