ESG

Social Justice Usage

Source: Schwab, Klaus, and Thierry Malleret, The Great Narrative for a Better Future: The Great Reset, Book 2. Forum Publishing.

Nowadays, business leaders no longer consider the improvement of stakeholder value as an option. For all the reasons expanded in other parts of this book, they know that there is no alternative way forward. That is the reason why, in the coming years, measuring ESG performance will be the gold-standard of business adherence to stakeholder value. Many businesses do not have an interest in making the world better, and some will be tempted to engage in green- or woke-washing, but they’ll be forced to commit to ESG and, ultimately, all the commitments will be put to the test by government action and societal pressure.

New Discourses Commentary

ESG is an acronym that stands for Environmental, Social, and Governance and refers to a scoring metric primarily within investment finance using those three dimensions for the basis of its scoring. Large investment banks use ESG scoring as a form of what they claim is risk assessment for long-term investments like those in index and mutual funds and other forms of pooled or passive investment portfolios. They also use them to engage in what is known as “impact investing,” which is investing in order to create desirable social or political outcomes, i.e., to make an “impact.” In this regard, they can be thought of as a kind of impact-based credit system (that is, a social credit system) for investment capital, mostly retirement pension capital that is invested for long periods of time in passive investment portfolios.

The large investment firms most notably involved in the ESG scoring system include BlackRock and Vanguard along with Goldman Sachs, State Street, JP Morgan Chase, and Fidelity. Governments, including the United States through its SEC rules, are joining in on the ESG program now as well, and this may be partly or largely due to the influence these companies have but also the influence wielded by large NGOs like the United Nations and World Economic Forum. There are strong reasons to believe these organizations, public, private, and NGO, are colluding under conspiracy to mandate ESG policy upon corporations of every size via different mechanisms.

ESG scoring is, for example, intrinsically woven into the foundations of the UN “Sustainable Development Goals” (SDGs), which are “17 Goals to Transform Our World” as a part of their Agenda 2030, which puts a target date on achieving certain benchmarks with regard to that transformation. Though it is possibly coincidental, the word “transforming” in relation to changing the world to be more environmentally and socially ideal—not to mention being under a cooperative global system of administrative governance—has been a central pillar of Communist thought from the writing of the early Marx, say in the Economic and Philosophic Manuscripts of 1844, which predate both The Communist Manifesto (by about three and a half years) and Capital (by about 23 years).

Before analyzing E, S, and G on their own terms, it’s worth noting how the ESG scoring system works, along with certain points about its history. Three points stand out. These are that (1) ESG investing is a form of impact investment that doesn’t necessarily advertise itself entirely as such, (2) ESG investing is most importantly done through passive investment programs and therefore invests other people’s money, and (3) the firms controlling the ESG scoring systems control a sizable percentage of all investment assets in the world and therefore have tremendous, if not cartel, power over markets.

First, then, ESG is unabashedly a form of impact investing that claims to be long-term risk management investing. This mismatch is egregious as there’s no clear connection in theory or evidence proving that ESG investing manages long-term investment risk, though the sociopolitical manipulation as an “impact” investment is clear. The claim that a failure of good corporate governance, responsible environmental behavior, and corporate social responsibility would correlate with eventual problems for corporations is a reasonable one, but there is much ambiguity in what constitutes these three measures. Disagreement and competition on what complex ideas like environmental and social responsibility, and what constitutes good corporate governance, would be a sign of a healthy market, but ESG standards actually prevent that from occurring. On the other hand, “impact investing” is likely to be expensive since it seeks to achieve other (often expensive) goals in addition to improving shareholder value, so it stands to reason that ESG investment programs sold as good long-term profitability measures are little more than scams to enable the impact investment. The actual history of ESG investing bears this skepticism out, as we will see.

In the current ESG scoring systems, however, very little difference about what constitutes good ESG-compliant policy, all of which serves a particular agenda and seems to be failing to deliver on its promises of long-term return-on-investment. In fact, some highly ESG compliant nations are collapsing, and highly ESG compliant corporations perform worse, in many cases, than their competitors. This issue has led several states in the United States to offer legal guidance that ESG compliance is likely to violate fiduciary responsibility of corporations. Indeed, because of the demands imposed by the Social and Governance scoring, ESG compliance may also create liability and exposure for companies, notably for example with regard to discrimination law.

These data are somewhat obscured by the fact that every corporation is forced to be highly ESG compliant. When companies that are highly ESG compliant do badly, these entities often accuse them of “greenwashing” or “Wokewashing” (to use Klaus Schwab’s words, from The Great Narrative for a Better Future) their companies rather than committing to ESG principles in earnest. This compels companies to toe the environmental and social (justice) lines in all aspects of their business, including in the preparation and sale of their products, whether they agree with the impact agendas of Larry Fink (CEO of BlackRock) or Klaus Schwab (Executive Chairman of the World Economic Forum) or their hand-selected council of stakeholders on all matters ESG, e.g. Bill Gates, John Kerry, and so on.

In practice, then, corporations are strongly pressured to engage in a monopoly-trust behavior known as “bundling” under ESG scoring programs. The impact investing behind ESG creates a strong pressure for corporations to bundle social, political, and environmental ideals, objectives, and products into their offering in order to maintain high ESG scores. Since the market depends on ESG compliance in the current system, virtually no alternatives outside of the ESG-compliant scheme are available. Consumers are therefore required to purchase products that include ESG-compliant activism as a part of the product, but this is likely to constitute illegal bundling under existing anti-trust law. Due to the structure of the ESG-rigged market, however, no one in particular can be held liable for this bundling unless it would be the large investment banks who control the capital flows on a scale never before seen on Earth. Again, there’s little theoretical reason or practical evidence supporting that these narrowly defined ESG metrics achieve their selling point on financial markets, which is reduced risk in long-term investment portfolios.

Second, ESG investment is not impact investment being done by individuals like Larry Fink of BlackRock himself, at least not at the relevant scale. These financial institutions command the wealth of the world’s pension funds, and the power to compel corporations and other institutions around the world into full and enthusiastic ESG compliance follows from the reservoir of money controlled as such, mostly through long-term, passive investing. This reservoir of assets under control of the setters of ESG measurement likely exceeds (USD) $10 trillion, much of which is bound to be held for a long duration against tax penalties for earlier withdrawal.

Obviously, this raises an important question in light of the fact that ESG is ultimately impact investing posing as long-term risk management: should a small number of self-appointed “stakeholders” be allowed to do impact investing for their preferred impacts under the auspices of managing other people’s money? Someone may, for example, hold diametrically opposed values to the ESG or UN “sustainability” agenda but work for an institution, like a school, university, or corporation, that pools pension and retirement investment for certain advantages, leading that person to be impact investing against his own values with little or no meaningful recourse.

Third, the quantity of money under ESG-mandating management is a sizable percentage of all the asset capital on Earth, which gives unbelievable power to the asset managers controlling it, especially if they are colluding directly or indirectly on the definitions of ESG compliance. As mentioned, we are talking about many trillions of dollars in (other people’s) assets under management. In fact, it has been estimated, that just the two or three largest investment firms listed above, combined, own (technically by proxy) more than a third of the entire S&P500. Consequently, these firms also own (technically by proxy) substantial, if not controlling, fractions of many, if not most, large, publicly traded companies, which allows them to exert tremendous influence through proxy voting, demoting a company’s ESG rating (perhaps arbitrarily, see Tesla), and the ability to sell large quantities of shares if those corporations don’t maintain fidelity to the ESG impact programs.

While these companies control considerable voting power over the corporations they kind-of own large stakes in, the capacity to sell off huge fractions of the stocks of any given non-compliant company in a short time (thus massively devaluing their stock) and the ability to downlist ESG compliance (thus additionally spooking potential investors) gives those firms controlling these assets virtual cartel power over most of the large publicly traded corporations on Earth. Since they control these massive reservoirs of investment capital, it also gives them considerable power over lending interest rates and access to startup or other investment capital, extending their influence over virtually the entire corporate and institutional worlds. In light of this, the lack of diversity in what qualifies as good environmental, social, and governance policy for corporations and institutions represents a significant capture of the entire market.

It’s important to understand that the central scheme described above—how to do massive-scale impact investing with other people’s money—was the purpose of ESG investing from its beginning. The ESG investing scheme was begun in 2003 by a young United Nations staffer named James Gifford. The team he joined and help shape in that year went on to define the United Nations Principles for Responsible Investment, but Gifford’s ambitions were specifically to connect the huge reservoirs of passive investment (retirements and pensions) under management to (especially environmental) impact investing programs. The goal of the UN Principles for Responsible Investment program was to figure out how to get fund managers to “view sustainability as central to their entire mandate.”

The ESG program, then, arose specifically from within the context of early 2000s environmental activism movement as it connected to the broader UN “sustainability” agenda, which, among other things, believes that anthropogenic climate change is a catastrophic and existential risk for all of humanity and life on Earth unless several trillion dollars a year are directed specifically to mitigating it through radical environmental policies, especially the reduction of carbon dioxide in the atmosphere.

The E, for Environmental, in ESG is therefore easily understood. Key expert “stakeholders” at major outfits like the United Nations, World Economic Forum, and many of the world’s largest philanthropic foundations, working with university professors, determine what they consider to be sound environmental policy for corporations in alignment with this particular environmental activism agenda. Corporations are then scored according to their compliance with that activist agenda, and if they don’t like it or don’t agree, they find themselves in the risk circumstance outlined above.

Much could be written about this particular environmental agenda, including whether the models indicating a looming global catastrophe are accurate or whether human activity contributes to the issue in any significant way. For the time being, it is sufficient to point out that not only is the radical environmentalist movement that views human-caused climate change to be an existential risk at the center of all E-in-ESG policy, so too are plainly ideological agendas like “environmental justice” and “climate justice,” which are asset, access, and resource redistribution schemes based on claims of injustices and inequities in environmental outcomes (i.e., enviro-Socialism).

It bears mentioning that good E-in-ESG policy conforms almost entirely to the so-called Green New Deal, particularly with electrification of everything powered entirely by renewables and definitely not at all by nuclear power in any form. European countries like Germany are currently in a severe energy crisis as a result of shutting down their nuclear power plants because of the ESG agenda. In some sense, it is accurate to say that the E in ESG stands for “energy scarcity,” which will be administered by the same council that is manufacturing it.

The Corporate Social Responsibility movement, which was radically altered toward the “Woke” following the Occupy Wall Street movement in 2011–2012, forms the basis for the S, for Social (Justice), component of ESG. In other words, the S in ESG stands for Social Justice, which is little more than the updated branding for Communist redistribution under the identity-political social theories of late neo-Marxism (that is, Woke Marxism). Corporations and institutions that promote, implement, mandate, and sell “Diversity, Equity, and Inclusion (DEI)” or “unconscious bias” training and policies or that support “Woke” social causes will see their ESG scores go up. Thus, the prevailing wisdom of “Go Woke, Go Broke” is revealed to be suspended through ESG-driven market manipulations, and corporations are highly incentivized to bundle certain forms of environmental and social activism with their products and services, even if it enrages customers or craters revenue.

The S-in-ESG score is the primary reason that no school, university, or major corporation will remove DEI or unconscious bias programming, among other desirable outcomes now that Woke is so universally hated. They don’t have the opportunity. It is too financially risky and too costly to go against S-in-ESG policy to take the risk, even if it would attract an incredible customer, thus revenue, base. It must be said that this sort of behavior is indicative not of a market but of a cartel-controlled environment.

Of note, Elon Musk’s Tesla corporation was severely demoted in ESG standing after he announced he was going to purchase Twitter, and the claim was that Musk’s behavior and Tesla’s management fell egregiously outside of proper S-in-ESG policy. That is, the Social component of ESG was instantly adjustable for a corporation doing things that the people controlling ESG didn’t like. Of further note, when the conflict with Russia in Ukraine broke out, weapons manufacturers, which had previously scored low on the S-in-ESG metric, were upgraded to high ESG standing via the Social scoring if they were producing weapons for the Ukrainian side because the conflict in Ukraine was declared a global social emergency. In decisions like these, laid utterly bare was the capacity for the ESG czars to use ESG scoring to accomplish whatever aims they want by leveraging the world’s corporations and institutions (including media) to take up the cause (like a cartel).

The G in ESG stands for (corporate) Governance, and on its face it is the least controversial of the three letters. The idea that corporations and institutions that engage in best-practices in governance are the lowest long-term risks for investors is obviously true, at least when best-practices are, in fact, genuinely best practices in the domains those entities serve. While some best-practices do, in fact, raise the G-in-ESG score for these entities, there are other criteria as well. For example, having a “diverse” corporate board, filing requisite ESG paperwork, and hiring political officers in the form of DEI and ESG officers is also necessary to having a high G-in-ESG score. On this last point, it is difficult to see how this requirement differs significantly from the Soviet demand to place commissars that enforced Soviet policy in various working entities in the Soviet Union. The Soviets, after all, believed the enthusiastic and fully monitored implementation of their Communist ideology was necessary to save humanity from itself, too.

In summary, ESG scoring is a tool to enforce a narrow conception of impact investment through leveraging the ocean of investment capital assets contained in the world’s pension funds under the guise of being a smart risk-management metric for long-term investing. Crucially, the entire scam is being conducted by risking most of the world’s population’s retirement assets to try to achieve this narrow and potentially self-serving “transformative” vision. While it is possible that sound environmental, social, and institutional governance policies might, in fact, contribute to reducing long-term risk or raising long-term profitability for corporations and institutions, as it is implemented, it is the tool of a monopolistic financial-sector cartel that wishes to force the world to manufacture the impact envisioned by its founders and leaders. That’s the most charitable case, anyway. It might just be a way for these same powerful people to enforce their power over everyone for the sake of shaping the world as they would, depending on how much they actually care about those impacts and how much they wish to leverage them to gain and maintain control.

Revision date: 9/2/22

⇐ Back to Translations from the Wokish

James Lindsay