New SEC Rule Could Eliminate Environmental, Social, and Governance Funds
SEC is trying to address “greenwashing” and “climate washing” manipulations as investors strive to make profits. Meanwhile, billionaire Bill Gates is slamming the brakes on climate panic.
The last time I reported on environmental, social, and corporate governance, BlackRock Chief Executive Officer Larry Fink, whose firm has attempted to foist these standards on the global business community, had stopped using the term, whining it has become too politicized.
Now, the Securities and Exchange Commission has announced a rule that may pull the curtain back on the content of these funds, which may drive a stake through the heart of ESG inanity.
The Securities and Exchange Commission recently announced a rule requiring environmental, social, and governance funds to be 80% aligned with the funds stated goals. This could reveal a long-held secret of ESG funds: to be competitive, they are packed with more profitable investments that are not green.
…The growth of ESG has sparked regulation for sustainable reporting standards for businesses. The European Union was the first, with the European Sustainability Reporting Standards that were approved in July and set to go into effect January 1. The ESRS will require publicly traded and large privately held companies to report greenhouse gas emissions, actions taken by the entity to reduce GHG emissions, and other green policies. Eventually it will expand to small and medium-sized enterprises. While reporting will be mandatory, no environmentally friendly action is required. The SEC is set to release similar standards for the US in October.
The increased interest in ESG caused fund managers and businesses to adjust their practices. This sudden shift raised concerns of greenwashing, or the exaggeration of environmentally friendly initiatives to appear greener than they actually are. A new term, climate washing, has recently developed that is specific to the exaggeration of climate change initiatives.
As elite investors attempt to stay profitable while still presenting themselves as morally righteous, ecologically sensitive, social justice warriors, many have attempted to veil profit sources that are not deemed pure enough. The discovery of this “sin” is now leading to fairly significant fines.
Deutsche Bank-controlled (DBKGn.DE) investment firm DWS will pay $25 million to settle charges over misstatements regarding its environmental, social, and governance (ESG) investing and failures in policies designed to prevent money laundering, U.S. regulators said on Monday.
DWS Investment Management Americas made “concerning” misstatements regarding its ESG investment process, the U.S. Securities and Exchange Commission (SEC) said in a statement.
The firm marketed itself as a leader in ESG investing, but from August 2018 until late 2021, failed to implement certain related policies as they were billed to investors, the regulator said.
Internal auditing that has been done for a few firms shows that the vast majority are not ready to embrace ESG truthiness fully.
Three-quarters of companies globally are not ready to have their environmental, social and governance (ESG) data audited externally months before new regulations kick in, according to a new report from KPMG published on Tuesday.
Stricter European Union, U.S. and global rules are being introduced, mostly in time for the 2024 reporting season, to replace a patchwork of voluntary private sector practices for listed companies to make climate-related disclosures.
Regulators say external auditing of sustainability-related data – while not as extensive as financial auditing – is crucial for giving investors information free of misleading environmental claims, known as greenwashing.
It’s a good sign that woke corporate managers and elite investment organizations may have to reveal the truth about how business-essential their sustainability, green-energy, and social policies are. Professor Glenn Reynolds noted recently that even billionaire Bill Gates is now back-tracking on climate panic.
Speaking at a New York Times event, he observed that heavy-handed policies won’t work: “If you try to do climate brute force, you will get people who say, ‘I like climate but I don’t want to bear that cost and reduce my standard of living.’”
As Gates noted, many of these people are in middle-income countries, like China and India, that are the biggest contributors to carbon emissions today and whose emissions (unlike those of the United States) have been growing.
He also rained on the greens’ apocalyptic parade, saying “no temperate country is going to become uninhabitable.”
And he cautioned against untested approaches like massive tree planting: “Are we the science people or are we the idiots? Which one do we want to be?”
Making investment decisions based on science, production capacity, access to source materials, availability of efficient energy resources, and consumer interest seems a sounder approach than following faith-based ESG commandments.
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Comments
“billionaire Boll Gates…”
Well, it’s locust-adjacent.
Apparently the solution to deforestation is not reforestation. Who knew?
Don’t be too optimistic. They may have to abandon their “Green” wording but they’ll replace it with something like, “responsible” and nothing else will change.
You are the evil lowlifes with fatal emotional and mental issues.
That said, you really can’t go wrong with some tree planting … but stop with all the BS global warming junk. And stop your evil redefinition of “pollution”. Almost every single time you hear the word “pollution” it isn’t. THey are talking about carbon dioxide (or sometimes methane) and they are calling the incorrectly termed “greenhouse gases” ‘pollution’, … but water vapor is the most “greenhousy” of the “greenhouse gases” there is. So every time it rains it’s really just MASSIVE POLLUTION coming down and covering everyone and every thing. Laughable, really.
They don’t even know what a greenhouse is, what it’s for, or how it works.
Since when did Billybob Gates get a degree in science?
Billionaires aren’t stupid but they aren’t the repository of the intelligence in the world.
Why 80%? That seems like an arbitrary number. Shouldn’t it be 51%?
The SEC hasn’t given up on ESG – they are going to force firms in ESG funds to be ESG.
Meanwhile, the pressure on firms to be ESG compliant will go up and fund managers for ESG funds will push firms harder to be ESG compliant as shareholders and activists
No, this new rule isn’t really progress, it’s what the party would call “Progress”. It’s designed so funds can’t escape their role in pressuring companies, Komrade.
Real progress would be eliminating ESG funds as breach of fiduciary responsibility and eliminating any disclosure needs around ESG.
This is designed to be another step on the road to serfdom.
Yes and no. Many of these MF/ETF claiming to be virtuous and marketing themselves as supposedly committed to investing in ESG driven companies are a sham. They ain’t close to 100% ESG Heck many ain’t close to 1/3 of their holdings in ESG.
The practical impact is that the MF/ETF marketing themselves as ESG will now have to actually put 80% of their investment capital into actual ESG v just lip service. Gonna be tough as a great many companies are already taking a hatchet to their internal woke policies and seriously scaling back their own ESG compliance. I suspect that main street investors who were conned into investing in an ESG fund will be surprised to discover the fund unwinding due to lack of investment opportunities or that the ESG label is removed when the fund doesn’t comply with the 80% ESG requirement.
These funds were all created in bad faith. Eliminate them.