• October 18, 2022
ESG – Woke or Broke?

By John Williams

October has not always been kind to the U.S. stock markets, and fear is growing amongst investors as we enter the earnings season where many large corporations report their earnings for the previous year and forecast earnings for the upcoming year.  The Dow Jones Industrial Average and the S&P 500 are down 20% and 25% year-to-date, respectively.  People are concerned about their investments and retirement portfolios and rightfully so!

Many Americans save for their retirement through a tax-deferred investment account such as an IRA or 401(k).  Most of the time, this money is placed in various mutual fund companies, and their funds are then invested in the stocks of individual companies chosen by the asset managers of those funds.  The goal for these investments is simple:  invest in companies that make a profit, so your retirement assets grow as much as possible.  Less profit means less money for retirement.

This might seem like common sense, but it’s becoming less common thanks to a new investment strategy called ESG. If you’re wondering what that means, you’re not alone.

ESG stands for Environmental, Social, and Governance, and, generally, it means that a company’s first concern should no longer be how much money it makes, but rather how much social good it does. In other words, “woke investing.”

If you’re an oil company, for example, you’re out of luck because, by the nature of your business, it’s assumed you’re destroying the planet. Never mind that you’re powering homes and hospitals. That doesn’t count.

In fact, if you’re a company just trying to make a profit, you’re the problem.  ESG proponent Klaus Schwab, chairman of the World Economic Forum, puts it this way: “We can’t continue with an economic system driven by selfish values, such as short-term profit…”

People who advocate for ESG investing view Capitalism as a threat, but the genius of capitalism is that it requires businesses to do good things for society to make a profit.  Think about it. If you want to start a business, you’ll have to create a product or service that helps others and at a price they can afford.  In a free enterprise system, you can’t make money without providing a social good or service that people desire or want. Therefore, Capitalism is, by its very nature, conscientious of society.

The pursuit of profits has fueled many of mankind’s greatest innovations.  Everything from aspirin to airplanes came about because of the desire for profit.  Profit is why you have a job, clothes, a house, food, and every other necessity.  Profit isn’t selfish-it motivates us to contribute our talents to help others.

ESG threatens this system by vilifying profits.  ESG wants you to live in a world where profits take a backseat to income inequality, race and gender sensitivity, and climate alarmism.  Companies complying with ESG requirements become less profitable at producing “widgets” because they must focus their profits on solving societal challenges.

But even if you wanted to address those concerns, how would ESG help you do it?  That’s a fair question because there are no ESG certifications or consistent standards.  In fact, there is a LOT of discretion about who gets the label and who doesn’t.  Most of the time, the decisions on who gets the ESG label are decided based on political views.  By comparison, in capitalism, there is a simple metric to determine success: how much profit you make.

However, there are much larger concerns when it comes to ESG.  At its core, ESG is about control and is the codification of the cancel culture. It uses economic force to direct the flow of capital to force people and companies to abide by the views of one side of the political spectrum.

Today, we see this in the form of a government using the private sector to do its bidding, through a backdoor process that the government couldn’t get done through the Constitution. ESG sucks the life out of a democracy because it puts a small group of Elitists and corporate boards in charge of solving societal problems that should be openly discussed and debated in the public square.

We see this manifested from two primary sources, Wall Street and Silicon Valley. From Silicon Valley we see this in the form of censorship of content, and from Wall Street we see this from large financial institutions using their economic power to force policies on Americans that they never would’ve accepted through the democratic process.

In 1776, we fought a revolution, not between Republicans and Democrats, but between the idea of a system of citizens engaging in self-governance versus a system of enlightened elites deciding behind closed doors what’s best for society at large. ESG is the 21st century embodiment of everything we fought against in 1776 and a precursor to Marxism.

So, if somebody tries to sell you on Environmental, Social, and Governance investing, hold on tight to your wallet and your values because ESG is coming for both!

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