Are We Finally Heading Toward ESG Sanity?

For years, insurance companies, banks, financial institutions, and asset management firms have championed the climate change cause and ostracized fossil fuels to “accelerate the transition” from oil, natural gas, and coal to wind and solar energy.

They formed alliances, signed pledges, steered investments into “green” energy companies, and denied fossil fuel companies access to investment capital. They say this reflects environmental, social, and governance (ESG) principles to ensure “socially responsible” investing and corporate action, all necessary to avert the “climate crisis” and ecological destruction.

But the ESG cabal is doing this with other people’s money.  They are redirecting insurance premiums, government and corporate employee pension funds, and other investments – tens of trillions of dollars that rightfully belong to hardworking Americans – to achieve purposes they want, with next to no input, vote, or agreement by the clients they serve.

In effect, they are violating their fiduciary obligation: to serve their clients and secure maximum returns on their behalf. Instead, they are using investors’ money to advance politicized agendas. They are all but colluding behind closed doors, with each other and with activist groups and government agencies, in violation of antitrust laws and longstanding ethical principles.

By exaggerating the “climate crisis” and the ease and cost of the “energy transition” in their marketing materials and annual reports, they deliberately ignore or misstate vital material facts, thereby misleading investors. Because they control trillions of investment dollars, they are effectively deciding which companies, even which industries, they will “allow” to continue doing business, and indeed continue to exist.

Florida Gov. Ron DeSantis put it bluntly: “Who do these people think they are? That they govern our society? Nobody voted for [BlackRock CEO Larry Fink]. So our mantra in Florida is, no economic or social transformation without representation. These are policies that could not win at the ballot box, so they’re trying to do through corporate America what they can’t do in the electoral process.”

It seemed there was no way to stop this. But many companies have recently grown cautious, moderated their positions, stopped extolling their ESG activism, or left ESG alliances altogether. Why?

Some may have been reacting to the financial hammering that Budweiser, Target, North Face, and Kohls have received for “woke” social policies that appease activists but antagonize customers. Some may be experiencing moments of sanity. Others may just be lying low for a while, hoping resistance ebbs.

However, something much more profound and long-lasting may be happening. This may be the result of a grassroots, conservative pushback.

In recent years, a number of free-market representatives and corporate shareholders have taken part in BlackRock, Bank of America, JP Morgan Chase, and other annual shareholder meetings to raise a fuss. They vote on various matters, put up some of their own proposals, and ask the CEOs uncomfortable questions about their involvement in ESG activities.

The CEOs are not accustomed to such pushback from conservatives. They dodge, weave and filibuster evasively and defensively. They have no answers. Their reputations have been challenged.

The activities of these grassroots activists likely have motivated red states to act as well. Florida, Arizona, Kentucky, Louisiana, Missouri, Texas, and other Republican-led states pulled tens of billions of dollars out of BlackRock, State Street, and other Wall Street asset management firms for violating fiduciary duties to state pension plans. Vanguard and other firms then pulled out of the United Nations-sponsored Glasgow Financial Alliance for Net Zero.

Perhaps it is this withdrawal of funds by red states that recently led Citigroup’s CEO to backtrack and publicly admit that “the global economy simply cannot operate without fossil fuels today, nor can it grow without them in the mix.” There seems to be a growing recognition that oil, natural gas, and coal are essential for modern industrial economies and living standards and will be for decades to come.  

The outlook for the near future isn’t likely to get any better for those pushing the ESG agenda. Multiple state attorneys general are now raising issues and calling for investigations and lawsuits. They say actions to push ESG constitute collusion, consumer fraud, stifling competition, violating federal and state antitrust laws, misleading investors, and attempting to usurp policymaking and legislating roles that properly belong to citizens, lawmakers, and courts.

Faced with such threats of legal action, 15 of 31 companies quickly left the Net-Zero Insurance Alliance, whose original members collectively controlled more than $3 trillion in assets. More will likely follow. Banks and investment firms playing the ESG game should take notice.

All this is good news. The American people are showing they will not stomach the woke agenda these wealthy, powerful, unelected ESG promoters are imposing on them. We the People and our elected representatives have a right and duty to confront and, hopefully, put a stop to them.

Craig Rucker is president of the Committee For A Constructive Tomorrow (www.CFACT.org)

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