Joe Rogan FREAKS Out: George Soros INSANE PLAN
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- ESG principles emerged as a survival strategy for investment firms like BlackRock.
- Investment houses rebranded as virtuous entities to gain growth and power.
- ESG adoption marginalized individual investors, shifting focus to ESG agendas.
- Powerful investors like Fink and Soros influenced politics and global issues.
- Their influence raises questions about diversity and long-term effectiveness.
You might not be aware of it, but a major shift in the investment and banking world has been happening, and it all centers around something called ESG. It stands for Environmental, Social, and Governance, and it’s become a survival strategy for big investment firms like BlackRock. Back in 2009, BlackRock acquired Barclay’s Global Investors Ltd, making it the largest investment firm globally with almost $3 trillion in assets under management (AUM). But it faced a tough time politically, coming on the heels of the 2008 Financial Crisis and during the “Occupy Wall Street” movement when public suspicion of big banks and corporations was at its peak.
The financial industry turned into a morality play, with banks being portrayed as the greedy villains and policymakers trying to play the role of heroic civic advocates reigning them in. For BlackRock, growing freely in such a hostile policy climate seemed nearly impossible. However, the company’s leaders had a brilliant idea that would soon be adopted by other firms in the early 2010s.
What if these big investment houses rebranded themselves as virtuous and civic-minded, outshining even their regulators? This approach could be game-changing, opening up a path to limitless growth and granting these companies quasi-governmental power. The principles of ESG, which had already been introduced in the 2004 United Nations report “Who Cares Wins,” emphasized the importance of environmental and social progress for higher long-term profits. However, defining the broad categories of “environmental” and “social” fell into the hands of international institutions.
For example, “environmental” mainly focused on CO2-reduction goals, while “social” encompassed issues like gender parity, racial justice, and poverty reduction according to the UN’s stated social goals. The ESG strategy was designed to align the priorities of political elites with those of business leaders. While this approach was not new in Europe, where the World Economic Forum (WEF) and Klaus Schwab had blurred the lines between business and government for a long time, it was a radical departure in the US, where the shareholder had long been the king.
The adoption of ESG principles skyrocketed over the years. By 2020, ESG-minded investing vehicles were managing over $30 trillion worldwide, with more than $17 trillion of that in the US alone. Private equity firms and investment outfits entirely devoted to ESG, like Al Gore’s Generation Investment, were popping up regularly. Major US investment firms began offering ESG-mandated mutual funds, and projections estimated a staggering $53 trillion to be invested in ESG by 2025, showcasing the scale of this shift in investment practices.
While the rise of ESG brought positive changes in corporate behavior, individual investors found themselves sidelined. This trend began back in the early 1980s when federal proxy voting rules were altered to allow investment firms like BlackRock to vote on behalf of their clients. This move was meant to address the challenges faced by individual investors, who often lacked the time and resources to attend shareholder meetings or convey their views to company leadership. Unfortunately, it also bestowed enormous power upon investment companies, with the understanding that they would prioritize maximizing profits and shareholder returns.
In the 2010s, things started to change, and investment companies began voting in line with the ESG agenda. BlackRock, for instance, cast votes at an astounding 16,200 shareholder meetings in 2020, involving 153,000 company proposals. Frequently, these votes went against company management, reflecting the company’s commitment to the ESG cause.
BlackRock’s own Investment Stewardship Annual Report highlighted their stance, stating that they identified 244 companies in 2020 that were not making sufficient progress in integrating climate risk into their business models or disclosures. They took voting action against 53 of these companies, putting the remaining 191 companies “on watch.” The message was clear – those who didn’t make significant progress would face voting action against their management in 2021.
In conclusion, ESG has transformed the investment landscape, providing a way for big investment firms to rebrand themselves as virtuous and civic-minded entities while aligning their priorities with those of political elites. As ESG continues to gain momentum, trillions of dollars are being channeled towards companies that prioritize environmental sustainability, social progress, and sound governance. While this shift has brought positive changes, it has also raised concerns about the influence of investment firms on corporate decision-making and the potential sidelining of individual investors in favor of larger institutional players. As you navigate the investment world, it’s essential to be aware of these trends and their implications on the financial landscape.
In the world of big investors like BlackRock, attending shareholder meetings was once seen as a way to influence company managers towards embracing the ESG principles. However, BlackRock’s CEO Larry Fink discovered a far more effective method: the royal proclamation. In his letters over the years, Fink advocated for companies to shift away from traditional shareholder capitalism and embrace the idea of “stakeholders,” which includes not only shareholders but also employees, customers, and communities.
The idea of expanding stakeholders beyond shareholders might seem inclusive, but it actually marginalizes shareholders and elevates the power of company managers. By making companies accountable to everyone, they end up being accountable to no one in particular. In 2020, Fink took things a step further and decreed that all American companies must align their businesses with the goals of the Paris Agreement on climate change, with potential shareholder activism or divestment as consequences for non-compliance.
Fink insisted that companies include climate risk as investment risk in their financial analyses, which indirectly disadvantages businesses involved in heavy industry or fossil fuel production. However, this measure also coerces companies into complying with international climate agreements, with government climate regulations becoming the primary near-term risk for many businesses.
The concern arises from the fact that Fink is speaking with the authority of an elected representative who supposedly has universal support from his investors when, in reality, this may not be the case. As BlackRock is headquartered in the United States, there are likely many investors who either reject ESG principles or disagree with Fink’s methods of applying them. In a free-market capitalist democracy, diversity of opinion is expected, but when CEOs prioritize Fink’s demands over the preferences of their actual investors, it stifles this diversity and hampers the discovery of the best strategies.
The influence of powerful investors extends beyond Larry Fink, as evident in the case of George Soros and his son, Alex Soros. The younger Soros is actively involved in politics and is expanding his father’s philanthropic endeavors to support various liberal causes, including voting and abortion rights, gender equity, and left-leaning U.S. politicians.
However, Alex’s radical left-leaning stance on issues like Affirmative Action and the Green Transition has sparked controversy. His support for the Green Transition, which involves relying heavily on intermittent and unreliable sources like solar and wind power, has raised concerns about its feasibility and potential impact on people.
Alex’s belief in “marine cloud brightening” as a strategy to cool the Arctic and combat climate change has also raised eyebrows due to its unproven nature. Critics argue that such interventions could have unforeseen consequences and should be approached with caution.
In conclusion, the influence of huge investors like Larry Fink and George Soros can shape the behavior of companies and even impact global issues like climate change. While their intentions may be rooted in what they believe is right, their power to sway companies and politics raises questions about the diversity of opinions and the long-term effectiveness of certain strategies. In navigating the complex landscape of investments and political involvement, it’s important to consider the implications of such influential figures and be aware of the potential consequences of their actions.