There’s no such thing as blue money or red money. Only the green stuff will pay bills.
Friday, North Carolina State Treasurer Dale Folwell became the latest of many officials from nearly half the states across the U.S. — including Florida, Texas, Kentucky, Missouri, Arizona and West Virginia — to protest Wall Street’s blue investment strategy, also called ESG.
What is ESG? “E” stands for environment, “S” for social justice and “G” for corporate governance. ESG funds invest in companies that oppose fossil fuels, push for unionization and stress racial and gender equity over merit in hiring and board selection. That’s a partial definition because at least a dozen rating firms tag companies with an ESG score, often based on subjective and somewhat secret criteria, even including a company’s stance on abortion rights.
State officials are pulling billions of dollars out of Wall Street asset managers like BlackRock, State Street and Vanguard, citing ESG’s lousy returns and strong-arming of corporations that don’t bow to the left-wing agenda.
Pay attention to what these officials are warning because small investors are also getting hurt by ESG. In fact, even if you don’t invest at all but you pay taxes, ESG puts you at risk. You’ll be on the hook when states invested in ESG funds incur losses and have to come to taxpayers for more money. New York City taxpayers beware.
Folwell calls ESG “wacktavism,” warning that “a focus on ESG is not a focus on returns.”
Here’s proof: Last week, Bloomberg reported that the eight of the 10 largest ESG funds by assets have underperformed the benchmark S&P 500 so far in 2022. Ouch! The cost of being woke.
It shouldn’t be a surprise. In August, a Harvard Law School symposium on ESG fund performance found no support for hyperbolic claims that investing in “social good” benefits the bottom line. Overall, the relationship between ESG and financial performance is “uncertain.” Several studies found ESG funds “underperform,” especially in market downturns — like now.
New York City has incurred sizable losses. Taxpayers will have to cough up billions to replenish the city’s Retirement Systems, according to Brad Lander, the city’s comptroller. Instead of being remorseful, Lander is pressing Vanguard and BlackRock — the two biggest asset managers of city retirement funds — to double down on their climate commitments. Meanwhile, taxpayers can pound salt.
It’s hard not to apply the word “scam” to aggressive ESG marketing, especially to millennials. Asset managers charge a whopping 40% more to manage money in these funds than non-ESG funds. For what? That’s the question the Securities and Exchange Commission is asking.
“In response to investor demand, advisers like Goldman Sachs Asset Management are increasingly branding and marketing their funds and strategies as ‘ESG,'” said Sanjay Wadhwa from the SEC’s Enforcement Division. On Nov. 22, the SEC slapped Goldman S with a $4 million penalty.
Making ESG claims without backup is so common now, it has a name: “greenwashing.”
Stefan Hoopes, chief executive of Deutsche Bank AG’s investment unit, which is also under SEC investigation, says it’s time to dial back the “exuberant marketing.”
Amen. But there’s a bigger danger: financial strong-arming. Wall Street asset managers are putting capital in companies with woke policies and choking off capital from companies that don’t bow to their ESG agenda.
Sounds like the Chinese Communist Party, not America. In the U.S., access to bank loans and investment capital shouldn’t hinge on your political views.
Larry Fink, CEO of BlackRock, denies that ESG is political, but key staff managing his ESG operations previously worked in the Obama administration and donate to Sens. Elizabeth Warren and Bernie Sanders.
On Dec. 1, Florida Gov. Ron DeSantis yanked $2 billion of state money from BlackRock. State Chief Financial Officer Jimmy Patronis said, “If Larry, or his friends on Wall Street, want to change the world — run for office. Start a non-profit. Donate to the causes you care about. Using our cash, however, to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for.”
ESG is thuggery, using financial clout to accomplish what Americans would never approve at the ballot box. The danger isn’t just to your wallet. It’s to our nation.
Betsy McCaughey is a former lieutenant governor of New York and chairman of the Committee to Reduce Infection Deaths. Follow her on Twitter @Betsy_McCaughey.
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A generally well written piece articulating the truth behind so-called ESG investing and its motivations. ESG is yet another attempt, in a long line of such attempts, to create a centrally managed command and control economy. The fact that the 3 major wealth management firms are fronting this operation, on behalf of the Socialists that control both the Democrat Party and the administrative state that comprises the federal government, should not divert the public’s attention from the underlying objectives of ESG. Chief among those objectives is to gain a permanent and ultimately controlling foothold in the boardrooms of all of corporate America, so that all investment and basic business decisions conform to supporting the so-called “progressive agenda”.
Of course investments in ESG will yield lower returns for the individual investor, as maximizing ROI (Return on Investment) is NOT the priority of ESG. Thus your investments generate less income over time, which comes out of YOUR pocket in the end. It’s about conformity to a set of “progressive” (socialist) principles, that in many cases are actually anti-business, anti-profit or anti- capital growth in nature. Favored sectors of the economy will flourish, like wind and solar businesses and projects no matter how unsound or weak the economic fundamentals may be. While unfavored sectors of the economy will be starved of cash and hopefully cease to exist. Sectors like oil, natural gas and nuclear businesses, as well as say agricultural fertilizers, farm machinery, oil refineries, chemical porcessing and manufacturing plants and industries.
When you strip away all the new lingo that proponents like to spew about ESG and why it is supposedly so wonderful, what it really boils down to is about essentially establishing a version of the old political officer that used to exist under the old Soviet Union. The person equal in rank and prestige to the actual head of the company or leader of the military personnel to ensure all decisions conformed to the official, state approved principles and directives of the ruling Communist Party at all times. All major decisions had to flow through and be approved by the political officer. In ESG, the ultimate goal is nothing in business will be done without it conforming to ESG principles and being blessed by the Board members the ESG investment firms have installed on all the corporate Board of Directors.
By the way, the Chinese have a very similar version of the old Soviet style political officer today in all their state-owned businesses, as well as embedded in their military ranks. No doubt the Democrats see this and are envious of the control the CCP has over everything in their economy. So it is only natural that American Socialists would want to bring the same thing here. ESG is just their way of dressing it up a bit for public consumption. All in order to make it appear a bit more palatable and innocuous to the American public, that usually doesn’t pay too much attention to what is going on around them until it is too late. It will be interesting to see if the average American understands the threat posed to them by ESG or whether they will just shrug their shoulders, yet again, and just hope somebody else makes it all go away.
ESG is already embedded and those who are to lazy to educate themselves will be subjected. Can’t save everyone…
One of my annuities have some BlackRock investments. Moving to another investment. Will keep notes and will be ready for the class action law suits. They will come as they are not upholding their fiduciary responsibility.
One of the key points I learned from any investment funding I have done is to not put your money where IN THE LONG TERM, you will see losses. Good funding investment will always keep producing. Yes, you won’t see spectacular gains but you will never see major losses to your gains that will diminish your money to nothing. Lately, there’s been pushes to invest money in areas, well-known to be eventual losses by those pushing investors to buy, to create a fund program for themselves (it’s called market manipulation through a pump-and-dump method). This is what is occurring here with ESG. The only ones profiting here are the manipulators. It is your money don’t let anyone spend it frivolously unless your investment funds are just chump change to play with, which most of us don’t have.
I would like to know where Governor Mike DeWine of Ohio stands regarding ESG.
“ESG is thuggery, using financial clout to accomplish what Americans would never approve at the ballot box. The danger isn’t just to your wallet. It’s to our nation.
While I am opposed to Federal Campaign laws that exempt corporate media, I believe ESG scores need to be addressed by the Federal Election Commission. This amounts to political contributions promoting views not necessarily supported by the electorate! It is corporate views circumventing government and elections and directly controlling individuals and groups ( A prerogative of legitimate government and a consenting electorate).
Only Communist would use ESG.
since the esg are communists, and lately they claim they are for equity of outcome, let them pay taxes until their income and asset values have been reduced to the level of people like myself(you know, middle and low class plebs) BEFORE ANY OF US PAY A NICKEL IN TAXES!!!!!
Once they find out they cannt “get ahead” by cheating, ie marxism, totalitarianism, etc. lets see what they try.
REALLY? REALLY???? THERE IS NO CONNECTION TO WOKEISM???????????????????????? I SUPPOSE THAT A LOWER RETURN ON MY INVESTMENT WILL REPRESENT A LOSS OF TAX REVENUE TO THE THIRSTY DRAGON.
Good luck finding a fund that hasn’t joined the ESG bandwagon. I am having a hard time since my IRA contributions through my employer can only be invested in certain funds. Amy suggestions, anyone?
I own stock and will evaluate any potential investment on many criteria but not NSG.
I will stay away from fraud (if I can) such as Sam Bankman-Fried stuff and will focus on
blue-chip dividend payers.
Wall Street needs to establish Non-ESG funds or Non-Woke funds and advertise them as
such. We need to loudly state our non-woke preference. How ? My current bumper sticker states: “FULLY AWAKE BUT NOT WOKE”
I wondered why there were the commercials running on TV from Blackrock… now I know why. Trying to sell bad policy… putting that lipstick on a pig. Tell us that they are pro-American while practicing a woke ccp-like business model.