The ESG narrative is a wolf in sheep’s clothing – Bitcoin Magazine
This is an opinion editorial by Macro Jack, a Bitcoiner with a background in traditional financial services spanning investment research, investor relations and business development.
Environmental, social and governance (ESG) is an approach to evaluate companies or countries based on their alignment with these three factors. Growing in popularity in recent years, ESG has become a globally adopted framework and focal point for capital allocation. The concept sounds harmless on paper since most people are smart and want to promote environmental or social issues. Even better if we can do it through investment. But introducing a monetary reward for ESG’s disciples introduces a whole new set of incentives that probably haven’t been thoroughly explored by the investment community.
There is more than meets the eye. The ESG evaluation process is arbitrary, opaque and centralized, leaving considerable room for corruption. It is also suspicious that one of the main proponents of ESG is BlackRock CEO Larry Fink. BlackRock is the world’s largest asset manager, managing more than $10 trillion, and Mr. Fink’s lifestyle reflects that. He likes to fly privately to Davos, relax in his Aspen mansion and tell you to reduce your carbon footprint.
Digging deeper into ESG reveals a more sinister plan. While we want to be good stewards of the planet, we are quickly learning that the globalists’ proposals to do so are quite ominous and also illegitimate. ESG is an important part of the agenda to consolidate capital and centrally plan the allocation of resources, destroying the remnants of the free market in the process. Let’s dig a little deeper.
ESG is more than an approach to evaluating investments; it is a social credit system similar to that existing under the Chinese Communist Party. Similar to a credit score that determines one’s eligibility for loans based on their previous ability to service debt, a social credit system is a more invasive analysis and determines access to not only financial services, but also public services, such as public transport or grocery stores. For example, China’s social credit system seeks to compile digital records of citizens’ social and economic behavior to calculate a personal rating that determines which services they are entitled to. According to the Wall Street Journal, the official Chinese social credit system includes, among other things, loan repayment, credit card bills, compliance with traffic rules, compliance with family planning limits, and “reliability” of information posted or posted online. In addition to the official input, social credit includes political dissent, personal values and online speech in each person’s score. Someone’s beliefs, political views and online behavior determine their ability to access services such as insurance and banking, school admissions, internet services, social services and job eligibility.
Social credit is a system that determines access to goods and services at an individual level, while ESG determines a company’s ability to access capital. Ultimately, rather than a company delivering a product or service that the market demands, companies succeed based on their ability to compromise values and incorporate an ESG agenda. On an ESG standard, success is no longer based on delivering products and services to the market, but on allegiance to the ruling class. ESG is a return to the monarchical model, which allows an elite few to allocate capital to purposes that further enrich them in the name of “social good.”
Not only does the ESG system consolidate capital for the ruling class, but it is also effective at destroying wealth on a nationwide scale. For example, Sri Lanka’s ESG score was 98.1 before the collapse. World Economics research explains the score. A high emissions index (close to 100) indicates a low environmental impact for the country. The emissions index is based on equal weighting of carbon and methane emissions.
Sri Lanka’s collapse is due in part to the government’s decision to force farmers to switch from chemical fertilizers, which use natural gas as a key input, to organic fertilizers by April 2021. This mandate reduced crop yields and has led to less food, resulting in ii Sri Lanka is draining its foreign exchange reserves to import food. In two years, Sri Lanka’s foreign exchange reserves were depleted from $7.6 billion in 2019 to $50 million by the end of 2020, a decline of about 99%. All the while, the country had 81 billion dollars in debt and food prices have almost doubled.
If anything, ESG scores teach us that it can be a counter-indicator of a country’s economic health, indicating a lack of food and reliable energy. Another recent ESG development was the Dutch government’s recent announcement of its plans to cut nitrogen emissions by 50% by 2030 and Canada’s proposal to cut fertilizer emissions by 30%. In the Netherlands, the scapegoat is livestock and a reduction in herd size will bankrupt many farmers, increase global food insecurity and make beef artificially scarce. By succumbing to ESG pressures, companies and countries do not flourish, they crumble. Instead of raising all tides, they sink all ships.
At the corporate level, the ESG scheme is feasible because the stock market, namely passive investing, has been promoted as the best way to build wealth, especially in the United States. Passive vehicles such as exchange-traded funds have been championed by BlackRock and other companies. for its simplicity and has seen a massive growth in demand over the past decade. However, the unspoken consequence of passive investing is that shareholder voting rights are now concentrated with these giant asset managers, who use their votes to implement their ESG agenda. The ESG cronies are being appointed to board positions and leadership roles, destroying the remnants of capitalism. Instead of delivering shareholder value and increasing aggregate wealth, companies are forced to focus on “stakeholder capitalism”, translated as vigilante capitalism. Corporations must succumb to Marxist ideologies in order to maintain a connection to the monetary window. ESG is a social credit system that purports to be a “social good”. A new form of crony capitalism, one based on allegiance to the globalists and masquerading as a virtuous cause.
The root cause of Marxism spreading through the capital allocation process is the debt based fiat money. Because inflation is programmed into our money, savers are forced to invest in Wall Street products to preserve purchasing power. The inflationary currency monopolized by central banks is a problem that Wall Street is eager to solve, and their solution allows them to use shareholder voting rights to push the ESG agenda. The need for a savings technology independent of falling fiat currency and Wall Street’s financial products is obvious.
Enter Bitcoin, a savings technology that will free us from the globalists’ attack vectors, including ESG. By restoring the base layers of civilization with sound monetary technology, Bitcoin enables us to save for the long term. There is no need for Wall Street products on a bitcoin standard since there is no central authority, such as the Federal Reserve, diluting the supply. Bitcoin is programmatically scarce. There will only ever be 21 million bitcoin and monetary policy is completely transparent and inelastic to changes in demand. Just as gold was chosen by the free market as money because of its marketability across space, bitcoin is also being adopted as a savings technology. There is a growing demand for good money as fiat currencies trend towards zero. As demand grows over time and supply decreases, the price will rise. Bitcoin is the savings technology humanity needs to prosper.
Before people point out the obvious, it’s worth addressing that bitcoin’s price is volatile. Bitcoin’s price is falling in dollar terms due to the instability of the fiat financial system. However, Bitcoin is only 13 years old and not yet a unit of account. As understood in bitcoin and Austrian economics, money follows an adoption curve: first as a collectible, then as a store of value, then as a medium of exchange and finally as a unit of account. Bitcoin’s predecessor, gold, went through this monetization process over thousands of years. Bitcoin’s adoption is much faster. As it progresses through the monetization process, it will become more stable in dollars. Just remember that it is always stable in bitcoin terms; 1 bitcoin = 1 bitcoin.
To conclude, the restoration of sound money as the base layer of civilization removes theft from the monetary system. Unlike central bankers who devalue your savings and force you to speculate in Wall Street products to preserve purchasing power, bitcoin exists as an alternative to store value through space and time, defunding Cantillonares and destroying ESG in the process.
This is a guest post by Macro Jack. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
