ESG is coming fast. How it works.

You might have noticed the term ESG floating around.  It is being subtly injected into conversations about companies and banking.  It is always nestled in a flowery bouquet of sentence fragments of environmental concerns and identify company risk and green initiatives   that will save our planet.  If you’re thinking when your reading, you wonder what does that really mean?  ESG stands for Environmental, Social, and Governance. That makes you pause, doesn’t it?  Then there is this statement: It is used as an investment strategy to “encourage” organizations to “act responsibly.”   ESG works by analyzing organizations across three criteria — their environmental footprint, their stance on social issues, and internal corporate governance.

How are companies really affected. Once a strategy to reward companies who set objectives related to their organizational values, now ESG is being used to force corporate behavior. The US government and large investment firms like BlackRock and even credit rating bodies like S&P are using ESG criteria of their own design to drive changes in the behavior of American companies in ways that do nothing to increase profits and often fall outside of the scope of the goods or services the company provides. In this way they are forcing companies to adopt a progressive agenda or risk losing access to capital.

How this affects directly affects you
Their requirements are an unprecedented escalation of federal regulation on business, adding reams of red tape for every company in America. Generally, red tape increases operational costs for businesses. They’ll have to hire personnel to collect data and teams of lawyers to ensure they are compliant with new federal regulations. Employee information will be part of the equation – whether you drive alone or in a carpool, gas, or EV, or take public transportation, the federal government will pry ever further into your life.

How farmers are affected
ESG is already impacting farmers. A proposed rule from the Security and Exchange Commission (SEC) would require all publicly traded companies to report their direct, energy/electricity generation, and supply chain greenhouse gas emissions. Though the rule specifically addresses publicly traded companies, “all private farms, ranches and small businesses that provide goods to publicly traded retailers and processors will be required to disclose emissions data under the supply chain reporting requirements.” First this would impose onerous and costly reporting requirements on farmers. Perhaps worse is that they could incur legal liability from the companies they supply or those companies’ shareholders for inaccurate reports.

The situation facing European farmers should be a warning for America’s food producers. There, climate activist governments have imposed draconian measures. For example, Dutch lawmakers have introduced policies that would require 11,200 of the roughly 35,000 dairy and livestock farms to close in order to meet nitrogen reduction goals.

Beyond simply adding costs for every company, which will have an inflationary effect, this reporting system by design will lend itself to a grading system whereby “good ESG” companies will be rewarded, and supposedly bad ones will be punished. Investment dollars – capital – for businesses to grow will be the primary reward, and its absence, the punishment. Though undefined at present, government response is almost certain. Armed with this information, federal agencies will be obliged to set ESG standards, enforced by fines or other punitive measures.

The result is predictable: the innovation of American business will be stifled, and some companies will suffer for reasons other than their ability to provide a product or service to customers. It could be the company where you work.

The issue with ESG is that the criteria are subjective, and they are defined by largely unknown persons who are not accountable to the public. You don’t get to vote on the people who set the criteria or the criteria itself. Second, increasingly you don’t get to vote on where money goes. A great deal of capital today comes from passive investors – everyday people who don’t manage stock portfolios, but who contribute to their pension or retirement plan or who invest in index mutual funds. Those making the decisions about where capital goes are the fund managers, the large investment firms.

Little by little it is coming out. They are telling you that digital banking is coming next year. Digital banking will allow this whole social credit system to unfold in conjunction with the SEG.  Some countries are already limiting ATM daily withdraw limits.
UK is coming out with My neighborhood travel restrictions telling you if you can leave your neighborhood and how many times a week and how many hours you can be gone weekly.

This plan was completed some time ago including its execution. That is why it is unfolding so smoothly and is so effective.  A psy-op of convincing you that your daily activities are a crime, and you are causing a crisis and action needs to be taken now.

Companies are being strong-armed into this rating system agenda that is subjecting all companies to participate. As they begin to understand their “role” they discover they have to bend to the agenda, or their company will be poorly rated, and their business will suffer and fail.

How is this being done and who is doing the judging?

Several Third-party providers, including agencies, research and analysis firms evaluate companies on ESG performance and determine independent ESG scores. Specifically, Bloomberg ESG Data Services, Corporate Nights Data 100, Sustainalytics, Dow Jones Sustainability, Thompson Reuters, RepRisk are some of these companies.  This is a rapidly expanding business worth trillions of dollarsThese companies determine and hand out a score based on criteria such as company’s greenhouse gas emissions and treatment of animals.  Common environment evaluation criteria include soil and water contamination and environmental policy.

The social category is evaluated by a company’s business relationships with employees, suppliers, partners, and shareholders. Other factors include charitable donations, customer interactions and community impact and influence.

The ESG government category is characterized by legal and compliance issues of board operations.

The bottom line is that a company with a good ESG score is a company that is a better risk and thus has more opportunities.

The ESG score is a cage that is not interested in products or services that you provide and how well your company runs but more interested in your compliance of their standards like vaccines, masks, and social distancing. Are you giving to the right charities at the right moment? Are you on the right political team. If you are not, then you will have a low ESG score and will have difficulties getting loans and expanding your business.

ESG scores are another name for Social Credit Scores, and you could potentially be judged by your score by banks and employers. If your score is low, you will have to hire a firm to get your score up so you can participate in society again.  ESG scores are like an onion, each layer you peel gets you closer to its true core.  We have been told that after the COVID lockdowns we will quickly move into Climate Crisis lockdowns. We know this is coming because we were told it is coming by the United Nations who coined the term ESG and created the movement.

ESG discussions are getting to be commonplace, and I hope this helps you to recognize and understand what is quickly happening to our society.