The Financial Times has dropped a report that sheds much-needed light on companies bragging about their environmental, social, and governance scores (ESG). It turns out they are a lot like ISO. A way for people to make money while pretending to do something that matters.
In the latter decades of the last century, someone thought we needed a metric to measure a company’s commitment to quality control. ISO 9000, ISO 9001, and so on. Quality control matters but in the real world, your customers measure it and then decide whether or not to do business with you. But ISO was never an honest indication of anything other than your ability to meet the stated standard.
I was a Quality Control Manager. I wrote and managed an ISO system. We paid third-party auditors to certify our process, laundering money into the hands of alleged experts whose only job was ensuring that employees followed the documented procedures. You could write any instructions you wanted. It could produce crap. As long as the workers followed it and the end product met the documented requirements, you could get ISO certified.
That’s a bastardization of an oversimplification. We did a lot to ensure quality because staying in business demanded it. My job was to figure out how to make my job less necessary. Work with the managers and staff to determine how to efficiently get the best results and reduce waste, defects, and errors. What we didn’t need to do was spend many thousands more annually keeping and updating an entire ISO system that we could pay an external ISO auditor to verify. Except we did. This latest thing captured many industries, and the ISO label, meaningless as it could be, got you more business while an entire industry (see also abscess) grew to service it.
Quality Control always mattered, but suddenly there was a new expense item for an extra-judicial overseer everyone agreed to pay for the BS label. And like all such constructs, it only seemed to get more extensive and expensive, self-important, corrupt, and corruptible. ISO auditors could fail you because they felt like it or pass you for the same reason.
The quality control auditors needed quality control, which was a downstream expense in and of itself – creating this massive bureaucracy that cost millions across multiple industries annually but produced nothing.
Pandering to social justice is also expensive, and many companies hired experts to make them appear #woke, only to discover how wasteful and unproductive that can be – and ESG is no different. It creates a perception for investors, potential business partners, or consumers that you’ve done something. That something is a bunch of paper in binders (or on company servers) that don’t mean anything in practical terms—Potemkin social and climate justice.
From The Fiscal Times.
Companies rated highly on widely accepted environmental, social and governance metrics pollute just as much as lowly rated companies, research has found. This perverse lack of correlation holds even if companies’ carbon intensity — their carbon emissions per unit of revenue or market capitalisation — is compared purely to their environmental rating, according to Scientific Beta, an index provider and consultancy. …
ESG ratings have little to no relation to carbon intensity, even when considering only the environmental pillar of these ratings,” said Felix Goltz, research director at Scientific Beta. “It doesn’t seem that people have actually looked at [the correlations]. They are surprisingly low.”
And this makes perfect sense. Net Zero, Electric Vehicles, Wind, and Solar are all affectations assigned a false perception. None of them is good for the environment; many may be worse than what they are meant to replace. Things with which we could do more and inevitably emit less (if that mattered) will be mothballed and replaced with environmental shibboleths that are less useful and dirtier than their predecessors. But they have been assigned a symbolism to which they have no right.
“The carbon intensity reduction of green [ie low carbon intensity] portfolios can be effectively cancelled out by adding ESG objectives.”
And we’re not even talking about investing in (for example) solar, which enables the world’s number one ocean polluter, air polluter, carbon emitter, and (perhaps) human rights violator China. But it is still viewed as earth friendly.
If you want to install solar, don’t pretend you are not enabling environmental disaster and the opposite of pro-rights, human, social, or environmental. It is one of many deceptions perpetrated upon us at great expense.
Think of it like gloves on food service workers. They look like they do something, and in a minimal sense, there is a value, but if you don’t change them between tasks, you can still cross-contaminate food and surfaces – which is why you are told they need to wear them. Not used properly, they do the opposite of the stated purpose. Or you could wash your hands a lot and skip the gloves, which are themselves an added expanse with a front and backend carbon footprint and a potential environmental hazard.
Medical face masks are another example. They may keep you from sneezing or spitting into an open chest cavity, but they don’t stop the spread of germs and never did. And the moment you touch them, that minimal advantage is lost – but people still think they can do things they cannot while frequently adjusting them, voiding what little value they had. And no one – even medical professionals who know these truths – are allowed to communicate them. It would destroy the illusion.
ESG is annother illusion. It is an affectation that hides harm and distracts from meaningful investment and innovation in things that could improve the air and water worldwide, not just in the places you can see – all to make more money.
HT | ZeroHedge
