Environment, Social and Governance factors have taken some big hits lately. ESG factors have wormed their way into the finance and investment world, but the forces of common sense are starting to fight back.
Now, don’t get me wrong. As a Tulsa small business owner, I take social responsibility very seriously. We need to be great stewards of our environment and help our local communities improve and grow for the betterment of all. Our team finds great fulfillment in giving away a significant percentage of revenues to nonprofits and ministries in Oklahoma that are lending a helping hand.
But as an investment expert, I draw the line at the ESG orthodoxy supplanting the priority of solid long-term investment performance. Workers and savers are building and relying on retirement savings for their pension payments or IRA distributions from the hard work of their money managers or from good 401k investment options.
Tim Buckley, the CEO of Vanguard Investments, agrees. He recently withdrew from the Net Zero Managers Initiative touted by the likes of Blackrock and other investment houses. “Our research indicates that ESG investing does not have any advantage over broad-based investing,” Mr. Buckley told the Financial Times.
Even some Democrats sided with Republicans in the U.S. Senate to block a new rule by the Biden Administration that would have allowed retirement plan fiduciaries to consider ESG factors and prioritize politics over pursuing the best returns for millions of investors.
Hundreds of other financial institutions have bowed to the political pressure to include ESG factors in their practices. They need to follow Vanguard’s lead and put investor interests above the interests of politicians with an agenda.