First, what’s happening? Staying unrelatable, Florida Governor Ron DeSantis passed some vague legislation that the state can’t use ESG criteria for investments and neither can banks, to “protect Floridians” by making it harder for them to use basic analytics and ask questions about their investments.
Here’s two reasons why this is inane
First – ESG is only basic risk mitigation criteria.
E – environment: is this company burning down or otherwise decimating the places they were using to make money. That’s a risk if so.
S – social: are there people other than white dudes in charge here? Are there pending brand image crises afoot? Is there a likelihood of a strike internally or boycott externally due to company failures to engage the right people? That’s a risk.
G – governance: is this place run like a feudal state or dictatorship? Not great for business since employees tend to leave garbage fires like this… And, are there only dudes from the same college in charge? Welp that means there’s likely to be gaps in ideas, innovation, and problem identification. Soo risky!
Outlawing ESG is literally trying to outlaw the ability to do proper risk analysis in our increasingly complex world. Sorry Ron and co, but there’s more to success than coins in the bank these days. Investors are going to look at garbage fires like how sued every oil company is going to be, and step away, no matter how much you’ve been paid to make it seem unamerican to judge things – Americans have reality TV and that means we LOVE to judge. It’s not going away.
Second, lol “money isn’t political” brb laughing
Second, the legislation makes a claim that money shouldn’t be ideological which is hilarious because money is a fictional construct created to support the construct of an abstract, global marketplace and the ideology that we should all be able to shop anywhere, anytime, forever. If you think about it, that’s kind of a weird world view. It’s also an ideology – a “a system of ideas and ideals, especially one which forms the basis of economic or political theory and policy.” Ideology does not only show up when you disagree with it – it’s the foundation of our economics and political systems: States should be able to self-govern is a democratic ideology, for example. Companies are people is also [a creepy] one.
This reminds me how “lifestyle” is coded for “gay lifestyle” when literally everyone has a style in which they live life, it’s just that for some of us it’s more fabulous.
Finally, ESG is not enough!
For those of us driven by woke liberal ideologies, ESG is like “fat free froyo” – it’s better, your mom is ok with it, and ya know they do have cute toppings. Sure, let’s stop on the way home! ESG is an exclusionary criteria that cuts out companies which perform poorly on the ESG ratings systems, but these rating systems are basic. It cuts out Nestle since they steal water from the global south but then elevates Pepsi since they have a woman CEO. The fundamental mechanisms are just not super dialed in, as they say here in Colorado. Do they improve the output? For sure –
But there’s SO MUCH MORE WOKE CAPITAL IDEOLOGY to fear, hear ye fearmongers! Just a few concepts that improve on ESG are:
- Community investing – invest in main street, not wall street. Businesses you can point to. Investing directly is an option [how is out of scope] but most people find intermediary companies to help, like Raise Green or _______.
- Wall street investments packaged with intentional inclusion criteria – there are plenty of funds out there [CarbonCollective, ESGEX, making this feasible, as well as robo advisors like Ellevest to Betterment creating custom portfolio funds that include on everything from gender equity to green energy innovation.
- CDFIs and community lending notes – access to capital to start a business is imperative. fuck Chase, BoA, and double fuck Wells Fargo for the trash way they treat customers like tickmarks in a quota. Help people leverage better banks like Community Development Financial Institutions [CDFIs], and community-focused organizations like Calvert and many others to access that money. You put money in, they give you an interest rate its not going to be amazing
- Hack the need for all that money: Make your life cheaper financially by making it wealthier socially and more environmentally sustainable. Build human resilience, food systems, and energy resilience. Make some friends. Share tools.
- Supporting systemic solutions – hop in a time machine and try to explain to a 1940s person how today only 1 in 10 people is in a union and instead we all individually are supposed to have accounts so that we dont starve when we’re old except only 40% of people have these. Oh and 1% of the people have private jets and yachts with speedboats inside and most of the money. And the other 59% starve we guess. But if you do have one of these accounts you get to figure out investing all on your own! It’s buying parts of companies and hoping they make money. See, we’re still in it together! [melting face emoji] ps you’re supposed to have a million dollars in this account, good luck! But honestly there is a system that could function to solve this. It exists. It’s called Social Security. It uses 21% of our federal budget [source]. No one likes budgeting but everyone likes to feel mad about budget decisions that aren’t theirs…
Good luck enforcing this in the market, and also IT’S STUPID. We’re not surprised but, wow guys.