ESG, DEI, and the Rise of Fake Reporting. By Paul Fritjers, Gigi Foster, and Michael Baker.
We know that the modern West has developed a jaw-dropping degree of totalitarianism, wherein the bureaucracies of the state and the corporate sector coordinate together to cripple humans outside their power networks and media channels. But what are the mechanics of this coordination? …
ESG (Environmental, Social, and Governance):
In brief, ESG originated at the level of the international and intellectual stratosphere and then grew, unchecked by tedious real-world constraints like scarcity and tradeoffs, as a kind of malignant joint venture between large government bureaucracies and large corporations.
This JV is a serious industry, offering lucrative money-making opportunities for consulting companies, fund managers, and assorted professionals who ‘help’ companies comply. Bahar Gidwani, co-founder of a company called CSRHub, a compiler and provider of ESG company ratings, estimates that the collection of ESG data alone is already costing companies $20 billion worldwide. …
Large reporting costs are easier for large companies to bear, which offers a clue to why they’re interested: this sort of burden, particularly when made compulsory by the state, helps them dominate their smaller competitors.
DEI (Diversity, Equity, and Inclusion):
DEI is the younger brother of ESG.
At present, DEI reporting is not yet compulsory, but about 16% of the biggest US firms have open DEI reports, and the DEI fad is growing, perhaps eventually to eclipse ESG. …
Who’s Asking for This Crap?
Though specious, unverifiable, and mostly made up, ESG reporting is a way to formally present a company’s ‘ESG performance.’ This performance can theoretically be ‘scored’ by some third party, and thereby compared with that of other companies.
If ESG is valued highly by consumers, then companies that get high scores should attract a disproportionate amount of investment, meaning that their cost of capital will be lower than companies who don’t score so well — the magic through which a bullshit report is turned into a business opportunity.
This also makes delicious fodder for fund managers, who can bundle firms’ stock into ‘ESG funds’ or ‘sustainable funds’ or whatever, and charge investors fat fees for the privilege of investing in them. …
Many ESG fund investors themselves are government-type entities, like public pension funds, where the distance between investment decision and personal consequence is about as big as it gets. So often the ultimate payers for this circus are the general population whose pensions are, unbeknown to themselves, being used for virtue-signaling by public fund managers.
Who Wins and Who Loses?
Learning how to write up and cheat with these performance reports requires a lot of resources, but once a company antes up, the game becomes easy to play. ESG reporting is just one example of the broader reality that compliance with external bureaucracies requires largely a one-off fixed cost, and in this case the cost is often large enough to bankrupt a small firm. …
This, we think, is the reason why bullshit reporting is not getting pushback from the largest companies that don’t already have natural monopolies: plainly, it suits their purposes. They are big enough to absorb the cost without a major effect on the bottom line, and they are getting in return a stronger position in their markets. They naturally support the big bureaucracies that make these reports compulsory. Big consulting companies, and the aforementioned fund managers, also love the idea of compulsory reporting because it creates business for them. …
Will This Eventually Crash and Burn?
Hard-nosed managers of big firms understand that bullshit reporting requirements can be a source of competitive advantage, causing financial distress for their smaller competitors. What is in the whole charade for the state bureaucracy and the corporate bureaucracy is that it makes them seem virtuous while creating a huge fog of mystery about what they are actually doing, thereby providing both jobs and cover.
Like the woke movement, ESG and DEI are at heart parasitical developments, originating from a decaying West, championed by the useless and the clueless, and benefiting the shrewd and the corrupt.
Such malignancies weaken our society and should be discarded at the earliest opportunity. Much like Elon Musk showed the door to 80% of Twitter staff with no loss of functionality, and just as we have advocated previously that 80% of employment in ‘health’ professions is useless, so too do we think that firing all professionals whose primary business involves ESG and DEI can be done without any loss of functionality. We don’t think this will happen anytime soon.
Fundamentally unfair and parasitical, DEI and ESG are unsustainable. We will find a way to free ourselves of them.
In a free market, competitive pressure would soon eliminate them.