What Honest, Neutral ESG Would Look Like

Despite the transparent prevarications of the most powerful proponents of current ESG, those positions are entirely and deeply partisan. As has been noted on these pages before, Larry Fink followed up his assertions that ESG and stakeholder capitalism are neither “partisan” nor “woke” by establishing as his two biggest ESG goals “equity” – which means active illegal discrimination to achieve artificial equalities of outcome – and decarbonization on political schedules that will permit him and his buddies to continue to fly around the world in private jets while the rest of us are too crippled by costly and unreliable energy to be able to continue to live normal modern lives. Not incidentally, those two goals are also the two “whole of government” goals of the present administration, which is of course very partisan indeed.

Scott Shepard

So, yeah, there can be no doubt: ESG, however it is framed by its supporters, is not an effort to achieve any sort of objective sustainability, or to advance all stakeholders, or to improve society in broadly agreed ways. It’s just pushing a hard-left agenda that mirrors pretty exactly the goals of leftist professors and “progressive” politicians, while having no time whatever for any other interests.

It may be worthwhile, then, to consider what a genuinely neutral, nonpartisan ESG might look like, and how it would have to be constructed. This will reveal whether such a project is possible: whether bringing ESG within corporate executives’ legal fiduciary duties can be managed under any circumstances. It will also highlight just how huge is the gap between current, duty-breaching partisan ESG efforts and a neutral and honest variety.

Consider the recent declaration from Alphabet (parent company of Google) that its employees will be permitted to move to states where abortions are fully permitted, “no questions asked.” This offer is in addition to Alphabet’s offer to pay the costs for employees to travel out of state to get the abortion of their choice if it is unavailable in their state at the time they decide to abort.

This is a profoundly, inarguably partisan move. It allows employees to move to states with more aggressively pro-abortion laws. It does not permit employees to move to states that have more moderate or restrictive laws, if those laws would better fit the employees’ policy preferences. And it focuses only on this single very partisan issue.

The neutral, nonpartisan version of this policy is easy to outline: all employees are permitted to move, if they wish – no questions asked – to the state the laws of which best fit their own personal policy preferences. A nonpartisan ESG policy would not focus only on one issue, nor would it provide access to the benefit in favor of any particular partisan stance.

If it’s important to employee retention and morale that employees get to live in states that mirror their own policy preferences, it’s equally important to all employees. If the company is not willing to extend the benefit to all employees, then it’s not acting on behalf of honest stakeholder interests or for general, neutral social benefit. It’s just doing politics.

Similarly, if a company decided to take a position on any particular political issue, it would make sure to do so in a fully researched way that applied equally everywhere the company did business as well as within the company itself – and it would take the position only after complete and deliberative research to make sure that the position taken had also been shown to directly advance the broadly accepted social goal sought after full review of all unintended consequences and countervailing considerations. This would stop companies from racing will ye, nil ye to oppose, say, Georgia’s voting-integrity law after a Saturday afternoon call with some deeply biased, deeply partisan political and academic hacks.

Rather, if a company for some reason wanted to wade into the question of general voting laws, it would first identify the nonpartisan goal it hoped to achieve. That could be secure and reliable elections in which honesty is guaranteed and voting is as easy as possible. It would then either scan existing voting systems to determine best practices, or would otherwise develop a favored model. Once it knew what it thought was best to achieve the neutral purpose – after significant critical testing – it would then start to compare the model to real life circumstances, always starting with the company’s own operations. In the Georgia voting-law case, lots of CEOs instantly condemned the voter ID requirement on partisan grounds, only to discover that their own companies made themselves, and voting by their shareholders, secure by methods much more stringent than any suggested by the Georgia law. That, of course, rightly made these CEOs look like partisan hacks, and all-around imbeciles.

Once this pitfall had been avoided, the company would then identify any jurisdictions in which it operated in which the election laws failed to meet the standard that the company had developed, and it would pressure all of those jurisdictions equally to change their laws to meet the sensible, nonpartisan standard that the company had developed. It would not apply pressure only in jurisdictions that exhibited a specific partisan character, while overlooking similar or greater faults in other jurisdictions of different partisan hue – because, again, that would just be politics. (This, again, happened in the Georgia controversy, as it turned out that even after Georgia’s new law, its voting access remained easier than the longstanding laws in New York and Delaware, among other blue states. But somehow the CEOs hadn’t aimed any of their fire in those directions.)

Corporate executives would also be eager, in developing and supporting neutral ESG positions, to put themselves at the very vanguard by applying the consequences of their positions to themselves personally. Assume, for instance, that after following the neutral, thoughtful and complete research and analysis process outlined above, a company were to determine that it needed to decarbonize its practices by some date certain. It would then need to determine what effects such decarbonization, if followed by all world corporations and other carbon producers, would mean for human living standards. How much energy would the average citizen of the world (or perhaps, to be fairer, of the nation in which the executive lives) be able to use? What restrictions on use or on living generally would be required?

Having determined these limits – again, by neutral, complete and honest means — the executives would of course be obliged to demonstrate the feasibility of their proposals by immediately running their c-suites and living their own lives within these constraints. Private jet travel would have to end immediately, as would mansion living for the CEOs and their directors. If this proved impossible, or if the executives proved unwilling, then the whole project would have to be shelved. The impossible is impossible for everyone; ditto the intolerable. People who expect others to live in enforced misery to ensure their own opulence are not corporate executives; they are ancien regime nobility of the sort who genuinely merited the tumbrels.

A full consideration of honest, neutral ESG practices would result in the development of more rules of procedure than can reasonably be considered here, but even these initial standards establish that honest, neutral, legitimate ESG would require much more searching and objective research and much more thoughtful, rigorous development and application. In the course of this research and development, companies would be faced more starkly with serious doubts about whether all of this effort was properly within their fiduciary remit, or ought better to be left to political and social processes. And, of course, much of it would be derailed by failed attempts to apply the consequences of their ESG pushes to their own companies, perquisites and personal lives.

It’s likely, in fact, that executives would quickly find honest, neutral ESG a game very much not worth the candle. This just illustrates how illegitimate is the current partisan, woke ESG push; the vastness of the material corporate misrepresentations about their present efforts; and the dangers to CEOs who continue to play this rigged and crooked game.