Elon Musk calls ESG a “scam”
But in reality, it is something far worse
In response to the announcement that his company had been dropped from an ESG index, Tesla CEO Elon Musk declared, “ESG is a scam. It has been weaponized by phony social justice warriors.” ESG stands for environmental social, and governance, but what it really stands for is subordinating financial markets to a narrow ideological conception of social responsibility. ESG is now shorthand for a progressive takeover of the economy.
Before it was called ESG, it was known as SRI (socially responsible investing). Is Musk right? Is ESG a scam? No, it’s worse than a scam. ESG is an ideological virus injecting toxic politics into every aspect of our financial markets. Scams just take your money, but coercive utopian philosophies try to take all of you. Or, as C.S. Lewis more artfully said it, “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies.”
The announcement from S&P claimed that although Tesla conforms with ESG thinking because of its commitment to “accelerate the world’s transition to sustainable energy,” it noted two instances involving “racial discrimination.” But Tesla is a Fortune 500 company, and companies of that scale routinely have “claims” of all sorts of discrimination made against them. Such accusations are fairly routine. So why imbue the claims against Tesla with credibility and not similar claims about the other companies that remain in ESG’s good graces? Furthermore, why now? S&P does not give specifics on the alleged acts of racism, but news reports about such issues at its Fremont, Calif., plant place the events from 2016 to 2018. Why wait to hand out the demerits now? What changed?
What changed is that Musk has become a piñata for blue-check media for waging a rhetorical war against leftward censorship bias on Twitter and now against the left coalition. Musk is fed up with the left’s intolerance. We’re not explicitly told why these claims count, while Microsoft, with a serious history of sexual harassment claims, remains inscribed in ESG’s book of life. We’re only told that a “Media & Stakeholder Analysis” identified the claims as a potential risk. Which media? What stakeholders? How analyzed? None of those questions are addressed. But knowing that personnel is policy and that a very specific type of person gravitates toward stakeholder committees, it’s easy to see such a process as possibly amounting to little more than a woke popularity (or, in this case, unpopularity) club carrying out the general will of the socially responsible investment community in punishing Musk’s thoughtcrime.
Supporting that notion is the fact that S&P dropped Berkshire Hathaway from the list and that company Chairman Warren Buffett and Vice Chairman Charlie Munger have also been critical of ESG and BlackRock’s Larry Fink, respectively. The announcement does not tell us what deviations the stakeholders were able to dig up on Berkshire to get it kicked out of the club.
At this point, one wonders how much membership in the ESG club matters when the most prominent members are arbitrarily shown the door. Musk is the world’s richest man. Buffett held that title for much of his life and is still not far from the top. Cracks are appearing in the shell, and ESG is starting to look more brittle than EGGS.
And right on time, expert trendspotters like tech entrepreneur and investor Peter Thiel and hedge fund contrarian Bill Ackman have put up big money to start a firm called Strive Asset Management, which intends to counterbalance the politicized ESG agenda promoted by BlackRock and others. Both investors have built careers and vast fortunes spotting situations where the in-crowd was wrong. Heading up the new firm is successful biopharmaceutical entrepreneur Vivek Ramaswamy, author of Woke, Inc., who has tapped Justin Danhof, formerly of the National Center for Public Policy Research, a conservative think tank, as a member of his team. Danhof has spent a dozen years in the trenches of annual shareholder meetings fighting against the ideological capture of boardrooms while the rest of the movement slept through the stealth takeover of corporate America.
Conservatives, including conservative Christians, are no longer sleeping. They are now more fully awake to the reality of what has happened to the companies they buy from, work for, and hold in their 401(k)s. The question is, what will they do with that knowledge? Will they retreat into a religious ghetto hemmed in by endless commercial-boycott taboos, screening more and more companies out of their lives as larger swaths of corporate life convert to wokeism? Or will they instead confront and seek to reverse it?
These daily articles have become part of my steady diet. —BarbaraSign up to receive the WORLD Opinions email newsletter each weekday for sound commentary from trusted voices.