Once again, world leaders, business tycoons, and activists converged upon Davos, Switzerland for the annual World Economic Forum last week. The same elites fixated on ESG (environmental, social, and governance) selected “the fundamental principles driving trust, including transparency, consistency, and accountability” as the summit’s theme. Their hypocrisy could not be more epic.
ESG, which boils down to social credit scoring that penalizes individuals and businesses for perceived political incorrectness, is anything but transparent, consistent, or accountable.
Major global banks and investment firms have been pressuring American companies to comply with specific ESG policies, mainly promoting the climate alarmist narrative, or risk losing access to capital banking services, effectively forcing companies into compliance.
You’re not wrong if this is ringing 1984 bells in your head,. While the globalist elites preach “accountability,” ESG runs completely counter to the free market and our constitutional principles of limited government. No longer are companies rewarded based on merit — superior products and more affordable prices — but rather on public support for renewable energy.
ESG is also a top priority for the Biden bureaucracy, which has incorporated it into taxpayer-funded pensions. The administration has even proposed rules requiring businesses to publish “climate-related risk” disclosures — as if a single business could affect the weather of the entire planet.
ESG attempts to turn centuries of proven financial wisdom on its head. Investment managers have a fiduciary duty to prioritize stocks to maximize their potential return on investment for clients. But under ESG, managers are pressured to cherry-pick companies based on their lip service on climate change rather than their performance.
The long-term effects of ESG prioritizatizing politics over financial soundness could be devastating. For example, ESG compliance costs for universities, are so high that many will be unable to reach their investment goals. Limited diversification, higher fees, and compliance costs add up.
But one might be tempted to suggest that ESG would be worth all the pain if it managed to save the planet.
It won’t. Even if every financial institution in the world banded together to banish fossil fuels — if every car, home, and business shifted to 100% renewable energy — the temperature difference would be a tiny fraction of a degree at best. According to globally accepted climate data models, eliminating all manmade U.S. greenhouse gas emissions would reduce the average temperature by just 0.08 degrees by the end of the century. The impact would be barely half a degree if extrapolated to worldwide emissions. These models have overshot warming every time, so the difference would likely be barely measurable.
In reality, warming will likely remain mild and manageable while our resilience continues improving. Geological evidence suggests our current period of slight warming will end soon (in relative terms for the Earth) without catastrophe. We do not live in unprecedented times.
Meanwhile, even after decades of drumbeating, wind and solar power remain unreliable and exorbitantly expensive — at least without massive subsidies that drive up tax burdens — and come with their own significant environmental consequences. Their dependence on unethically mined minerals, prohibitively expensive battery storage, and, ironically, backup power from fossil fuels makes them a poor choice for anything beyond occasional supplemental power.
If “moral and intellectual integrity” are WEF’s core values, the case for abandoning ESG is clear. Suppose science indicates renewable energy isn’t likely to achieve its stated goals but will likely cause significant financial damage. In that case, it’s not the best choice for our economic future.
Fossil fuels, on the other hand, have dramatically improved the human condition. Reliable energy has supercharged our economy, creating entire new industries. Poverty, malnutrition, infant mortality, and infectious diseases have plummeted while GDP, education, gender equality, and life expectancy have skyrocketed.
If the WEF wants to be on the right side of history, it would abandon ESG and support fossil fuels and nuclear as the key drivers of reliable energy for our global economy.
The Honorable Jason Isaac is the Founder and CEO of the American Energy Institute and a Distinguished Fellow for Life: Powered at the Texas Public Policy Foundation (TPPF).
