ESG diverts companies’ attention away from maximizing profits to social justice nonsense?

After a fiscally devastating pandemic, businesses face rising pressure to spout progressive political jargon to retain investors? Bill Flaig of American Conservative Values ETF analyzes Environmental, Social, and Governance (ESG) investment options, which force businesses to align inauthentically and dogmatically to extremist ideals—when they should instead prioritize effective financial decisions. To receive daily updates of new Opp Now stories, click here.

We don’t necessarily disagree with the goals of ESG. But the problem Mr. Fink and other ESG evangelists fail to acknowledge is that companies and asset managers are implicitly expected to support ESG and invest accordingly. Otherwise, they’re likely to face the tedious task of dealing with the ruling class of social justice warriors who dominate the discourse.

Our larger concern is ESG’s impact on corporate America. Senior managers should be focused on maximizing their shareholders’ returns, not doing what’s popular among the loudest voices of Twitter. Let individual investors allocate capital. If an investor believes investment in a zero-carbon future maximizes his return, he likely won’t invest in Exxon. It makes sense.

By contrast, an investor with a less clear view of the future might invest in Exxon based on their track record of profits, the result of a successful business strategy that focuses unapologetically on efficiently extracting and distributing fossil fuels. The management team is fully aware of carbon emissions and renewable energy and has concluded that focusing on fossil fuels is the best strategy to maximize their shareholders’ returns…

Rather than letting political activists dictate the direction of a company’s financial decisions, companies should directly educate and influence individual investors about their plans and goals.  Likewise, government intervention and regulation need to be kept to a minimum. Let individual investors allocate capital to maximize their returns.

Collectively, let capitalism’s invisible hand and meritocracy do their jobs. Which, in addition to maximizing investor returns, will also organically address many of ESG’s underlying concerns.

This article originally appeared in the California Globe. Read the whole thing here.

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