Net Zero, ESG and DEI
I am neither anti-ESG nor anti-DEI. However, like the democrats always seem to overplay their hand, same is true with most of the ESG and DEI crowd. ESG stands for “environmental”, “social” and “governance” and is pushed by the left to force corporations and financial institutions to go green. The Davos crowd and the UN are enthusiastic proponents. The UN’s Net Zero Banking Alliance is “committed to aligning their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050”. Its members are 131 of the world’s largest banks from 44 countries and $50 trillion in assets. Banks like Barclays, BNP Paribas, Deutsche Bank, HSBC and Lloyds are members. The US banks in the group were Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo. These banks pressure their clients to move their activities toward net zero. Some banks have been accused of debanking fossil fuel companies. Canada’s new prime minister Mark Carney is a true believer and pressured banks to join the Alliance.
In 2022 eleven republican AGs demanded that the US banks turn over information regarding their ESG activities saying that there was collusion that may violate antitrust laws. That investigation along with the election of Donald Trump motivated the US banks to leave the alliance. Thank goodness for the republican AGs!
The companion organization to the banking group is the Net Zero Asset Managers Initiative. Larry Fink of Blackrock was one of this groups leading cheerleaders claiming that climate risk is investment risk and pledged to navigate clients to transition to net zero. The Initiative’s objective is for its asset managers to “assess material climate-related risks” and to commit to a goal of net zero emissions. The 87 members comprise most of the world’s largest asset managers committed to pressuring companies to adopt net zero goals or creating investment funds focused on ESG. Again the republican AGs to the rescue! They threatened to pull their pension funds from Blackrock, Vanguard and others contending that the returns on those portfolios were smaller due to the ESG objectives. Moreover, ESG funds had higher fees. Larry Fink blinked and withdrew Blackrock from the initiative. Blackrock also shut down many of its ESG funds. State Street, JP Morgan, Morgan Stanley, Columbia and Vanguard soon followed. However, the Europeans are still committed to net zero despite the damage it is doing to their economies.
In the US, there are 50 exchange-traded funds that focus on ESG with a combined $70.4 billion. Mind you, I am not opposed to ESG funds. I do oppose asset managers investing their clients’ monies in such funds to the detriment of earnings. I also do not mind that individual corporations incorporate ESG into their objectives, so long as they are open to their customers and stockholders. However, Blackrock and other asset managers were openly supporting shareholder petitions to force ESG into corporations. Blackrock has since announced that it will no longer do so. The top ESG rated firms include Microsoft, Caterpillar, Motorola, Nvidia, Mastercard and surprise surprise Marathon Petroleum. Again, if their stockholders endorse ESG it is fine with me.
What about DEI? There is currently a case before the Supreme Court that some observers on the right contend will be the death knell of DEI. One right wing outlet said the case “will kill DEI.” Not so fast my friends. It will only affect how some parties apply DEI. The case involves a straight white woman who was passed over for promotions by a gay boss who promoted a gay man instead. The lower court said that she did not have standing even though the evidence was on her side because being straight and white meant she was not in a protected class! Huh? You mean that equal protection under the law does not apply to straight white folk? Apparently not in that court. The Supremes appear to be going to rule unanimously in favor of the plaintiff. Justice Kavanaugh said “Discrimination on the basis of sexual orientation, whether you are gay or straight, is prohibited. The rules are the same whichever way it goes.” Even the three liberal justices seem to agree prompting Justice Gorsuch to say “We’re in radical agreement on that today.”
Apparently the 6th District appeals court applies a standard that will be struck down. Even the Ohio solicitor general who argued the case for the state said that “Ohio agrees it is wrong to hold some litigants to a higher standard” because of their identity” and that the plaintiff in this case, “should have the same burden” as a gay plaintiff who made a similar allegation of discrimination.” Slam dunk. Case closed. It is curious that the right leaning media would think that this case will kill DEI. It won’t. It will simply mean that straight whites have the same rights under the law as the so-called protected groups. In the words of Chief Justice Roberts “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” The same applies to race and sexual preference.
haroldblackphd.com 