Big Business Shareholder Value Scam
Stakeholder Capitalism Gets a Report Card. It’s Not Good
During this year’s protests, it felt different in the moment. After having lived through Rodney King up to here, I had hope! Now that things have calmed down a little… nope. Feels just like how it was before, a lot of “roundtables” and talk with no real metrics, accountability, or genuine intent besides making the roundtable participants feel better about themselves.
I’m hoping ESG can prevent the worst case scenario of corporate lip service. “In this scenario, bad companies mouth platitudes about social responsibility and environmental consciousness without taking any real action, but customers buy their products and services, either because they are cheaper or because of convenience, employees continue to work for them because they can earn more at these companies or have no options, and investors buy their shares because they deliver higher profits. As a result, bad companies may score low on corporate responsibility scales, but they will score high on profitability and stock price performance.” http://aswathdamodaran.blogspot.com/2020/09/sounding-good-or-doing-good-skeptical.html –
So let’s be honest here… ESG isn’t about rewarding “good” companies, it’s about denying capital and making life difficult for the “bad” companies (which is what the data shows). One of our large cap ESG funds is merely the S&P 1000 index with the bad actors removed… and just by removing the worst actors, it produces better returns. If you want to be invested in oil & gas, stand against the demographic trend of gender equality, environmentalism, etc… I wish you luck facing those headwinds, sold to you.
My response to these companies making announcements today, in the words of George W. Bush, “There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”