block a Labor Department rule<\/a> allowing retirement plan managers to include E.S.G. considerations in their investment plans. The vote is likely to draw President Biden\u2019s first veto.<\/p>Republicans are right about E.S.G. \u2014 but for the wrong reason. <\/strong><\/p>The problem with E.S.G. isn\u2019t <\/strong>woke<\/strong><\/em> capitalism. It\u2019s <\/strong>corporate<\/strong><\/em> capitalism. Corporate money has corrupted American politics so much that our democracy cannot effectively deal with environmental and social concerns.<\/strong><\/p>CEOs and pension fund managers who tout their records on E.S.G. are engaged in a kind of social greenwashing \u2014 designed to burnish their brands and attract investors (including retirees) who want to believe<\/em> they\u2019re doing good while they\u2019re also<\/em> doing well. But most of this is baloney. Investors don\u2019t want to do good at the expense<\/em> of doing well. They\u2019re unwilling to sacrifice shareholder returns to advance their environmental and social values. They want high returns and <\/em>they want environmental and social goals. But they can\u2019t have both. They\u2019d do more good by donating to nonprofits seeking to protect the environment and advance the social causes in which they believe. <\/p>Corporations and institutional investors won\u2019t deviate from maximizing short-term profits and shareholder returns <\/strong>unless they are required to do so by law.<\/strong><\/em> And even then, only when the penalty for violating the law multiplied by the probability of getting caught is higher than the profits from continuing with the illegality.<\/strong><\/p>When I was secretary of labor, big corporations would violate laws on worker safety, wages and hours, and pensions whenever doing so was cheaper than obeying the law. And they\u2019d fight like hell against such laws to begin with, all the while telling the public what wonderful citizens they were.<\/p>
The soothing corporate and Wall Street talk about E.S.G. is designed to forestall such laws by creating the false impression that corporations are <\/strong>already<\/strong><\/em> doing what needs to be done for the environment or social issues, so there\u2019s no need for more laws or regulations.<\/strong><\/p>In 2019, the Business Roundtable \u2014 one of Washington\u2019s most prestigious corporate groups \u2014 issued a widely publicized statement expressing \u201ca fundamental commitment\u201d to the wellbeing of \u201call <\/em>of our stakeholders\u201d (emphasis in the original), including employees, communities, and the environment. The statement was widely hailed as marking a new era of E.S.G.<\/p>Since then, the Roundtable and its members have issued jejune statements about all they\u2019ve done to reverse climate change and alleviate poverty.<\/p>
Not incidentally, these were priorities in President Biden\u2019s \u201cAmerican Families Plan\u201d and \u201cInflation Reduction Act.\u201d But the Business Roundtable didn\u2019t lobby for these bills. It lobbied against <\/em>them. Hypocrisy? Only if you believed the Roundtable rubbish about corporate social responsibility and E.S.G. in the first place. <\/p>The pressures on companies to maximize their profits and share values \u2014 social responsibility and E.S.G. be damned \u2014 are coming from shareholders, top executives (whose pay is linked to stock performance), and retirement plan managers, even those who tout their commitment to E.S.G.<\/p>
It\u2019s tempting to chalk this up to \u201cgreed,\u201d but neither corporations nor retirement plans are capable of such emotions. They aren\u2019t people, no matter what the Supreme Court says. They\u2019re bundles of contracts. The specific people who enter those contracts on behalf of corporations, shareholders, and retirees have no interest or expertise in the environment or in any particular social issues. They\u2019re simply doing what they understand to be their jobs \u2014 maximizing shareholder value.
<\/strong><\/div>If we want these transactions to be better aligned with public needs<\/strong> <\/strong><\/em>rather than private profits, laws must demand this, and penalties for violating laws must be increased. Corporate taxes must rise to fund public investments in non-fossil fuels and social safety nets. Regulations must be strengthened to protect the public.<\/strong><\/div>But laws and regulations won\u2019t do any of this if corporations continue to spend vast sums on politics.<\/strong><\/p>The most telling trends over the last three decades have been the growing share of the economy going into corporate profits \u2014 generating ever-greater compensation packages for top executives and ever-higher payouts for investors \u2014 and the declining share going to most Americans as wages and salaries.<\/p>
Much of the reason is the vast increases in corporate and Wall Street money flowing into the campaigns of lawmakers who cut corporate taxes, enact corporate subsidies, and block or dilute regulations.<\/p>
The divisive blather over E.S.G. is simply masking these trends.<\/p>
The most socially responsible action pension plans and corporations can take to allay environmental and social problems is to refrain from putting money into politics and to support campaign finance reform.<\/strong><\/p>What do you think?<\/p>\n
This post was originally published on Common Dreams<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"For nearly two decades, major corporations have touted principles known as E.S.G. (short for environmental, social, and governance factors), ostensibly by focusing their businesses on these concerns as well as on profits.But now Republicans are taking…<\/p>\n","protected":false},"author":4023,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30,38014],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1013625"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/4023"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=1013625"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1013625\/revisions"}],"predecessor-version":[{"id":1013626,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1013625\/revisions\/1013626"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=1013625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=1013625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=1013625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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