by Greg Barker
Thursday, 21
July 2022
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14:32

Elon Musk is right about ESG

The label has become indistinguishable from a scam
by Greg Barker
Does he look bothered?(Credit: Odd Andersen/ Getty Images)

When Standard and Poor’s (S&P) threw Tesla out of its ESG index, a list of companies dedicated to “excelling” in “environmental, social, and governance” issues, the charges were wide-ranging. Pointing to allegations of racial discrimination and poor working conditions in one of its factories, and how it handled deaths linked to its “full self-driving” system, Tesla was unofficially excommunicated from ESG investing. Unsurprisingly, Elon Musk quickly returned fire, calling ESG “a scam”. 

Given that the electric-vehicle company was replaced in the index by the oil refiner Phillips 66, perhaps America’s most famous eco-warrior has a point. The ESG industry’s sole purpose seems to be listing unsustainable companies its naughty list, so that Wall Street can earn increased fees from ESG-friendly stocks to clients. When there are oil companies like ExxonMobil being given higher sustainability ratings than EV companies like Tesla, it’s fair to say that it’s a scam. 

A read of this week’s headlines reveals as much. First, the Financial Times ran a piece soberly entitled “Energy crisis prompts ESG rethink on oil and gas”, which illustrated how corporations and governments were balancing their “green ambitions” with the “new imperatives of energy security”. Joining that was OilPrice.com with the headline: “Even ESG Funds Are Now Buying Big Oil Stocks,” and a Reuters opinion columnists who said, “ESG is more of a muddle than a fiddle,” noting the “lack of clarity over its goals”.

Independent media is more forthcoming about ESG’s deficiencies. Breaking Points podcast went into great detail on recent government raids on Deutsche Bank and Goldman Sachs over alleged greenwashing. And in addition to the big banks, politicians have been playing fast and loose with the label too. Earlier this month, the EU suddenly called natural gas a “green” source of energy.

Unsurprisingly, the ESG label has now become another culture war weapon used to discredit political adversaries. Used by the Right as a critique of the woke movement, and by the Left as a way to denounce greenwashing in companies within sectors it deems “naughty” (like oil and gas), the term is now redundant.

But the real tragedy is that upcoming ESG measures will continue to fuel increased scepticism around climate change and those broadcasting the potential dangers in good faith. Unfortunately for them, all the initiatives acting against climate change appear deceitful and misleading to sceptics, so they will likely not be persuaded. ESG is a scam — we would do well to discard the label and its attendant maladies.

Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at @concodanomics.

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Dougie Undersub
Dougie Undersub
21 days ago

It’s not so much that all the initiatives acting against climate change appear deceitful and misleading, it’s more that they are ineffectual, pointless and unnecessary, not to mention ludicrously expensive.

Stephen Walsh
Stephen Walsh
21 days ago

But they do great damage, by diverting investment and therefore, in the West at least, talent and expertise from economically important activities. They artificially drive up the price of “green” assets. The resulting market inefficiencies will ultimately damage both the pension pots these investors are supposed to be protecting, and also the security and economic resilience of the West.

Last edited 21 days ago by Stephen Walshe
Julian Farrows
Julian Farrows
21 days ago

Moreover, they also require ever-increasing control of the populace.

Liam O'Mahony
Liam O'Mahony
20 days ago

I like “unnecessary” best: it gives you away!

Steve Jolly
Steve Jolly
21 days ago

Musk is right, but I’m guessing this whole hullabaloo is really not about the company at all, but rather about how Musk has personally fallen out of favor with his progressive brethren for moving his HQ from blue California to red Texas, claiming he would allow Trump back on Twitter when he bought the company and citing free speech, and complaining about a coming depopulation crisis. He spoke heresies and is now being excommunicated. I doubt he cares, as he’s already bilked these idiots out of billions. Part of the reason he’s so rich is because of how subsidized electric vehicles are. Musk was one of the earliest to recognize and take advantage of a profit advantage that the government built in with energy policy. He took advantage of the scams while he could, and now that he doesn’t have to, he’s pointing out what he always knew. The man is no fool.

Last edited 20 days ago by Steve Jolly
Brendan O'Leary
Brendan O'Leary
21 days ago

The ESG industry’s sole purpose seems to be listing unsustainable companies its naughty list

.
For those of us working in productive enterprises, its purpose seems more as a job creation and fee-harvesting scheme for unproductive power-seekers, like a legalised mafia standover racket for political lobbyists.
These people sap value, and contribute none, yet they wish to insert themselves into otherwise viable enterprises and so they devise self-serving certification schemes and we are supposed to shut up, pay their fees and applaud.

Last edited 21 days ago by Brendan O'Leary
Warren T
Warren T
20 days ago

Precisely!

Fran Martinez
Fran Martinez
20 days ago

Doesn’t everything that comes out of the WEF behave mafia-like? It probably is because they are a mafia

Julian Farrows
Julian Farrows
21 days ago

It’s extremely discouraging how these regulatory and supposedly neutral agencies have fallen prey to ideology.

Brendan O'Leary
Brendan O'Leary
20 days ago
Reply to  Julian Farrows

All regulatory bodies are vulnerable to capture by untalented power-seekers, but ESG appears to have been designed that way from the start.

Andrew Horsman
Andrew Horsman
21 days ago

Corporations and Politicians in Massive Multi-Billion Dollar Government-Sponsored Scheme Related Corruption Shocker.

Will we ever learn?

Richard Craven
Richard Craven
21 days ago

Investors would be well-advised to use the ESG label as a red flag, indicating that the business concerned does not focus on sales, product, or paying its suppliers.

Liam O'Mahony
Liam O'Mahony
20 days ago

Everything, and I mean absolutely everything in the US is monetarised! Even religion fgs! So it’s no surprise that ESG becomes a money making racket like Kim Kardashian’s ass..

Warren T
Warren T
20 days ago
Reply to  Liam O'Mahony

Quite so! Well said.

Martin Johnson
Martin Johnson
20 days ago

Eric Hoffer wrote that all great causes begin as movements, become businesses, and then become rackets. ESG did the whole evolution in less than a decade.
Not that it ever was anything but a way to greenwash Wall Street and the City, really.

London King
London King
21 days ago

Everything Seems Green
Everyone Shouts Greta
Earth Says Goodbye
Earthlings Stupid Gone
End Sorry Grandchildren

Nicky Samengo-Turner
Nicky Samengo-Turner
21 days ago

all this tree hugging sandaloid, global warming, net zero, carbon doomsday stuff is a tedious manipulated joke that grips the naieve and ignorant…

Rafael Aguilo
Rafael Aguilo
20 days ago

The “Green energy at all costs” gullible keep forgetting one simple fact of life: There’s NO free lunch. When there’s a “Low Wind”, and heavy cloud cover, who are you going to rely on to provide energy ON DEMAND? “Ghostbusters” or oil, gas, and even coal? People are being sold on the idea that electric vehicles will solve the problem; as if the energy needed to charge their vehicles is available all the time, as if by magic.
For China; energy security has become more important than playing the renewables game. Will Nuclear be welcomed again into the fold?

Mark Kennedy
Mark Kennedy
20 days ago

So Tesla, which by a strange coincidence is the brainchild of Elon Musk–now fallen from woke favour for daring to challenge Twitter narratives–has, against all logic, fallen from grace as well, replaced by an oil refinery. The preposterousness of the scam is equalled only by the scammers’ apparently limitless contempt for the public’s ability to put two and two together. They literally couldn’t care less how transparent their motives are: the scammed’s opinions aren’t going to make the least bit of difference to scammer control and profits, and they’re what matter. No one can be permitted to march to drumbeats that potentially threaten The Corruption Narrative, not even a previously onside (they supposed) billionaire.

Fran Martinez
Fran Martinez
20 days ago

Great article