ESG Investment Reduction Benefits Shareholders, Infuriates Leftists {Issues: 1st Amendment, Environment}

ESG Facts

ESG Investment Reduction Benefits Shareholders, Infuriates Leftists {Issues: 1st Amendment, Environment}

Last week, President Donald Trump and U.S. Department of Labor Secretary Eugene Scalia moved to reduce Environmental, Social, and Governance (ESG) related corporate investments, leaving fund management companies and leftist media outlets infuriated. These companies and media outlets are afraid that without ESG investment policies, shareholders’ investments will be used to make greater returns – not to support leftist agendas such as climate change and gender diversity in the workplace. 

A primary tactic of ESG proponents is to insist that companies are responsible above all for their “stakeholders” – whom BlackRock CEO Larry Fink broadly identifies as “your shareholders, customers, employees, and the communities where you operate.” This doesn’t sound bad at first glance, but a deeper look reveals that the ESG “stakeholder” model places supporting politically correct agendas above shareholders’ financial goals, even if an ESG return is significantly lower than what could be made with another investment. 

All this is done under the assumption that “stakeholders” – which could be almost anyone related to a company – hold the same importance as people who invest in a company’s future when it comes to company choices. And more insidiously, ESG proponents consistently feign that all the aforementioned stakeholders are aligned with leftist agendas concerning the environment and social issues. 

Leftists want us to believe it is not only acceptable but necessary, for investments to fit socially acceptable criteria above actually serving those who invest in a company. But social politics and agendas don’t make it right to cheat shareholders out of money, particularly in retirement funds. Companies may have general duties to stakeholders, but when it comes to investments, their first responsibility is to their investors, not the broader community.

When examined, ESG is merely another leftist tool seeking to bring social politics and activism into a position of power over the financial returns of investors. Don’t let the nice catchphrases fool you. Sending politically correct messages should remain the prerogative of political activists, not corporate leaders whose job is to provide products, services, and returns to investors.