Skip to main content
Commentary

ESG is not a global conspiracy to destroy the United States

Jul 03, 2023

Share

When House Republicans return from recess, much of their focus will center around ESG (environment, social and governance). In particular, they will be seeking ways to reverse the trends of companies using ESG to guide their corporate policies and decision making.

Straight Arrow News contributor Peter Zeihan thinks given the changes within the American political system, now is actually a good time for businesses to consider employing some form of ESG principles–but it will take years before they get it right.

Excerpted from Peter’s July 3 “Zeihan on Geopolitics” newsletter:

What are my thoughts on Environmental, Social, and Governance (ESG)? It is the idea that business has a role in pushing society towards certain norms and positive outcomes regarding environmental and social issues. We must look at what ESG should be, what it is, and what it is not.

What ESG should be…Until now, American business has played a minimal role in the political system. With the American political system in flux, it is only natural that companies would reevaluate their place in society and create policies that align with the ESG mission.

What ESG is today…The new policies businesses implement can be equated to attempting to climb Mt. Everest before ever learning to walk. Without benchmarks or industry standards, these companies can’t even make it Everest base camp; this process will be long and iterative.

What ESG is not…It isn’t a global conspiracy to destroy the US economy. When Elton John gets invited to a week-long confab in the Alps, you know the WEF isn’t plotting with the Illuminati…they’re just partying.

To this point, most ESG has been influenced by activists pushing policy from the outside OR activist investors making policy from within. The international stage doesn’t have much say, making ESG a domestic conversation of politics and culture.

Hey everybody, Peter Zeihan here, the clouds have become a little bit more serious. On the upside, it means that all the mountain bikers have bugged out. So I’ve got the trailer myself, but my name is bailout points five miles. So
Anywho.
This is the latest in our ask Peter series. And today the question is about ESG. What do I think about it in general? Do I think it has a future? Is it a conspiracy to destroy us all.
ESG at least nominally is called. It’s short for environmental and social governance. And the idea is that business has a responsibility to play a role in society, and push it towards certain norms or positive outcomes, as regards things such as environmental issues or racial inclusion. And so that each corporation should have a series of ESG policies that help them achieve those goals. So let’s talk about what it is or what it should be, and then what it actually is, and then what it’s not. So first, what it should be, and why we probably should consider some form of ESG. For the longest time, American business has really only been involved in the political system. When it comes to say, developmental policy, civic expansion, contracting, or regulatory discussions, they’ve tried to stay out of all the social issues to get loud, especially anything regarding the culture war, because it’s not something that they have the aptitude for. And they have a wide array of shareholders, and investors and managers, and employees, and customers, who are all going to have radically different opinions on really anything that matters. So Why get involved in it? Well, for those of you have been following me for a while, you know that our political system is currently in flux. And all the factions that make up the parties are in motion, specifically for the business community, the Trump administration kicked them out of the Republican coalition, so they’re swing voters right now. So if you look at where the business community is, and the concept of ESG, the idea that now when they’re not part of the political process, when we’re going through all of these changes, when our political system looks like a washing machine, it makes sense for them to reevaluate their place in society. And coming up with policies as they struggle with that fits very nicely with the very concept of ESG. Now we can argue about whether they want to, or whether they’re adopting the right policies, and that’s when we get to what ESG actually is today. Because this is something that’s done at the corporate level, on an ad hoc basis, company by company, there is no overarching structure, there’s no regulatory guidelines for this. It’s just what individual companies have decided to do. And as you know, from your personal life, there are things that you’re good at, and there’s things that you’re not good at. And if you have spent the last century assiduously not paying attention to cultural or environmental issues, and then all of a sudden, you want to redefine your personal life based on this, you’re not going to get it right on the first try. And I would argue that no company in the United States that had gone down the ESG route has really put together even remotely productive or coherent set of policies to implement the supposed goals. The environmental ones are probably the ones that have been the worst because they equate equate things like adopting electronic vehicles with being a good, but based on who you are, and what you’re doing and where you are. That may be one of the most environmentally damaging things you can do. So like if you get an electric truck, and you’re running around the northeast, which is mostly fossil fuel powered, and this is a vehicle that has a huge carbon footprint to build in the first place, you’ve actually made the situation significantly worse. But by your G metrics, you’re right on the path.
What we need is a little bit more coherence, and intelligence and regularity for these sorts of regulations for them to make any sort of sense. And we’re not going to get that on the first try. And it’s difficult to see us getting that within a decade without some sort of benchmark. And since by its very definition, this is not a government initiative, it’s hard to see us getting that benchmark. So ESG may be a great idea, at least in concept that may fit the times for business community. That doesn’t mean it is or will be done very well.
Now, what ESG is not it is absolutely not some global conspiracy to destroy the United States. I’ve heard that a lot of late kind of pisses me off because let me think about this. Most people point towards like the World Economic Forum, and the build back better and all that good stuff.
No, okay. So, the World Economic Forum is not a shadowy cabal of international
Illuminati who are seeking to push their will on the United States. A majority of the people there who are matter are American for one
from all political stripes. In addition, whenever you see
Elton John, going to a week long confab on international affairs. You know, it is not a week long Conference on International Affairs. It’s a party, Klaus Schwab, the guys who in charge of the World Economic Forum, I know he’s got the great hair that makes him look like a villain. But really just think of him as a DJ for the rich, and everyone getting together and table Switzerland for a week of body shots or their equivalent for rich people. It’s not that WTF is pointless, it’s that it’s entertainment. And to think that there’s any sort of policy coming out of that it’s kind of funny, most ESG to this point, is a product of one of two things. Number one, the activist culture in the United States that protests and tries to get impose policies on the business community from the outside. And then second,
activist investors who are within the company probably have minority stakes, who are trying to get the company to shift its policies from within. That’s almost every little bit of it. The international pressure has almost no impact. And you can tell that because the international companies generally have less aggressive ESG policies than American national ones. This is a domestic political and cultural evolution. If it was really strong internationally, you would expect the international companies to be the ones that are leading the way and they most certainly are not. Okay. Oh, that was lightning. Well, the next one might be really exciting.

Video Library

Latest Commentary

We know it is important to hear from a diverse range of observers on the complex topics we face and believe our commentary partners will help you reach your own conclusions.

The commentaries published in this section are solely those of the contributors and do not reflect the views of Straight Arrow News.


Latest Opinions

In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum. We hope these different voices will help you reach your own conclusions.

The opinions published in this section are solely those of the contributors and do not reflect the views of Straight Arrow News.

Weekly Voices

Left Opinion Right Opinion

Wednesday

Left Opinion Right Opinion

Thursday

Left Opinion Right Opinion

Friday

Left Opinion Right Opinion