The whole concept of ESG was flawed from the beginning. ESG stands for environmental, social and governance and it has been pushed by extreme, woke activists for years. It is a catch-all term and has been used to try and pressure corporations into prioritizing social activism over pursuing a profit for shareholders..The term ESG originated from a 2004 United Nations report claiming companies should set aside any focus on profit, and if they just took on enough environmental and social justice work, it would be beneficial to the public and to the companies themselves. The concept is utter pie-in-the-sky bunk and despite nearly two decades of effort, it failed..Corporations only exist for one thing and that's to make a return on investment for the shareholders. They are not charities, nor should they be expected to be. While good corporate citizenship can aid with a company’s public reputation and help build brand loyalty, ESG goes well beyond that with its demands on corporations. Profit is to be considered a secondary goal to ESG..The ESG movement was insidious and compelling. Rather than directly try to convince companies to embrace woke policies that run counter to the company’s own objectives, large asset management companies were targeted. BlackRock was a leader in pushing ESG upon companies. It was thought even if consumers don’t really care about ESG targets, the companies could be compelled to embrace ESG policies through the strangulation of incoming investment. BlackRock CEO Larry Fink spearheaded such efforts. Fink is now distancing himself from the entire ESG movement. Asset management companies can only kill corporate profit margins for so long before investment starts to dry up..Shareholders will only put up with so much. They want a return on the investments they entrusted to asset managers and couldn’t care less if the company has unisex washrooms or sets emission targets above and beyond those required by legislation. They are demanding investments in profitable companies rather than woke ones. Most companies can’t be both..Retailers can’t pay the insane “living wage” demands made by the woke while maintaining competitive pricing and adding environmental regulations doesn’t win any government love as new regulations get piled upon the old ones. Appeasing the woke in the name of ESG has only managed to make profits smaller..Some ESG inspired idiocy will go down in business history such as the Budweiser debacle with trans activist Dylan Mulvany. Even a first-year marketing student should have seen the consequences coming when Budweiser took on the flamboyant Mulvaney as a brand ambassador. Budweiser had over a century of carefully cultivated market development under its belt. The brand loyalty was the envy of the very competitive beer industry and it was shattered by the bizarre choice to go down the trans activist rabbit hole..How could somebody have thought for a moment a market demographic made up predominantly of cowboys and blue-collar workers would want their favorite beer associated with a trans activist? It’s not a question of tolerance. It's simply knowing your market. The thing is, the luminary who came up with the idea to bring Mulvaney on as a brand ambassador wasn’t thinking of reality. She was wrapped up in the mythical world of ESG..It may take a generation for Budweiser’s sales to recover to where they were only last year..Nobody chooses their consumer products or services based on ESG scores. Investors don’t pick investment vehicles based on ESG scores either..That reality is finally coming home to roost as the old saying of “go woke, go broke” proves accurate..Silicon Valley Bank went whole hog with ESG. In its 2022 ESG report, the company says it seeks directors on its board with “knowledge of, or experience with, key risk oversight and risk management functions to help oversee the dynamic risks we face.”.ESG based word salad rather than sound financial planning led to the collapse of the bank in 2023..The list of ESG failures is growing while ESG language is disappearing from corporate boardrooms..One of the dumbest and most expensive social trends in modern history just came and went..Unfortunately, as with supporters of communism, the supporters of ESG think it just hasn’t been done right yet. They will rebrand the concept and try to push it through elsewhere..In the end, money talks and ESG walks.
