In RealClearEnergy, Rupert Darwall explains that the establishment, both Democrats and Republicans, are circling the wagons to protect ESG investing from conservative challenges. He writes:
This month, conservative critics of environmental, social and governance (ESG) investing had something of a surprise – an almost-simultaneous attack on their views from both Left and Right mounting remarkably similar arguments. Writing for CNBC last week, Democratic Senator Sheldon Whitehouse, the Senate’s climate-denier-witch-finder-in-chief, together with Senators Brian Schatz and Martin Heinrich, denounced state Republican officials for their stand against financial institutions whose anti-fossil-fuel policies damage their states’ economies. These elected officials, the senators wrote, are engaged in a purely ideological, anti-capitalist crusade against free-market principles.
Ten days earlier, from the Right, American Affairs senior editor Julius Krein launched a 4,800-word broadside on ESG’s conservative critics. They don’t understand, Krein suggested, that ESG is an outgrowth of shareholder primacy, the very thing they believe in.
Thus, both ends of the political spectrum end up on the same page, accusing pro-market, anti-ESG critics of subverting free-market principles.
The Old Left and New Right are converging in other areas. The trio of Democratic senators write of the “significant economic risks” of not transitioning to a low-carbon economy. Krein agrees. Major environmental catastrophes are generally bad for business, he writes. Clean energy also gets the nod. It’s the future, Klein avers, and missing out on it represents “a major business risk.” Krein even supports some aspects of the corrosive Diversity, Equity and Inclusivity (DEI) component of ESG. Disney, he suggests, “can easily make a prima facie case that its management should reflect the demographics of its target audience.”
Krein argues that conservatives should drop their “silly pretence” in the efficacy of markets and promote a conservative version of ESG, incorporating “their own substantive goals” – an implicit admission that ESG is indeed a vehicle for promoting a political agenda. This is asking conservatives to accept two counterintuitive propositions: first, that Congress and the administrative state have the potential to be more efficient capital allocators than markets; second, that conservatives can impose their cultural values and political preferences on Wall Street and blue-state pension funds such as CalPERS, CalSTRS, and the New York State Common Retirement Fund.
Entirely missing from Krein’s account of ESG is any notion of beneficiaries. Trust law, statutes such as Employee Retirement Income Security Act of 1974 (ERISA), and the courts require fiduciaries to act in the sole financial interests of beneficiaries. This mandate is anathema to collectivists of all stripes who want access to trillions of dollars of retirees’ capital to pursue public-policy objectives purportedly necessary for societal improvement and bringing harmony between people and planet. This effort to socialize savings is already underway in Europe. By joining with the Left, the New Right would help bring about the very thing it deplores: the Europeanization of America. Is this what national conservatism is going to be about?
Action Line: Your first question when seeking an investment advisor is “are you a fiduciary?” You might be surprised at how many “professionals” are not. When it comes to ESG (environmental, social, governance) don’t let another person’s political beliefs get in the way of your portfolio. If you’re not happy with how you’re being treated then vote with your feet.
E.J. Smith - Your Survival Guy
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