The Left Now Hides ESG Language to Avoid Republican Divestment
They hide it. Cover it up. Change the words.
The Left Now Hides ESG Language to Avoid Republican Divestment
March 27, 2023 Anti-Drilling/Fossil Fuel, ESG, Industrywide Issues
Talk about brazen. The “reporters” of Bloomberg, who report exactly what the Democrat Party dictates they should report, are bragging about how Big Banks and Big Investment Firms are now burying information about ESG requirements in their documentation (just not talking about it) in order to “avoid losing lucrative business.” That’s right. Banks and investment firms (like SVB, now failed, and BlackRock, the largest investment firm in the world) haven’t actually changed their policies–they just change the way they talk about it. They hide it. Cover it up.
Change the words.
The reason is clear. States like Texas, Florida, West Virginia, and a number of other Republican-controlled states are divesting from the divesters.
The problem in talking about this issue is that there are two ESGs. When a driller like EQT or CNX or Antero talks about ESG, they’re talking about responsible drilling for oil and gas with an honest attempt at reducing emissions. When BlackRock and banks like Morgan Stanley talk about ESG, they’re talking about divesting from companies that drill for, or use, fossil energy. It’s really that simple.
A number of “red” states have had enough and are in the process of selling their investments held by companies like BlackRock. The reaction by the left to counter this trend is subterfuge, with the left openly bragging about how they are hiding their ESG predilections:
Banks and financial firms are quietly recalibrating how they talk about ESG investing in the US, navigating around potential political fights in order to avoid losing lucrative business.
Eleven major banks and money managers told Bloomberg News that they’re adjusting the language they use in pitch books, marketing materials and investor reports when seeking to sell funds and take part in financial deals. In some cases this means avoiding using the ESG acronym and related terms in Republican-led states, while for blue states, they’re playing up their ESG credentials, according to representatives of the financial firms who asked not to be named discussing private information.
The different language doesn’t reflect a change in underlying services, just an acknowledgment that words need to be adjusted depending on who the client is, the people said. In general, they spoke of a desire to tweak language to refer to the long-term cost of things like flood risk, land erosion and extreme weather, rather than using potentially divisive terms like climate change.
The high-wire act reflects the dramatic politicization of the $8.4 trillion ESG market, with Republicans firing broadsides at anything connected with pursuing environmental, social or good governance goals. Florida Governor Ron DeSantis, a likely 2024 presidential candidate, said last week that he’s leading an alliance of about 20 states intent on banning ESG investing outright.
Arthur Krebbers, who runs ESG capital markets for corporates at Edinburgh-based NatWest Group Plc, said fund managers he speaks to are becoming “coy” about referring to their climate goals to US clients. There are “regional nuances” in the choice of words, “particularly in the US,” he said.
Anti-ESG rhetoric in the US is “absolute madness,” said Ioannis Ioannou, associate professor of strategy and entrepreneurship at London Business School. The “appeasement approach” that the finance industry seems to be resorting to “may be unsettling in principle,” but it’s arguably a case of the “long-term benefits” outweighing the “short-term compromises,” he said.
DeSantis’s own actions — in some ways — undermine his efforts to bash ESG.
When he proposed spending close to $1 billion on conservation projects such as protecting clean water in his own state, he was ostensibly embracing what ESG stands for while telling voters to fight its “pernicious effects.”
In response to the GOP, Democratic-led states have started imposing counter-measures to support ESG. And on Monday, Joe Biden used the first veto of his presidency to block Republican efforts that would have prevented managers of retirement funds from taking ESG into account.
A survey published this month by Robeco found that almost half of North America’s biggest investors worry that the politicization of ESG in the US exposes them to legal risks. That’s very different from the mood around the investing strategy in Europe and the Asia-Pacific region, where investors are more worried about the ramifications of not being sustainable enough, Robeco said.
Some investors started adapting last year. Trey Welstad, a money manager at Integrity Viking Funds, removed the ESG label from a $72 million socially responsible fund, Integrity Growth and Income, in October. “The term ESG just became too politicized,” said Welstad, who helps oversee $900 million at the North Dakota-based firm.
In San Francisco, an asset manager who asked not to be named said he started to reword the emails he sends his clients. Before ESG became a punching bag for Republicans, his firm discussed environmental issues associated with their investments. Now, client emails focus more on navigating the financial markets.
A person who works at a too-big-to-fail global bank said the lender’s clients told the bank they were wary of saying too much about sustainability in their quarterly results for fear of attracting political backlash.
And corporate executives are shying away from talking about ESG, climate change and net-zero emissions targets. So far this quarter, their use of such terms on calls with analysts and investors is down by more than half from a year ago, according to data compiled by Bloomberg.*
*Bloomberg (Mar 23, 2023) – Bankers Bury ‘ESG’ in Pitch Books to Head Off Republican Attack
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