ESG, a Ratings Agency, and Utah

ESG, a variant of "socially responsible" investment, is a discipline — too kind a word, really — under which potential (or actual) ...

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BY ANDREW STUTTAFORD Image April 23, 2022
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BY ANDREW STUTTAFORD April 23, 2022
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ESG, a Ratings Agency, and Utah

ESG, a variant of "socially responsible" investment, is a discipline — too kind a word, really — under which potential (or actual) portfolio companies are measured against environmental, social, or governance criteria designed, to no small extent, to support the pretense that the subjective is objective. And it is a pretense made all the worse by the manner in which ESG is being used to further a political agenda without the inconvenience of asking voters what they think. ESG is also a good and sometimes extremely profitable business — an invitation to rent-seeking, which has been eagerly accepted by any number of financial businesses, lawyers, accountancy firms, "consultants," and the like. To help understand why ESG has taken off so quickly, just look at the flourishing ecosystem that it has spawned.

There's a long, long way to go, but there are some signs of a pushback.

Bloomberg:

Utah's governor and its federal lawmakers are objecting to S&P Global's move to publish ESG scores for U.S. states, calling it an undue politicization of the ratings process.

In a letter sent to the firm on Thursday, the politicians — all Republicans — lay out a lengthy rebuke of S&P's move to release environmental, social and governance assessments, or a so-called ESG score. Despite Utah's results falling in line with many other states, the officials argue S&P should focus strictly on financial fundamentals . . .

S&P's ESG indicators include categories like human rights, social integration, low-carbon strategies, climate measures and sustainable finance.

The ratings agencies have, if nothing else, a keen nose for a money-making business, and that, plus in all probability, a leftwards drift within S&P (as in so many parts of today's capitalist system, from corporations ...   READ MORE

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