ESG: Are Markets Ready for “A Needed Dose of Reality?”

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You have been reading for years here on YourSurvivalGuy.com about the dangers of ESG investing. Here’s a small sample of what Your Survival Guy has been telling you about ESG investing and its proponents:

• You Invest, They Win: ESG Is a Money Grab
• The Woke ESG Investing Money Grab is Falling Apart
• Your Survival Guy Never Buys ESG Funds Ever
• EXPOSED: ESG’s Biggest Con Explained
• Is Your Financial Advisor Hiding the Truth About ESG?
• ELON MUSK: “ESG Is the Devil”
• ESG, Richard Young, Jack Bogle, and You
• ESG Money Managers Are Feeling the Heat
• ESG Is Another Way to Attack Conservative Principles
• The Painful Truth for ESG Investors

Now, in The Wall Street Journal, James Freeman wonders if ESG has peaked, as “recent market ructions finally brought a needed dose of reality.” He writes:

A few years back various Wall Streeters were whispering that the political fad of investing with the so-called environmental, social and governance (ESG) agenda would continue to gain ground until the next bear market. Have the last year’s geopolitical events and investing losses plus recent market ructions finally brought a needed dose of reality? Even today such talk is generally confined to background discussions because Wall Street remains institutionally politically correct. But a welcome change toward focusing on doing right by shareholders may be in the offing. Such a change would also benefit the U.S. economy and human flourishing around the world. That’s because profit-seeking corporations, not politics, represent the most efficient path to fueling, sheltering and feeding a hungry world.

For the uninitiated, the “G” in ESG is highly misleading because this is not about sensible corporate governance focused on the long-term health of a business for the benefit of shareholders. The “E” and the “S” are about serving political agendas on climate and social issues promoted by “stakeholders” who often have no stake in the enterprise. Such influencers are generally seeking to bully companies into enforcing policy changes that voters have rejected.

Even before the recent market tumult sparked by Washington-created inflation and the resulting rise in interest rates, a successful fund manager recently shared with this column a cautious optimism:

Up until recently, ESG was just growing and growing, meaning it was more and more of a focus. It was a focus of investors of funds like ours. It was a focus of corporate chieftains, some of whom spent a lot of effort virtue signalling, you know, [BlackRock Chairman] Larry Fink, et cetera. Other corporate executives were simply kind of run over…

My belief is that ESG has peaked. That doesn’t mean at all that it’s going to disappear. But I sense a spirit in the investing community of a little bit of courage, where even a year ago there wasn’t courage. There was dancing. There was wiggling, wriggling, trying to deal with this amalgam of stuff because clients were saying that it was important to them. Funds and investment managers were trying to deal with it without disrupting their strategy, their approach, their ability to make money.

He notes that the “transition from oil, gas, coal to solar and wind will take many, many decades, if ever, to complete” and adds:

Are you telling [billions of people in Africa, South America, and Asia] that they should do without reasonably priced or cheap energy because a hundred years from now the houses on stilts on the Malibu beach are going to be underwater?

The fund manager also notes that defining ESG is highly subjective and, as in the example above, may end up harming the world’s poor. He adds:

So once you point those conflicts out, the investors who want ESG—they’re not folding, but they’re as confused as the rest of us as to what this is.

Action Line: When you’re ready to talk about taking control of how your shares are voted, I’m here.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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