Harsh reality of ESG investments: ‘Companies that remain neutral … outperform companies that lean left’

In the world of finance where results are the key to success, it would seem a straightforward concept to maintain a profit-driven business model. But with globalist, corporate, stakeholder capitalism pushing for social credit scoring based on ulterior motives and feelings, the facts still had to be laid out.

After the run at Silicon Valley Bank (SVB) where venture capitalists were attempting to stem the bleeding before it defaulted, Heritage Foundation senior fellow Andy Puzder and 2ndVote Value Investments Inc. director Mike Edleson were publishing an op-ed with the Wall Street Journal to do just that.

While readily apparent to seasoned business leaders, activists have continued to gravitate toward ESG (environmental, social, governance) scoring to nudge, and often shove, industry behaviors toward causes outside of their own best interest.

“Woke capitalism makes its way into financial markets through an ill-defined concept known as environmental, social and governance investing. Huge investment managers use their ownership of shares to pressure companies to jump on the ESG train,” the pair wrote in the Journal.

“But while individual investors are free to support whatever cause they wish with their dollars, those who invest other peoples’ money have a fiduciary duty to focus solely on clients’ financial interests. Thus it’s important to know whether politically focused companies actually do produce superior financial results,” they went on.

To prove that, they created a metric based on six key issues, “environment, education, abortion, Second Amendment rights, other basic constitutional freedoms and support for a safe civil society,” that scored a company on a scale of 1 to 5, with “1” being most liberal, “5” most conservative and “3” neutral.

“On average, roughly a quarter (or 221) of the S&P 900 large/mid-cap companies studied scored 3–taking no political or social stance on any of these six issues…Of the remaining companies, the political tilt was strongly to the left,” they determined.

Inherent leanings weren’t enough to satisfy their conclusion, however, so using their metric, they compared those companies’ performances to the market average over a 10-year-span and found, “The neutral portfolio’s cumulative return (334%) outgained the market (230%)…”

“The data indicate that, as common sense would suggest, companies that focus on profits outperform companies that don’t. As a corollary, it seems obvious that asset managers won’t maximize shareholder returns if that isn’t their focus,” the op-ed asserted.

Days after their report, investigators seeking the cause of SVB’s collapse looked to their woke policies and reporter Paul Sperry noted that the current president of the Federal Reserve Bank of San Francisco, tasked with regulating SVB, was an activist focused on “climate change and inequities” while the bank’s own risk management head was a diversity hire satisfying the push to promote ESG.

“Companies that remain neutral on social and political issues outperform companies that lean left,” Puzder and Edleson wrote and ultimately concluded without surprise, “When the business of business is no longer business, it may be unclear who wins, but it’s clear that shareholders lose.”


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Kevin Haggerty


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