A Governor Who Understands That Woke Corporations Undermine American Interests
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“ESG is kind of rewriting how you invest. Instead of focusing on value for your shareholders, it’s more of a political agenda.”
These are the prudent words of Oklahoma Gov. Kevin Stitt about environmental, social and corporate governance standards, dubbed ESG, which are nonfinancial yardsticks applied to firms and used by money managers in decision-making on investments.
With clarity, Stitt, a Republican, further noted in a Fox News interview this week that corporate use of ESG standards “breaks down the free market principles of capitalism that we’re used to in investing, and so it’s anti-American.”
Indeed, ESG is the Left’s (and its corporate enablers’) blatant mugging of our free-market economy, which has generated prosperity by creating more and greater opportunities than any economic system in history.
The ESG agenda insists that policymakers and private-sector leaders see themselves as the stewards of a newly “woke” planet. In actuality, it’s a way to force companies to take positions in the political arena on issues that may have nothing to do with their actual business activities.
The true path to ensuring environmental, social, and governance improvements lies in focusing on policies that enhance economic freedom. As documented in The Heritage Foundation’s annual Index of Economic Freedom, the linkage of economic freedom, individual liberty, and prosperity around the world is unambiguous. (The Daily Signal is Heritage’s multimedia news organization.)
This prosperity is not just an end in itself. As the Index of Economic Freedom catalogues, preserving and advancing economic freedom enables individuals, entrepreneurs, and companies to care better for the poor and the environment, create better health care and education systems, ensure an abundance of food and clean water, and solve many other societal problems to make life better for a greater number of people.
Regrettably, under the tent of ESG activism, corporations around the globe have become woke. These corporations have weaponized capital, promoting a left-wing policy agenda.
Perhaps the not-so-surprising unfolding reality is that the environmental, social, and governance agenda largely is failing to produce what it promises in investment returns and positive impact. A recent Financial Times commentary headlined “Forget ESG. Bring on the BS Index” pointed this out in a witty, sarcastic way:
The jig is up for ESG. Regulators are swarming. Investor enthusiasm is waning. Executives are revolting. For the armies of asset managers, data providers, consultants and advisers that have sprung up in the past 10 years this is an existential threat. Here is our solution: pivot to bullshit. … Identifying BS is subjective but can be inferred with the help of several analytical frameworks, all of which can be used to charge more fees to companies and investors. Just like ESG.
Ill-guided and politically driven agendas such as ESG indeed present clear and present perils. And it’s people who seem to get lost in all of this.
For instance, under ESG, traditional American energy sources such as oil and gas are punished as part of the Left’s climate alarmism. Customers pay higher prices and receive inferior goods and services as companies become more focused on “social justice” than meeting the customers’ needs.
Stitt, Oklahoma’s governor, is right to point out that companies that embrace the environmental, social, and governance agenda are “not having an honest conversation about the needs of Americans.”
As underscored by Jessica Anderson, executive director of Heritage Action for America, at the launch of “ESG Hurts,” a new campaign by The Heritage Foundation and Heritage Action:
The United States leads the world in innovation and economic opportunity because of the policies we put in place to empower our businesses and individuals. If we allow the left to use ESG to turn businesses into social justice tools and shareholder reports into social credit scores, our economy will suffer and our adversaries like China will succeed.
It should be noted that economic freedom—not the environmental, social, and governance agenda—makes America and the world cleaner, safer, and better governed. It’s not hard to find the economic damage inflicted by heavy-handed and misguided government policies, which result in lingering uncertainty, deteriorating entrepreneurial environments, and lower employment growth.
The year 2022 should mark the end of that unacceptable trend and the beginning of restoring America’s economic freedom.
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The post A Governor Who Understands That Woke Corporations Undermine American Interests appeared first on The Daily Signal.
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