![]() ![]() ![]() The questioners understand a simple truth that seems to have eluded the anti-ESG crowd: climate risk is investment risk. ![]() The most common of these questions centers on climate transition plans. A recent Nasdaq report shows a significant jump in the number of companies getting ESG questions on their earnings calls-from 28 percent in Q4 2021 to 49 percent in Q1 2022. State governments may decry ESG as “woke” ideology, but for businesses, it is a reality that can only be ignored at their peril. “If you’re an asset manager focusing on oil and gas companies and you decide that you’re not going to incorporate climate risk analysis in, say, trying to understand whether the valuation of long-lived assets is reasonable or not in deciding between allocating capital to OilCo A or OilCo B, I don’t know if I’d want to leave my money with you.” JUST Capital’s cofounder and chairman, Paul Tudor Jones, notes that these anti-ESG moves are “really just to serve people’s purposes, instead of looking at the facts.” The company’s head of investor relations adds that it’s “increasingly irresponsible” to ignore ESG factors. The move is costing taxpayers $300 to 500 million in extra interest this year. As a result, the top five lenders left the Texas municipal bond market because they wouldn't support the manufacturing of assault weapons, which has in turn reduced competition. In Texas, Greg Abbot approved two laws that bar firms from operating in the state if they stop investing in firearm firms and fossil fuel companies, denying the financial cost of climate change. The backlash is currently most evident in efforts by Republican governors to deny the legitimacy of ESG factors when investing their states’ pension and treasury funds (witness Ron DeSantis’s recent move to pull about $2 billion from Blackrock’s management Florida’s chief financial officer explained that it is “undemocratic of major asset managers to use their power to influence societal outcomes”). Yet despite the evidence that corporate social responsibility is good for business, expected and even demanded by every stakeholder group, there is a growing backlash that views anything but the Miltonian edict that businesses’ responsibility is to increase profits as overreach at best, and “woke” political ideology at worst. (Photo by Octavio Jones/Getty Images) Getty Images Indeed, company leaders who don’t take a stand are often targeted by activists who demand some kind of response.įlorida Gov. The old “silence is golden” expectation no longer holds. Georgia’s threatened retaliatory boycotts never materialized, and Georgia’s lawsuit against Major League Baseball for pulling its All-Star Game from the state was withdrawn. CEO James Quincey didn’t stop after saying the legislation was wrong, vowing that Coca-Cola, headquartered in Atlanta, would advocate for its change “both in private and now even more clearly in public.” Other Georgia-based businesses, including Delta Air Lines, UPS, and Home Depot, joined hundreds of others around the country in condemning the new laws. This material may not be published, broadcast, rewritten or redistributed.Įmployees, investors, and consumers mostly applaud when companies like Coca-Cola speak out against, for example, Georgia’s new restrictive voting laws. (AP Photo/Mark Lennihan) Copyright 2012 AP. can create and sustain value for shareholders. increasingly discusses how stakeholder capitalism. Laurence Fink, Chairman and CEO of BlackRock Inc. ![]()
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