October 21, 2022

Red States Go After Woke Banks’ ESG Agenda

Nineteen Republican-led states have seen enough of the anti-capitalist pressure being applied by big banks on American business.

If you haven’t yet heard of ESG, now is the time.

For years, the innocent-sounding acronym of Environmental, Social, and Governance has been flying under the radar, amassing strength and exerting ever greater influence. Briefly put, it’s where wokeness meets Wall Street.

Why should you care? Well, if you have money invested in the stock market, it’s probably already being hamstrung by investors who are more concerned with ingratiating themselves to global elites than they are maximizing the financial performance of your humble portfolio. Calling itself “a framework for understanding and measuring how sustainably an organization is operating,” ESG is in fact the corporate roadmap for The Great Reset, which we covered here and which Michael Rectenwald explains in greater detail here.

ESG represents 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 scores companies according to their wokeness.

“For example,” as columnist Justin Haskins writes, “a company that uses ‘too much’ plastic, emits ‘too many’ carbon-dioxide emissions, or doesn’t have the ‘right’ ratio of Asian to Hispanic workers — all of which are real examples from ESG frameworks — would be ranked lower than another company whose profits might be smaller and products of a lower quality but who scores better in the metrics that elites value.”

What happens when a company doesn’t toe the ESG line? As The Wall Street Journal’s Andy Kessler writes: “On May 18, the S&P dropped Tesla from its S&P 500 ESG Index. Exxon is still in. The S&P explains why, unconvincingly citing ‘Tesla’s (lack of) low-carbon strategy.’ Tesla CEO Elon Musk tweeted, ‘ESG is a scam. It has been weaponized by phony social justice warriors.’”

Musk tends to have a way of sniffing out such things.

Kessler notes four key points about ESG made by University of Colorado professor Sanjai Bhagat: First, ESG funds have underperformed; second, companies that tout their ESG credentials have worse compliance records for labor and environmental rules; third, ESG scores of companies that signed onto the United Nations’ ESG program didn’t improve after they signed, and financial returns were lower for those that signed; and fourth, Kessler’s favorite point, companies publicly embrace ESG as a cover for poor business performance.

“It makes sense,” Kessler writes. “When earnings are bad, companies cite their focus on ESG. When earnings are good, they drop ESG references.”

Here in our humble shop, we call this a scam.

On a related front, a group of 19 Republican-led states is launching an investigation into the involvement of six large U.S. banks in the UN’s Net-Zero Banking Alliance, which they say is killing American companies by starving them of funding unless they go woke.

As Fox Business reports: “The states, led by Missouri Attorney General Eric Schmitt, oppose the UN’s environmental, social, governance (ESG) policies that require banks in the alliance to set carbon dioxide emission reduction targets in their lending and investment portfolios, and reach net-zero emissions by 2050.”

The six banks — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo — were subpoenaed Wednesday by the states.

“The Net-Zero Banking Alliance,” says AG Schmitt, who’s also the Republican candidate to fill the Senate seat of retiring Senator Roy Blunt, “is a massive worldwide agreement by major banking institutions, overseen by the UN, to starve companies engaged in fossil fuel-related activities of credit on national and international markets. Missouri farmers, oil leasing companies, and other businesses that are vital to Missouri’s and America’s economy will be unable to get a loan because of this alliance.”

What do Schmitt and his colleagues hope to achieve? He continues: “We are leading a coalition investigating banks for ceding authority to the U.N., which will only result in the killing of American companies that don’t subscribe to the woke, climate agenda. These banks are accountable to American laws — we don’t let international bodies set the standards for our businesses.”

Kudos to Schmitt and his fellow attorneys general in Arizona, Kentucky, Texas, Arkansas, Indiana, Kansas, Louisiana, Mississippi, Montana, Nebraska, Oklahoma, Tennessee, and Virginia, in addition to five other states bound by confidentiality requirements, for taking the fight to these lily-livered banks, to the America-hating UN, and to the globalists whose woke agenda imperils the free-market capitalist ethos that has brought more wealth and prosperity to more people than any system ever devised.

Banks and investment firms can manage our money with our best financial interests at heart, or with ESG at heart. But not both.

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