Monday, 9 January 2023

State Investing, Not ESG, Is the Problem

"[What's the problem with] the left wing policy fad/clever corporate power grab once known as 'corporate responsibility' and now known — for the moment, at least — as environmental, social and governance (ESG)? ...
    "[T]he problem isn’t so much that a company takes ideological considerations into account in its business practices so much as that governments — such as state-run pension funds — are imposing ideological agendas on businesses via this financial control. ...
    "[And] government has no business forcing an ideology ... on anyone.
    "Let’s consider how this applies to ESG....
    "[W]hen state pension plans ... start making or 'encouraging' companies to change how they operate based on ideological issues (such as causing oil companies to get behind green anti-fossil fuel initiatives), this amounts to the state adding the further injury of lower profitability for such companies to the original one of what amounts to nationalisation by stealth.
    "These are both bad, but they are not the essence of what is wrong with ESG, which is a further wrong than state ownership and mismanagement.
    "State interference in ideology is the real problem with ESG. A truly free market would allow investors to make clear-eyed decisions about where to place their money and whether they want to earn higher returns or support political causes with their money.
    "But when the state sets up a retirement fund with the supposed purpose of reducing taxpayer costs of a pension plan by high returns, it should not then use that money to support causes the retirees may or may not outright oppose, and finance the shortfall by taxes on others (wrong to begin with!) whose opinions also aren’t being consulted.
    "Of course, any investment strategy has to have an implicit basis, so there is no way for a state to run a pension plan without running afoul of separation of ideology and state.
    "The proper response by lovers of liberty is not ... merely object to the particular ideas that underly some state investment strategies, but to work towards the real solution, namely to privatise the investment sector.
    "This won’t eliminate ideologically-driven companies from the marketplace (although a free market would cull unprofitable ones), but it will end the gross abuse of government officials improperly forcing their political beliefs into corporate boardrooms throughout the economy all at once, as we see them doing today."
~ Gus Van Horn from his op-ed 'State Investing, Not ESG, Is the Problem'

No comments: