Environmental, social, and governance (ESG) scores are an insidiously envisioned mechanism by which ideologically aligned influential interests represented by unelected supranational organizations are attempting to “reset” the global financial system to their advantage. This emerging design would circumvent national and individual sovereignty by altering traditional financial methods of assessing risk and debt / capital allocation. This attempted shift from “shareholder capitalism” to a “stakeholder collectivism” model hinges upon assigning companies, and soon individuals, arbitrarily determined ESG scores. These scores would mandate subjective and difficult-to-define and evaluate metrics assessing one’s commitment to “climate” and “social justice” issues. [1] Essentially, poorly scored companies suffer reduced or altogether eliminated access to capital and credit, while highly scored companies receive “preferred status” capital in-flows via traditional capital and debt markets, in addition to tax credits, grants, access to “special financial vehicles,” preferential contracting, and potentially other yet-to-be-defined advantages through future legislation, executive action, or international treaty. [2]
ESG’s metrics have ostensibly been designed to combat systemic global problems such as climate change, racial inequality, and world hunger—in alignment with the United Nations’ Sustainable Development Goals.[3] In reality, these measures will simply centralize power and control in the hands of unelected technocrats and private global institutions influenced solely by the wealthy elite that control monetary policy, capital, and credit through global central banks, where “baskets of currencies” make up the current global system. ESG is a major step toward consolidating a unitary global governance model utilizing digital identification and central bank digital currencies (CBDCs) as micromanagement tools that can be isolated upon individual transactions. ESG would therefore be a major step towards the dissolution of free markets, national sovereignty, due process under the law, and individual liberty.
Below is a brief discussion of how these influential elites and organizations work hand in glove to coerce ESG compliance.
International Organizations
International and supranational organizations have been the most outspoken champions of ESG’s adoption, chief among them the United Nations (UN) and its sister institutions such as the International Monetary Fund and the World Bank, as well as close UN allies such as the Klaus Schwab-led World Economic Forum. ESG metrics largely cleave to the UN’s Sustainable Development Goals (SDGs), of which there are 17, including “zero hunger,” “affordable and clean energy,” “sustainable cities and communities,” and “climate action.”[4] To see a clear illustration of the remarkable impact these organizations have made upon the global economic community, one needs only look at the growth of the UN-backed Principles of Responsible Investment (PRI) from its creation in 2006 through 2022. PRI—an association of financial institutions, businesses, and government-related funds—included just 63 signatories in 2006, representing $6.5 trillion in assets under management (AUM). Today, PRI has grown to include more than 4,700 signatories, representing more than $100 trillion in AUM.[5]
As ESG has continued to grow in popularity in recent years, international organizations have pushed for a unitary ESG system under the governance of the International Sustainability Standards Board (ISSB), which—if ESG backers have their way—would be forced upon every single corporation—and eventually, individual—on the planet.[6]
Asset Managers, Financial Institutions, Insurance Corporations
While these international institutions have been highly influential, they would not be able to achieve their goals without the complicity and leadership from titans of the international business community. The “Big Three” asset management firms of BlackRock, State Street, and Vanguard are at the heart of ESG’s coercive implementation, investing in companies that adhere to ESG standards, and diverting investment from poorly scored companies. These three Wall Street giants control over $20 trillion in AUM, and own approximately 20 percent of shareholder votes in the S&P 500.[7] They wield their power with abandon; for example, they organized a takeover of ExxonMobil’s board of directors in 2021, replacing three of its 12 directors with climate activists committed to moving the company away from products that result from carbon-dioxide emitting processes, which is Exxon’s primary business.[8]
The world’s largest banks and insurance companies are in on it, too. Financial institutions such as JP Morgan Chase and Bank of America restrict lending to companies with unfavorable ESG scores, while insurance conglomerates such as AXA, Allianz, and Zurich refuse to underwrite policies for companies that do not adhere to “sustainable” practices.[9] Together, these business titans and their industry allies from approximately 45 countries have signed on to the Glasgow Financial Alliance for Net-Zero (GFANZ). GFANZ members collectively control at least $130 trillion in capital, and use these funds to achieve the Paris Agreement goals of halving net-zero carbon emissions by 2030 and achieving a full net-zero transition by 2050.[10]
Regulators
Aiding and abetting this corporatist global alliance are governmental regulators. The European Union (EU) is the prime example of imposing regulations for sustainable business practices, and has recently announced a mandatory due diligence model upon EU corporations and their business partners, which is on the verge of becoming law.[11] In the United States, federal agencies and departments such as the U.S. Securities and Exchange Commission (SEC), and the Office of the Comptroller of the Currency (OCC) have been some of ESG’s chief advocates.[12] To date, President Biden has signed more than 30 executive orders related to ESG topics.[13] Even the Department of Defense (DoD) has sublimated its responsibility towards the national security of the United States in favor of climate objectives; the U.S. Army has even committed to fully transforming all tactical and non-tactical vehicles into electric vehicles by 2050.[14]
International organizations, powerful business entities, and regulators are not the only actors involved in this conspiracy to reset the global capitalist system. Equally crucial to their efforts are those of central banks such as the U.S. Federal Reserve, which has printed exorbitant amounts of “free money” to prop up businesses, and allow them to focus upon non-material ESG factors at the expense of profit margins. Ultimately, the efforts of this global monopolistic array of elite organizations will do nothing less than destroy free markets, democratic processes, and individual rights. These actors, and the system they hope to impose upon us, must be stopped.
[1] For more information, see: Justin Haskins and Jack McPherrin, “Understanding Environmental, Social, and Governance (ESG) Metrics: A Basic Primer,” The Heartland Institute, January 26, 2022, https://www.heartland.org/publications-resources/publications/understanding-environmental-social-and-governance-esg-metrics-a-basic-primer
[2] Mark Bergman et al., “Introduction to ESG,” Harvard Law School Forum on Corporate Governance, August 1, 2020, https://corpgov.law.harvard.edu/2020/08/01/introduction-to-esg
[3] United Nations, “Sustainable Development,” Department of Economic and Social Affairs, accessed July 12, 2022, https://sdgs.un.org/goals
[4] Ibid.
[5] Principles for Responsible Investment, “About the PRI,” unpri.org, accessed January 24, 2022, https://www.unpri.org/pri/about-the-pri
[6] For more information on this new initiative, and plans for a unitary model, see: Jack McPherrin, “A Global ESG System is Almost Here: We Should Be Worried,” The Epoch Times, May 31, 2022, https://www.theepochtimes.com/a-global-esg-system-is-almost-here-we-should-be-worried_4501543.html
[7] Adrienne Buller, “With $10 Trillion in Assets, BlackRock Has Set a New Benchmark for Corporate Power,” Jacobin, March 3, 2022, https://jacobin.com/2022/03/index-funds-blackrock-vanguard-stocks-ownership-democracy-concentration
[8]Witold Henisz, “Why Engine No. 1’s Victory Is a Wake-up Call for ExxonMobil and Others,” Knowledge at Wharton, University of Pennsylvania, June 15, 2021, https://knowledge.wharton.upenn.edu/article/engine-no-1s-victory-wake-up-call-for-exxonmobil-and-others/
[9] For more information, see: Justin Haskins, “Are Financial Institutions Using ESG Social Credit Scores to Coerce Individuals, Small Businesses?” The Heartland Institute, February 27, 2022, https://www.heartland.org/publications-resources/publications/financial-institutions-are-expanding-esg-social-credit-scores-to-target-individuals-small-businesses
[10] Glasgow Financial Alliance for Net Zero (GFANZ), “Amount of finance committed to achieving 1.5°C now at scale needed to deliver the transition,” November 3, 2021, https://www.gfanzero.com/press/amount-of-finance-committed-to-achieving-1-5c-now-at-scale-needed-to-deliver-the-transition/
[11] Marti Flacks, ““European Union Releases Draft Mandatory Human Rights and Environmental Due Diligence Directive,” Center for Strategic and International Studies, March 11, 2022, https://www.csis.org/analysis/european-union-releases-draft-mandatory-human-rights-and-environmental-due-diligence
[12] For more information on the SEC’s role in coercing ESG compliance, see: The Heartland Institute, “ESG Scores: The Role of the U.S. Securities and Exchange Commission,” August, 2022, https://www.heartland.org/_template-assets/documents/PolicyTipSheetESG2.pdf; For information related to the OCC’s similar policy objectives, see: OCC, “Risk Management: Principles for Climate-Related Financial Risk Management for Large Banks; Request for Feedback,” OCC Bulletin 2021-62, December 16, 2021, https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-62.html
[13] Federal News Network, “ESG isn’t just an investment for federal agencies, it’s an opportunity,” Insight by KPMG: Federal Insights, June 10, 2022, https://federalnewsnetwork.com/federal-insights/2022/06/esg-isnt-just-an-investment-for-federal-agencies-its-an-opportunity/
[14] Department of the Army, “United States Army Climate Strategy,” Office of the Assistant Secretary of the Army for Installations, Energy and Environment, February 2022, https://www.army.mil/e2/downloads/rv7/about/2022_army_climate_strategy.pdf
Jack McPherrin ([email protected]) is a managing editor of StoppingSocialism.com, research editor for The Heartland Institute, and a research fellow for Heartland's Socialism Research Center. He holds an MA in International Affairs from Loyola University-Chicago, and a dual BA in Economics and History from Boston College.
