the 54-year-old CEO is challenging the asset-management industry’s environmental, social and governance orthodoxy.
“Our research indicates that ESG investing does not have any advantage over broad-based investing,” Mr. Buckley said in a recent interview with the Financial Times. Matching word to deed, his comments came after he had withdrawn his firm from the $59 trillion Net Zero Asset Managers initiative, an organization that is part of the $150 trillion United Nations-affiliated Glasgow Financial Alliance for Net Zero. Both alliances are committed to restricting their investments over time to companies that are compliant with the Paris Agreement’s objective of net-zero greenhouse gas emissions by 2050. Mr. Buckley claims the financial world, swept up in climate-change fervor, can’t make such commitments without reneging on its fiduciary duties.
It is the other way around. Clausewitz told me in a lunch discussion when I was bit younger; what he had originally said was “Everything is Economics by other means”! He said it got all twisted up by the media!
Vanguard’s action has nothing to do with DEI hiring practices inside Vanguard.
Merely a couple of years ago there was some sketchy advertising out there pushing the idea that investing in companies highly rated on ESG metrics could generate better returns than index funds. That has been shown to be false advertising.
There are many, many metrics within each of the three ESG categories with inconsistent definitions being captured, refined and sold by a number of firms. The metrics can be gamed. One popular highlighted item is oil companies getting top marks in Environmental.
ESG-based investing is a personal (or institutional) choice. ESG is an interesting modern metric to provide non-traditional information. But It is way outside the brief of any general market index fund with millions of stockholders to buy or exclude stocks based on a somewhat arbitrary metric that has little to do with company performance.
Vanguard just called this out. They also effectively said ESG metrics are too volatile and are inappropriate for V to spend time designing and managing a custom index around them.
How arbitrary is it? Do we take the next two decades to lay waste to our environment? I get the falsehoods abound but can be weeded out. Do we give critical weight to solutions?
We are mostly old enough to die without much caring. But if we are alive twenty years from now we may have a worthless concept of mother earth to face. Good luck funding your retirements, garnering respect for the little we leave the next generation or deciding later, “oh perhaps things might have been different”.
Is it our business to say no to the potential ruin of our world?
Dig a little deep. I am reading Hamilton by Chernow. In over 200 pages we find Hamilton the abolitionist wanting a meritocracy. The Southerners refuse to entertain a conversation on abolition and the topic is taken off the table. The Southerners further decide to attack Hamilton as an aristocrat. In fact Hamilton wants a meritocracy. Hamilton in founding the Bank of New York is skewered by the Southerners as dishonest. The accountability of Northern financial institutions is assailed and never taken off the table. In other words finance v slavery only financial matters are questioned as illegitimate.
Here I question the leverage finance has on destructive manufacturing. We can either make the destruction cheap and easy to accomplish or make the solutions cheap and easy to accomplish.
Taking the decisions off the table for investor is not a short cut to your wealth. It is a short cut to your grandchildren’s demise both economically and physically.
Just as you would not back a financially ruined corporation, would you back a company that degrades your life? In a word “yes” you and all of us are right now. What fools we are. That is our critical weight and our path right now. It is a decision with no real choice.
Netherlands-based activist group Follow This was created first to target Shell and subsequently expanded to file climate resolutions at other western majors including BP, Exxon Mobil, Chevron and TotalEnergies.
According to the data published by it and investors, giant US investors BlackRock, Vanguard, State Street and JPMorgan all voted against the Follow This resolutions this year.