The Patriot Post® · ESG Asset Managers' Dirty Little Secret

Money talks.

That seems to be the sentiment among ESG investors these days, who label their funds as environmentally friendly while ensuring that those same funds enjoy a healthy dose of investment in fossil fuel energy sources such as coal, oil, and natural gas.

And why wouldn’t they? Without those fossil fuel investments, those feel-good ESG funds would be bringing up the rear. Late last year, Power Line’s Steve Hayward noted that most ESG funds were the tail-end Charlies in an already bad market. “What is best performing sector of the stock market this year?” Hayward asked. “Fossil fuel companies. In other words, energy that works. If you are overweight in oil, gas, and coal, you’re up on the year. That’s one reason to run as fast as you can away from any fund that boasts it doesn’t invest in oil or other forms of energy that work.”

Asset managers, it seems, have gotten the memo. As The Washington Times reports, “Mega asset managers are all-in on ESG investing that favors the environment and social justice politics, but their labels for such funds tell a different story: ESG investors also are buoying fossil fuels with billions of dollars.”

The Times continues: “There is nearly $3.1 billion invested in fossil fuels across 10 of BlackRock’s largest ESG-labeled funds that each have at least $1 billion or more in assets, according to data compiled by As You Sow’s fund tracker and analyzed by The Washington Times. The fossil fuel share of the individual funds ranged from 2.8% to 12%.”

Imagine that. Those ESG funds aren’t as “E” as they’re promoting themselves to be.

Quipped Andrew Behar, CEO of the nonprofit shareholder advocacy organization As You Sow, “Even Vivek Ramaswamy would like [BlackRock’s] ESG funds.” Ramaswamy, in addition to being a Republican presidential candidate, is also a self-described anti-woke crusader.

Behar added: “There’s a problem with fund naming. They’re misleading. People who want to invest in fossil fuels are confused and people who don’t want to are confused. Everyone is confused.” The only thing that’s not confusing, it seems, is the solid performance of fossil fuel stocks.

ESG, as you may know, is the innocent-sounding acronym of Environmental, Social, and Governance, a trio of attributes that are an integral part of The Great Reset and represent nothing less than a new way of evaluating the business enterprise. Rather than assessing traditional factors such as revenue, profit, debt, the quality of goods and services, brand loyalty, and other metrics, ESG assesses companies according to their fealty to social justice and other “progressive” causes. In other words, ESG is where wokeness meets Wall Street.

To be clear: ESG is a drag on investment. As Mike Edleson and Andy Puzder recently pointed out in The Wall Street Journal:

The data indicate that, as common sense would suggest, companies that focus on profits outperform companies that don’t. As a corollary, it seems obvious that asset managers won’t maximize shareholder returns if that isn’t their focus. It’s hard enough to generate profits and returns when that is your focus, let alone when you’re trying to change the world. When the business of business is no longer business, it may be unclear who wins, but it’s clear that shareholders lose.

Elon Musk put it even more bluntly back in May: “ESG is a scam,” he said. “It has been weaponized by phony social justice warriors.”

Blackrock, which has around $10 trillion in assets under management, and other woke-capitalistic asset managers are, understandably, trying to thread the needle between ESG fealty and good stewardship of their clients’ money. “Our investment view is carbon-intensive companies,” said Rich Kushel, head of BlackRock’s portfolio management group, “will continue to play a crucial role in the economy for the foreseeable future under any plausible transition path, alongside investments in new energy technologies and steps to mitigate methane and carbon emissions — all of which will create new investment opportunities for our clients. Ultimately, the choice of where to invest rests with our clients.”

Translation: We’re bound to ESG, but we’re not idiots.