When The New Right Meets The Old Left On ESG
When The New Right Meets The Old Left On ESG
Authored by Rupert Darwall via RealClear Wire,
This month, conservative critics of environmental, social and governance (ESG) investing had something of a surprise – an almost-simultaneous attack on their views from both Left and Right mounting remarkably similar arguments. Writing for CNBC last week, Democratic Senator Sheldon Whitehouse, the Senate’s climate-denier-witch-finder-in-chief, together with Senators Brian Schatz and Martin Heinrich, denounced state Republican officials for their stand against financial institutions whose anti-fossil-fuel policies damage their states’ economies. These elected officials, the senators wrote, are engaged in a purely ideological, anti-capitalist crusade against free-market principles.
Ten days earlier, from the Right, American Affairs senior editor Julius Krein launched a 4,800-word broadside on ESG’s conservative critics. They don’t understand, Krein suggested, that ESG is an outgrowth of shareholder primacy, the very thing they believe in.
Thus, both ends of the political spectrum end up on the same page, accusing pro-market, anti-ESG critics of subverting free-market principles.
The Old Left and New Right are converging in other areas. The trio of Democratic senators write of the “significant economic risks” of not transitioning to a low-carbon economy. Krein agrees. Major environmental catastrophes are generally bad for business, he writes. Clean energy also gets the nod. It’s the future, Klein avers, and missing out on it represents “a major business risk.” Krein even supports some aspects of the corrosive Diversity, Equity and Inclusivity (DEI) component of ESG. Disney, he suggests, “can easily make a prima facie case that its management should reflect the demographics of its target audience.”
In getting to this point, Krein does not disclose the role of the United Nations in the origins of ESG, a detail that might spoil his narrative of ESG as an efflorescence of shareholder supremacy. Krein’s essay links to a 2004 report, “Who Cares Wins,” its first page carrying the logos of the UN and the Swiss Federal Department of Foreign Affairs. The report had been produced under the auspices of the financial sector of the UN Global Compact. Neither does Krein mention that the Global Compact had been launched five years earlier at Davos by Kofi Annan when he was UN secretary general.
Sure, ESG is hard to pin down. It’s not a coherent investment strategy and means different things to different people. As Krein puts it, its purpose “isn’t entirely clear,” a factor explaining much of its appeal. Nonetheless, he prefers to view ESG as a passive risk-disclosure matrix, downplaying ESG as a vehicle for promoting a political agenda – surely the reason why Senators Whitehouse, Schatz and Heinrich are such ardent advocates of ESG and why the UN birthed ESG in the first place.
In this telling, index investment-product providers such as BlackRock, the world’s largest asset manager, are relatively indifferent to the performance of individual stocks, something that happens to be broadly true. Then follows confusion. Index product providers do care about beta or overall market risk, Krein says. However, beta isn’t a measure of market risk – or, as the finance jargon has it, non-diversifiable risk. Beta is a measure of the riskiness of individual securities or groups of securities compared to the market as a whole. Because macro-economic factors, such as the Fed’s monetary policy, drive overall market risk, asset managers like BlackRock use ESG to disclose such macro risks, Krein claims, even though, as its initials imply, ESG has nothing to say about interest rates, inflation, and GDP growth. It’s all nonsense on stilts.
In fact, BlackRock’s conversion to climate activism and demanding that the companies it invests in should produce net-zero transition plans followed an intervention by the Sisters of Mercy, who had filed a motion ahead of BlackRock’s 2020 annual meeting accusing it of neglecting climate issues in its stewardship program. Whatever the motives of the sisters, it is highly improbable that they included maximizing the value of BlackRock stock.
Krein derides conservatives for hiding behind what he calls “liberal proceduralism” to content themselves with “redefining” directors’ fiduciary duties to “reemphasize” shareholder interests. This, too, is incorrect. It is not a matter of redefining, but restating – and that’s a big difference. As former BlackRock senior executive Terrence Keeley points out in his new book “Sustainable,” shareholder primacy long predates Milton Friedman. In a 1919 suit brought by the Dodge brothers against the Ford Motor Company, Justice Russell Ostrander wrote for the Michigan Supreme Court that “a business corporation is organized and carried on primarily for the profit of the stockholders.”
Krein argues that conservatives should drop their “silly pretence” in the efficacy of markets and promote a conservative version of ESG, incorporating “their own substantive goals” – an implicit admission that ESG is indeed a vehicle for promoting a political agenda. This is asking conservatives to accept two counterintuitive propositions: first, that Congress and the administrative state have the potential to be more efficient capital allocators than markets; second, that conservatives can impose their cultural values and political preferences on Wall Street and blue-state pension funds such as CalPERS, CalSTRS, and the New York State Common Retirement Fund.
Entirely missing from Krein’s account of ESG is any notion of beneficiaries. Trust law, statutes such as Employee Retirement Income Security Act of 1974 (ERISA), and the courts require fiduciaries to act in the sole financial interests of beneficiaries. This mandate is anathema to collectivists of all stripes who want access to trillions of dollars of retirees’ capital to pursue public-policy objectives purportedly necessary for societal improvement and bringing harmony between people and planet. This effort to socialize savings is already underway in Europe. By joining with the Left, the New Right would help bring about the very thing it deplores: the Europeanization of America. Is this what national conservatism is going to be about?
Tyler Durden
Thu, 01/26/2023 – 07:20
https://www.zerohedge.com/energy/when-new-right-meets-old-left-esg
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“The metaverse to us is not a virtual space that people go to spend time in. It’s a world in which we can add more context to your real world and make your real world more enjoyable,” Sandu told TechCrunch. “We’re going to be responsible for catalyzing a completely new generation to be more conscious of their environment; more conscious of how they spend and how they buy.”
“It’s always crypto winter being a Black founder.” Iddris Sandu, founder, Spatial Labs
Spatial Labs company made a splash in the industry last year by selling clothes designed by Sandu called Gen One Hardwear, which were embedded with a microchip called LNQ (pronounced link) that provided consumers with the item’s provenance and ownership history, seen, naturally, on the blockchain.
Almost like a QR code, tapping the LNQ chip with a phone unlocked online and in-person experiences, such as virtual concerts. Last year, Spatial Labs launched a marketplace for buying and selling items. It also sold microchips to those wishing to sell their own embedded products and upload their own exclusive offerings for potential buyers. The chip, for example, allows brands to add loyalty programs directly into their products rather than, say, signing someone up for an email list. To gain access to the loyalty benefits, all consumers must do is bring their phone within proximity to the chip sown into the item they purchased from the brand.
“There was a time when nutritional facts weren’t available on products, so people were just consuming anything,” Sandu said. “We want to give and create a new nutritional fact ecosystem for the products that you put on your body, as well as the objects you put into your home.”
This seed round makes Sandu, now 25, one of the youngest Black men to raise a double-digit seed round—and a solo founder at that. He’s already part of a somewhat rarified club. Per Crunchbase data, only 1% of all VC funds were allocated to Black founders last year; out of the $21.5 billion raised by web3 startups globally last year, $60 million of that went to U.S.-based Black web3 founders, one of whom was Sandu.
He said it took around six months to close his round. Asked what it was like raising during what was also a crypto winter, he said that for Black founders, there is little difference between a bear and a bull market due to persistent funding discrimination. “It’s always crypto winter being a Black founder,” he said. “It’s challenging, but it’s worth it.”
With the fresh capital, Spatial Labs plans to continue scaling its blockchain-enabled technology and expand into other industries, such as media and entertainment. Later this year, it also plans on launching a device called Node to simplify how long it takes to develop and deploy augmented reality experiences. “We’re also thinking about reducing the barrier of entry into web3 and augmented reality using our chip technology,” Sandu continued.
Sandu has come a long way from where he started. Born in Accra, Ghana, he moved with his family to Los Angeles at the age of three. Inspired by the launch of the iPhone, he spent time at his local libraries, first in Compton and then later in Harbor City after his family moved, to teach himself computer programming with hopes of one day becoming an entrepreneur.
By high school, he was working for Google and building his own apps. He was recognized by then-President Barack Obama for his work in STEM, forwent attending MIT to focus on building technology, consulted with Twitter, Snapchat, and Rihanna, created software for Uber, and helped create the first smart retail store with the late Nipsey Hussle.
At the same time, he realized there was an information gap affecting Black youth like himself, where even his textbooks in Compton were outdated.
“If you want to keep people out of space, the easiest way to do that is creating separatism as it relates to information,” Sandu said. He considers himself a lucky one in that, at a young age, he was able to find his way around pushing boundaries but notes that it shouldn’t have to be that way. Next year, he hopes to launch a personal fund to support people of color and will focus on tech and hardware innovation.
Until then, though, he’s building Spatial Labs. He wants it to become one of the fastest-growing unicorns and, overall, wishes to inspire the next generation of technologists; naturally, of course, he wants also to create products that, well, change the world.
“Legacy for me is centered around how many lives we can impact, more so than how many products we can sell,” he said.
“It’s the purpose that I feel I’ve been called here to do,” Sandu continued. “To open doors and to hold them as long as possible and eventually make sure that those doors simply do not exist. No one can gatekeep if there is not a door there.”
This piece was updated to reflect what year LINQ and Gen One Hardware launched.
Spatial Labs, a web3 infrastructure and hardware company, closes $10M seed round by Dominic-Madori Davis originally published on TechCrunch
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