ESG Harms Investors and America. Period.

I give two cheers for a recent piece at RealClear Politics that attacks the ESG-movement-driven divestment in oil.

My first cheer comes from the fact that the piece correctly warns American investors that they are being screwed by money managers who won't invest in oil:

Image by Zbinek Burival, via Unsplash, license.

Not even a price surge has slowed the need for a fuel embedded in just about everything we do: Oil prices just saw their best first half since 2009 (see below). In recent months, oil companies have had the best run of any sector in the S&P 500. Investors that bet against, or pulled out of, U.S. oil fund USO ... have been burned. The popular oil Exchange Traded Fund nearly doubled in value since October last year, and others such as DBO, BNO, and USL are once again making for sound investments.

This rising demand exposes the wrongheadedness of the ESG -- environmental, social, and corporate governance -- push and the feel-good folly of divesting from oil companies.

Money managers demanding divestment of oil from their investment portfolios are costing their clients money -- the pension funds, mutual funds, and IRAs largely owned by everyday Americans. Banks leaving oil behind to satisfy ESG enthusiasts have seen "shadow lenders" and hedge funds gladly fill the void. [bold added, links omitted]

My second cheer comes from the fact that the piece plainly states the economic and geopolitical folly ESG represents:

... Together, OPEC, Russia, and China control nearly 80% of the world's proven oil reserves and are salivating at the chance to exploit the U.S. and Western retreat from the world's most vital fuel.

The three highest-earning oil and gas companies are all controlled by the Chinese Communist Party. Oil is the prime fungible commodity sold on an international market, so these rogue players benefit when their free-market competition in the West loses market share.

Since 2008, the shale oil revolution has allowed the U.S. to cut its imports from OPEC to historic lows ... [bold added, links omitted]

So, in addition to ESG ruining our personal investments, it is enriching despots and making America dependent on them.

Unfortunately, I stop at two cheers and want to blow a raspberry at the very next part of the last paragraph above:

... huge ESG benefit that gets conveniently ignored. In addition, OPEC, Russia, and China have far fewer environmental regulations, so any increased reliance on them for energy is contrary to our climate and emission-reduction goals -- and thus also contrary to purported ESG goals.

It would have been fine to mention that Western companies pollute less -- and thus that ESG impedes even its own stated goals -- but this arguably concedes a moral premise I don't agree with: That ESG proponents mean well.

Given the damage they have already done, and that this article clearly indicates they are poised to do, if there is one thing the ESG movement does not deserve, it is a moral pass.

It is high time for Americans to ask hard questions of the ESG movement, and to reconsider its fundamental premise that seeking profit is a short-range and destructive basis for running business. Absent such a question, the piece would have better ended with its well-argued demonstration of harm.

-- CAV