What is ESG?
ESG grew out of investment philosophies clustered around sustainability and, thereafter, socially responsible investing. Early efforts focused on “screening out” (that is, excluding) companies from portfolios largely due to environmental, social or governance concerns, while more recently ESG has favorably distinguished companies that are making positive contributions to the elements of ESG, premised on treating environmental and social issues as core elements of strategic positioning. While climate figures prominently in ESG discussions, there is no single list of ESG goals or examples, and ESG concepts often overlap. That being said, the three categories of ESG are increasingly integrated into investment analysis, processes and decision-making.Harvard Law School on Corporate Governance, 1 August 2020: Introduction to ESG
Who created ESG?
ESG was probably birthed by the Environmental Studies Group at MIT in the late 1960s. In 1980, the program was given permanent status under the jurisdiction of the School of Science.
In 2008, environmentalists declared the ozone hole and global warming as the consequences of human activities that release pollutants into the atmosphere altering it.
Coincidentally in 2008, environmentalist ‘scientists’ discovered the chemical equator. “Scientists have discovered a ‘chemical equator’ that divides the polluted air of the Northern Hemisphere from the largely uncontaminated atmosphere of the Southern hemisphere. Researchers found evidence for an atmospheric chemical equator around 50 km wide in cloudless skies in the Western Pacific. Their findings show for the first time that the chemical and meteorological boundaries between the two air masses are not necessarily the same.”source
Food for Thought
The discovery of the chemical equator gives rise to two questions. First question: Where is the ozone hole? Answer: over the South Pole in the largely uncontaminated atmosphere of the Southern hemisphere. Second question: If most of the anthropogenic airborne chemicals are only in the northern hemisphere, why is the ozone hole over the South Pole and not over the North Pole?
What is the purpose of ESG?
The stated purpose of ESG is to force behaviors, as stated by BlackRock CEO Larry Fink who says, “You have to force behaviors and at BlackRock we are forcing behaviors”.
Word of the day: force
(1) to compel, constrain, or make (someone) to do something, (2) to drive or propel against resistance, (3) to bring about or effect by force, (4) might, as of a ruler or realm
Company Example Number 1
Measuring the performance of our suppliers against Key Performance Indicators (KPI’s) we strive to continually improve the sustainability of our supply base … we strive to shape and improve our supply base in the areas of Environment, Labour & Human Rights, Ethics & Sustainable Procurement.NSH Group Sustainability:ESG Objectives
- Company Example Number 2
… Climate-change initiatives are often the most visible ESG-related program, but there are other important components to consider within each discipline…
Environmental: the company’s impact on the planetRiskConnect.com: What is ESG – and Why Does It Matter?
Social: the societies in which they operate, and the current political atmosphere, including diversity, equity and inclusion
Governance: … a set of organizational practices, controls, and procedures used to make effective decisions, remain compliant, and meet stakeholder demands …
How is ESG negatively affecting your life?
Natural gas is used in the Haber-Bosch process, which generates the ammonia in nitrogen fertilizers. Those fertilizers feed half the planet.
Gagliardi thinks the picture is more complicated at home, where environmental, social, and corporate governance (ESG) has become a controversial tool of stakeholder capitalism, often used to force divestment from fossil fuels or other industries disfavored by the left.
“It’s a combination of record demand domestically and from LNG [liquid natural gas] exports combined with less than expected supply, in part due to the starving of capital for the O&G industry due to the ESG/green movement pressures on capital providers, plus pressure from Wall Street to spend less capital and return value to shareholders,” he said.The Epoch Times, 7 May 2022: US and World Gripped by Fertilizer Crisis — Fertilizer shortages should be used to hasten environmental transitions, official says
ESG effectively creates crises: fuel shortages, food shortages, widespread unemployment, and government overreach. The end of ESG is the spawning of crises (plural of crisis), not creating an abundance of goods and services for the people.
How is ESG working for you now?