How ESG is Bankrupting the Free Market
You might not know what “ESG” stands for.
In fact, unless you work for a big investment bank—or you’re a member of a “woke” corporate board—ESG (environmental, social, and governance) standards probably aren’t on your radar screen.
That’s because “ESG” could end up being the most expensive acronym you’ve never heard of. In the years ahead, it has the potential to force millions of Americans to fund the Left’s agenda without even knowing it.
ESG, at a basic level, is an investment strategy. But instead of prioritizing the investments that bring the best financial return—to make money on an investment or save as much as possible for retirement—ESG artificially elevates investments that align with a certain political or social cause instead.
That means green energy gets artificially pushed ahead of Texas oil companies, pro-abortion businesses and states win out over pro-life ones, and American companies like tobacco and coal get pushed off to the side, regardless of performance.
And everyday companies are taking note.
ESG creates a financial incentive for businesses to align themselves with the “woke” agenda with pride flags in their logos, paying employees to seek abortions out of state, and even picking fights with “unpopular” elected officials to prove their “corporate social responsibility.”
But elected officials are taking note, too.
Florida Governor Ron DeSantis announced a legislative proposal that will protect Floridians from (ESG) corporations. The legislation would prohibit state board of administration (SBA) fund managers from making investment decisions based on political factors and would prohibit large financial institutions from discriminating against Floridians based on political affiliation or religious beliefs.
A group of 19 Republican attorneys general recently called out the CEO of the investment firm BlackRock for prioritizing left-wing political initiatives over shareholder returns. The group warned that BlackRock was jeopardizing the retirement funds of the workers and pensioners, and that their plan “is likely insufficient to satisfy state laws requiring a sole focus on financial return.”
In the past two years, West Virginia and Texas broke new ground as the first states to refuse to do business with Wall Street firms that boycott the fossil fuel industry, giving real-world consequences to ESG decisions.
Unfortunately, states are moving in one direction, but the federal government is moving in the other.
The House of Representatives narrowly passed a bill that would require all public companies to formally report on their ESG metrics, setting the state up for future financial bullying (or legal enforcement) if they aren’t “woke” enough.
The Securities and Exchange Commission (SEC) is taking an “all-agency approach” to ESG, responding to what it calls “investor demand for climate and other environmental, social, and governance (ESG) information.” The SEC has even created a “Climate and ESG Task Force” inside of its Division of Enforcement.
The message from the federal government is clear: Go “woke” or go broke.
But the message from the states that are most impacted by ESG is clear, too: Local businesses and good-paying jobs are more important than virtue signaling from investment banks and corporate boards.
And thankfully, more and more states are starting to stand up and fight back.