environment

GOP directs culture war fury toward green investing trend

6 Comments
By SAM METZ

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Quote: Investors making carbon neutral or net zero criteria common were, in effect, Oaks said, limiting access to capital for oil and gas businesses, hurting their returns and potentially contributing to gas price spikes.

Actually the opposite is true, and we've seen it following the largely failed sanctions on Russia, which amount to ESG writ large. The sanctions have created a lack of supply and pushed up the cost and value of fossil fuels. Fossil companies are rolling in cash and can fund their own expansion. But transitioning to green is expensive, takes time and (like it or not) is resourced with fossils. We are actually too early in the transitioning cycle to wind down fossils, even by the back door: deliberately shutting off Russian energy, as we don't have enough to build green tech and keep people warm/cold/fed.

The sanctions on Russian energy look good in theory, but in practice have undermined the global ability to transition to green energy as well as the political stability and economic strength required to do it. In short, the West is coming off worse from sanctioning Russia, and the small chance of transitioning to green energy has gotten much smaller as a result.

ESGs have their place in risk assessment and due diligence. The problem with using them to advance political or ideological policy is that it will undermine the quality and reliability of due diligence and could lead to catastrophic losses. Placing your finger on the scales during risk assessment doesn't change how the markets function. It also politicises something that can then not easily be depoliticised, with the sort of havoc that is now playing out.

0 ( +0 / -0 )

US politicians, left and right, are politicising everything for their own purposes, demonising centrism, tolerance and compromise, dividing their nation and radicalising their followers. This usually leads to civil war.

0 ( +0 / -0 )

The GOP is blindly working against their own, and everyone else's, self interest. Welcome to 2022.

4 ( +4 / -0 )

The world is changing a little for the better, but dinosaurs are still trying to pull everything back in time, it is not going to work because now the effects of ecologic irresponsibility are clear and people are realizing something has to be done now.

4 ( +5 / -1 )

Though the policy doesn't mention it outright, Jonathan Williams, the group's chief economist, said ESG's mainstreaming amid broader trends of political correctness was a driving force. He said his research shows that incorporating factors beyond traditional financial metrics can lower the rate of return for already underfunded state pensions.

This is basically just fossil fuel interests trying to deter efforts to reduce carbon emissions by tying it to stupid culture wars outrage.

Its not "wokeness" or any political ideology that is driving including ESG's into investment decisions by institutional investors, rather its economic rationale. They have heavily diversified investment portfolios and recognize that climate change poses a significant risk to the long term growth of many of the corporations they are invested in. This downside risk outweighs the short term upside benefit they could gain by letting investee companies in the fossil fuel industry continue with business as usual. So their investment strategies - dictated purely by economic interest - have led them to start demanding that their investee companies follow ESG principles in their corporate governance.

5 ( +7 / -2 )

And the GOP meltdown continues.

5 ( +8 / -3 )

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