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ESG: The New Overlord of Investing
Bow Down to Your Green Master. How Sustainable Investing Controls What You are Allowed to Think, Do, Own, and Believe.
In March 2020, the arrival of COVID-19 on the shores of the United States, sold to us as a potential medical threat that had all the signs of devastating families from coast to coast. However, amidst the chaos of a potentially deadly pandemic, another threat emerged. This threat, known as ESG, was not airborne or viral in the conventional sense. Rather, it was born from the imaginations of banks, corporations, and governments. And much like COVID-19, this threat is poised to significantly impact the lives of millions of people worldwide.
MOVE OVER NUKES, THE WEST HAS A NEW FINANCIAL WEAPON
The West has been expanding its economic and financial policies with a range of new weapons, in addition to their old favorite—sanctions and embargoes. These have been traditionally implemented by the United States and the European Union against entire states, companies, and individuals, but now the scope is expanding. It's essential to understand the arbitrary criteria by which these are decided. The US and EU decide at their sole discretion, establish sanctions or total embargoes, and demand third countries comply with it, or face retaliation.
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61 years after the US imposed an embargo on Cuba, the economic blockade still continues. The reason? Cuba had the audacity to nationalize the properties of US banks and multinationals that controlled the Cuban economy. And now, US companies are demanding billions of dollars in repayments from Cuba.
But it's not just Cuba that has been a victim of US economic policies. In 2011, in the lead up to the US-NATO war against Libya, US and European banks seized 150 billion dollars of sovereign wealth funds invested abroad by the Libyan state. And where did most of that money disappear to? Probably the central bankers. What we do know is that Goldman Sachs, the most powerful US investment bank, and Mario Draghi, its vice president at the time, were heavily involved in the great robbery.
So, while the US and EU may claim to be champions of democracy and human rights, their economic policies often reveal a different story.
In 2017, the U.S. froze assets worth $7 billion and seized 31 tons of gold deposited by Venezuela at the Bank of England and Germany's Deutsche Bank, following new U.S. sanctions against the country.
But now, in a stunning new development, major US and European banks like Goldman Sachs and Deutsche Bank have launched a massive financial operation that is being compared to sanctions. Instead of economic restrictions or seizure of funds to punish countries for violations, these banks are granting funding to governments and entities that adhere to the “ESG Index: Environment, Society, Governance.” It's like sanctions, but for the virtuous! How generous.
ESG: THE NEWEST TOOL FOR CORPORATE HYPOCRISY AND FAKE VIRTUE SIGNALING
The ESG Index claims to set standards to prevent climate catastrophe, defend human rights, and promote good governance. The U.S. Department of State, World Economic Forum, Rockefeller Foundation, World Bank, and some UN organizations are the main forces behind this initiative. It aims to use investors to steer corporations in a more socially responsible direction. In his book “Shaping the Future of the Fourth Industrial Revolution,” Klaus Schwab, the founder of the World Economic Forum, outlined this approach as a means of transitioning technologies and businesses away from current models of doing business and towards a new stakeholder-centric method.
But let's not forget the track record of the U.S. State Department, which, with UN approval, caused the death of over a million people, including half a million children, through its embargo on Iraq from 1990-2003. With such a sterling track record, we can surely trust them to protect human rights and prevent climate catastrophe.
The UN Conference in Glasgow emphasized the focus on climate change on November 3, 2021, with the slogan “Finance goes green and resilient”. The Glasgow Financial Alliance for Net Zero, a coalition of 450 banks and multinationals from 45 countries, which has been gaining steam since April of that same year. Their pledge? To invest a whopping 130 trillion dollars of private capital over the next three decades to transition to a zero-emissions economy by 2050. This is being done through the issuance of Green Bonds and investments made by mutual and pension funds, largely funded by small savers who may be unwittingly caught up in yet another speculative bubble.
“Entrepreneurs and Investors are the vanguard when it comes to marrying a values-based approach to technological development… It makes sense that thinking about broader social impact at this stage would have significant cascading effects. Investors, on the other hand, have the carrot with which to direct the development of technologies… The values of entrepreneurs and organizational leaders have a tremendous influence on the workplace and how technologies are developed. Leading from the front can transform company culture and prioritize societal values.”
Every bank and multinational company seems to be jumping on the zero-emissions bandwagon and pledging to help “poor countries” achieve this goal, where over 2 billion people still rely on wood as their primary fuel source. Even Royal Dutch Shell, the Anglo-Dutch oil company responsible for an environmental and health catastrophe in the Niger Delta, is now committed to zero emissions. However, the company refuses to clean up the polluted land and the people continue to suffer from water contaminated by Shell's hydrocarbons. So much for their solemn commitment to the environment.
Multinational corporations such as Coca-Cola, Gillette, Disney, and BP sometimes act in ways that contradict good business practices in order to promote a political agenda that goes against the beliefs of many of their consumers. This is an attempt to boost their ESG, which is basically nothing apart from a value-based credit score. As corporations respond to investors and the ESG score used to gauge societal value, they may push agendas designed to shift the Overton Window and promote cultural acceptance of a more progressive agenda.
Advocates of ESG metrics often invoke the libertarian principle that private companies have the freedom to act in their own best interests and fulfill their fiduciary responsibilities. However, ESG is not a purely private matter.
In March 2020, the SEC established an ESG Taskforce, and since then, publicly traded companies have been required to provide comprehensive disclosures on their climate change and greenhouse gas emissions. While these regulations are touted as serving the public good, they can come at a cost to businesses and ultimately, consumers may end up paying more.
Advocates of ESG regulations put forth a range of arguments to support their cause:
However, supporters of ESG regulations often do not explain how ESG metrics will be used to effect social change. Moreover, if ESG is merely a tool to aid investors in making decisions, why is the SEC requiring companies to disclose ESG data? Furthermore, the question arises as to who is classified as an investor.
CONTROLLING YOUR LIFE THROUGH YOUR WALLET
As per Investopedia, an investor refers to an individual or entity that invests capital with the expectation of receiving financial returns. Unfortunately, this also holds true for 401k holders, as corroborated by Merrill Edge. In 2018,Merrill Edge incorporated ESG scores on their clients' dashboard to inform them whether they were invested in companies that posed reputational risks.
It is not just 401k holders who may find themselves affected by ESG. Following the Canadian trucker convoy, the government relied on financial institutions to freeze the bank accounts of anyone who had supported or financed the protest in any capacity.
There have been various recent incidents that raise concerns about the impact of ESG metrics on individuals' access to financial services. For instance, PayPal has reportedly cancelled the accounts of several users without providing any explanation. Additionally, in an article, Justin Haskins has documented countless instances where banks have frozen or cancelled the accounts of politicians who have been accused of expressing controversial views.
In 2021, Fitch Ratings, a credit rating agency, released a white paper outlining how they incorporate ESG factors into their evaluation of individual credit ratings. Furthermore, FICO, a company that develops credit-scoring models, has announced that they will factor ESG criteria into their assessments of individuals' creditworthiness. These developments have sparked concerns that individuals who do not align with the prevailing ESG standards may face difficulties in accessing financial services or securing credit.
It is unclear what factors credit agencies may consider when evaluating an individual's ESG score. However, there are concerns that certain actions or behaviors could result in a low ESG score, which could adversely impact one's access to credit or financial services.
For instance, owning a gas-powered vehicle instead of an electric one, owning a firearm, buying ammunition, speaking out against the injustices being committed by the state every single day, investing in oil and gas companies, or openly opposing the push for introducing children to the transgender lifestyle could potentially harm an individual's ESG score. Additionally, factors such as where one resides, their profession, and whether they grow their own food may also come into play.
Individuals may face the risk of being denied credit based on their ESG score, which could consider various factors such as vehicle ownership, firearm ownership, political views, investment choices, and lifestyle choices.
As ESG standards have been implemented by corporations, financial institutions, and governments globally, there has been growing opposition to such practices. Some states have even passed anti-ESG legislation to safeguard ordinary Americans from what they see as overreaching regulatory measures designed to promote a specific agenda. The concern is that ESG could lead to discrimination and curtailment of freedom, ultimately impacting the economic and financial well-being of individuals.
S&P Global has unveiled a strategy to monitor and sustain ESG ratings for states, which would result in punishing states by pressuring businesses to abandon states with poor ESG ratings. If companies refuse to relocate, they will be excluded from funding, loans, and resources. This will put an immense strain on individuals in the targeted states who rely on the companies for employment or other necessities.
Furthermore, in the past, being pro-business, with low taxes and limited regulations, was a positive attribute for a state's economy. Under the rules of ESG, the most regulatory happy state becomes the standard that everyone must follow, regardless of their individual values or beliefs. This is because ESG standards are often seen as a one-size-fits-all solution to global challenges, and those who don't follow them are seen as non-compliant or even unethical.
For example, if California sets a certain standard for emissions control or renewable energy use, all businesses operating in California must follow those standards, even if they are based in another state or country with different regulations. This creates a situation where a handful of states or countries can dictate global policies, which may not align with the needs or values of other regions.
Moreover, the strict ESG standards set by a few countries or states can create a domino effect, where other countries adopt similarly strict requirements in order to not be seen as lagging. This can lead to a situation where ESG standards become so burdensome that they stifle economic growth, create unnecessary bureaucracy, and impede innovation.
Thus, while ESG is meant to be a framework for addressing global challenges and promoting responsible business practices, it has the potential to be misused as a tool for imposing a narrow set of values on everyone else, regardless of their individual needs or preferences.
In the world of ESG, corporations are pressured to conform to the strictest standards set by any given country. For instance, if Hungary sets higher standards than other nations, corporations must meet those standards to do business in Hungary. This trend could lead to a domino effect where other countries adopt similarly strict ESG requirements to avoid being outdone. While a corporation may not be concerned about losing Hungarian business, they may worry about losing business in countries like France, Britain, and Spain where such standards are embraced. This creates a scenario where corporations are forced to adopt increasingly stringent ESG policies to maintain their global market position.
There is still hope for those who oppose ESG. While ESG may be an effective way for governments to control personal and business actions by leveraging the financial industry, more people are becoming aware of its negative impact on prices, supply chains, jobs, and businesses. As a result, they are becoming more vocal about its consequences.
Although the threat of ESG is global, the fight against it is local. It is crucial to draw attention to the ESG agenda at the local levels of government and to continue introducing legislation that stops the creep of regulatory capture and discriminatory policies of multinational corporations. At the same time, it is important to actively seek startups and established corporations that are opposed to ESG, before the war on our liberty is complete.
By raising awareness about the negative impact of ESG, we can help to create a world that is fairer and more just. It is our responsibility to take action and to fight against the negative effects of ESG on our society and on our freedom.
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