What Is ESG Investing?
ESG — investment decisions based on environmental, social, and corporate governance — is the primary way the progressive agenda seeps into today’s corporate boardrooms.
ESG theory insists that
corporations ought to focus on a broader community of “stakeholders,” not just shareholders. And in consideration of this broader constituency, corporations
Escalating the conflict: Black-
Rock’s practice of assigning compa- nies ESG compliance ratings that are taken into consideration when it decides which companies will be favored by its gargantuan invest- ment portfolio, and which firms will be spurned and rejected. As Texas Attorney General Ken
Paxton recently explained on News- max TV’s America Right Now: “These large companies like BlackRock and others control trillions of dollars of assets, and they control it for most of the country. And they go to these companies and force them to change policies. “In the end, that costs sharehold-
ers who are retirees and people in my state literally thousands of dollars. And it could be millions of dollars over a lifetime.” To put it another way, investing in
a company that’s politically correct is unlikely to generate better returns. BlackRock founder Larry Fink
insists, however, that his company’s support for ESG is consistent with its fiduciary duty to maximize investor returns. He cites the long-term risks com-
panies face if they fail to prepare for and counteract climate change. The rise of ESG shows how far
the nation has drifted from the views of conservative economist Milton Friedman, the Nobel Prize winner who advised Ronald Reagan and Margaret Thatcher. Friedman was famous for insist-
ing, “the social responsibility of cor- porations is to increase their profits.” Friedman believed corporations
benefit society most when they focus on serving their customers. By pro- viding sought-after products and ser-
Continued on page 16 NOVEMBER 2022 | NEWSMAX 15
Biden Plan Would Drive Up Energy Prices S
hould every public company in America
be forced to report how much carbon and methane they’re releasing annually if they want to stay in business? The Biden
administration says yes. Earlier this year,
with surprisingly little fanfare, the Securities and Exchange Commission which oversees financial markets proposed a rule requiring all companies to report on how climate change is affecting their operations. “The Enhancement and Standardization of Climate-Related Disclosures for Investors” mandates that the 12,000 companies the SEC regulates must disclose: The level of “climate- related risks” they face due to global warming and rising oceans.
The annual greenhouse gas emissions they generate, either directly or indirectly, in the course of doing business. The disclosures would help huge investment firms determine which companies would receive higher or lower rankings as choice investments for pension funds. Companies that
produce a lot of greenhouse gas emissions — the giant oil-company refineries in southeast Texas, for example — fear their stock values could plummet. Also, climate activists
would find those companies much easier to target or boycott. While some investors
like the idea of getting more information to help decide where to park their money, critics see several
should actively promote socially approved goals that just happen to be progressive. Environmentally, for
example, a company might slash the use of carbon-based fuels even if it increases costs. Socially, it could mean promoting educational
curricula to address systemic racism. Governance could
involve putting climate- change or LGBTQ activists on corporate boards in the name of greater diversity — irrespective of their actual qualifications.
problems with a massive environmental reporting mandate. Aside from the sheer
cost and manpower required to gather and tabulate the data, the SEC would be adding climate risk reporting to an already hefty regulatory portfolio.
In June, over 20
state treasurers who are members of the conservative State Financial Oficers Foundation sent a letter to the SEC objecting to the proposed regulation. They warned it would drive up energy costs that ultimately would have to be borne by consumers. For now, SEC oficials
are reviewing the public comment on their proposal. The reporting mandate, once issued, will likely be challenged in court. — D.P.
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