ESG…Don’t Be A Sucker
applied intelligence…to The Big McKinsey & BlackRock Scam
According to Salesforce CEO Marc Benioff, “Business is the greatest platform for change,” however if we engage in a “culture of phony, derivative, halfhearted, or misguided efforts, it will eventually sink.” Benioff believes having a social purpose is important as business values permeate everything we do. Values are the bedrock of resilient companies which translates to resilient societies. “In the future, profits and progress will no longer be sustainable unless they serve the greater good,” says Benioff.
So the notion of ESG (Environmental Social Governance) on the surface sounds wonderful, but in reality, it has not delivered anything of even remote value.
BlackRocks’s former Investment Chief and whistle-blower, Tariq Fancy, says BlackRocks ESG frameworks are a very “dangerous distraction,” and that they do not produce any “real-world environmental or social impact.” Fancy also highlighted the danger BlackRock poses on society calling it “a giant societal placebo.”
ESG investing “is a smoke screen,” says Tariq Fancy and “When all is said and done, a lot of money will have been spent, a few people (Consultants, BlackRock and Industry Money Managers) will have benefited but companies will not be any more socially responsible than before ESG was invented,” Fancy concludes.
Hans Taparia, an associate professor at the New York University Stern School of Business, called “E.S.G. a marketing strategy aimed at investors who wanted to feel that they were making a difference with their money.” It’s basically “greenwashing,” he said. You package and market climate change, diversity, gender and pay equity, the welfare of employees, and the impact of technology on society — all under the ESG banner. This included corporations jumping onto the Diversity Equity and Inclusion (DEI) bandwagon, not for any genuine purpose or morality but only to check the “Social” box under various ESG mandates.
Today (Jan 9, 2024) — it’s being reported from Brussels, the European Union’s Copernicus Climate Change Service (C3S) said 2023 was the world’s hottest year on record, EU scientists confirm. On average, in 2023 the planet was 1.48 degrees Celsius warmer than in the 1850–1900 pre-industrial period, when humans began burning fossil fuels on an industrial scale, pumping carbon dioxide into the atmosphere. However, companies like BlackRock fueled by big consulting firms like McKinsey & Co., and PWC, generate bogus self-serving research and strategies to drive BlackRock’s phony business/scheme.
New York Times reported in October 2021, “…it is very hard not to argue today that McKinsey is not the greatest private sector catalyst for [carbonization] on the planet.” Combined, BlackRock and McKinsey are running a cynical money-making scheme that is precisely calibrated to thug on the morality strings of trusting retail investors. Those they know don’t do any research themselves but rely on their investment advisors, who are part of the sales team for the scheme.
BlackRock Inc. — an American multinational investment company, is the world’s largest asset manager, with $9.42 trillion in assets as of June 30, 2023. About five years ago, Larry Fink the longtime CEO of BlackRock, began the firm’s ESG business by sending out a disingenuous letter to corporate leaders. According to the New York Times, urging them to assess the societal impact of their businesses, embrace diversity and consider how climate change could affect long-term growth.
“Companies,” Mr. Fink wrote in his annual letter to chief executives, “must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce?
Nevertheless, this was all pure marketing and a sales ploy using morality rankings to sell mutual funds or managed money services. A spurious ranking system for institutional investors to check the ESG boxes under the pretence that they are acting for the common good with their investment decisions.
As I write my article, in real-time, The Globe and Mail published (January 9, 2024, by Jeffery Jones — ESG and Sustainable Finance Reporter) an article titled Shareholder advocacy group alleges misleading disclosures on sustainable finance from Canada’s big five banks. The group is calling on securities regulators to crack down on Canada’s Big Five banks misleading investors and the public with their sustainability claims. Calling the banks’ environmental, social and governance (ESG) programs a “$2-trillion placebo,” wanting disclosure of the true emissions impact of their sustainable finance divisions. And standards for enforcement.
In 2022, the Competition Bureau launched an investigation into RBC after environmental groups alleged its climate-focused market practices were deceptive. For example, listed in the complaint was financing done using green and sustainability-linked bonds in 2022 by RBC as a book-runner for a $200-million bond issue by Tamarack Energy. Tamarack used some of the proceeds to acquire a couple of rival oil and gas companies, which essentially increased their production of fossil fuels — increasing emissions. In 2021, BMO and CIBC were “sustainability structuring agents” for a $4-billion sustainability-linked loan to Teck Resources Ltd., in short, the financing was used for Teck to double its oil sands production and expand a coal terminal in North Vancouver. TD Bank was the sustainability structuring agent for a US$4-billion sustainability-linked loan for Occidental Petroleum Corp. in 2021. Occidental too of course increased its oil and gas production capital expenditures — 8 to 17 times its “net zero pathway” spending. And so on.
And, each of these deals would raise the participating banks own financed emissions — which account for scope 3 emissions — thereby taking them further away from their own net-zero commitments rather than helping,” the group’s complaint said. As you can see the big Canadian banks are not immune to dishonesty and deceitfulness when big dollars stand to be made. This is why disclosure and regulation are required or nothing will change.
Coupled with the BlackRock sales scheme are the big consulting firms, aka The Big Con, the likes of McKinsey & Co., and PWC to name a couple. McKinsey’s ESG strategies and its opaque style of business provide impetus — “research” and marketing material to support BlackRock’s ESG investing con. Which has become a major corporate trend in the investment industry. These fake constructed themes allow McKinsey to get paid big bucks to consult on “diversity strategies,” even though, ironically they are amongst one of the least diversified organizations to begin with. Nothing more than a homogeneous group of white males in collaboration — sucking money from people and poisoning societies around the world.
A New York Times article, dated Dec 2, 2022, found that “over a full 20-year period ending last December, fewer than 10 percent of active U.S. stock funds managed beat their benchmarks.” This especially included those claiming to run ESG strategies.
According to a March 2022 study written in the Harvard Business Review (HBR,), An Inconvenient Truth About ESG Investing, by Sanjai Bhagat. The research reveals that investing in sustainability/ESG funds, not only doesn’t make any difference to companies but may contribute to directing capital into poor business performers, says Bhagat.
The University of Chicago researchers analyzed the Morningstar sustainability ratings of more than 20,000 mutual funds representing over $8 trillion of investor savings. The “highly-rated” ESG funds attracted more capital than the low-rated, non-ESG funds, but none of those high-sustainability funds outperformed any of the lowest-rated funds. So, according to the data, ESG does not deliver any better financial performance than a non-ESG fund. Furthermore, and more importantly, investors’ money does not have any impact on solving humanity’s most pressing problems, like the existential threat of climate change and the growing inequality and digital divide.
Columbia University and the London School of Economics researchers compared the ESG record of U.S. companies in 147 ESG fund portfolios, and also U.S. companies in 2,428 non-ESG portfolios. They found that the companies in the ESG portfolios had worse compliance records for labour, environmental, and social. It was also discovered that the companies added to ESG portfolios did not subsequently improve their general compliance or environmental regulations.
HBR suggests that “there’s some evidence that companies publicly embrace ESG as a cover for poor business performance.” A recent paper by Ryan Flugum of the University of Northern Iowa and Matthew Souther of the University of South Carolina discovered that when corporate managers underperformed analysts’ earnings expectations, they often blame their ESG mandates. Invoking the morality investing as an excuse. However, when they exceeded earnings expectations, they made few, if any, public statements related to ESG, the report finds.
Investors gain nothing extra from investing in funds that claim ESG mandates, and their capital has no socioeconomic, environmental or governance impacts on society! Effectively, The Big Con industry is a burgeoning source of economic rents. An invented business for consultancy revenue growth and power. And, according to The New York Times, if you factor in all the hours billed by McKinsey alone on climate, it is not an understatement to say that they are amongst the world’s largest polluters.
Acclaimed professor Mariana Mazzucato, in her most recent book titled THE BIG CON — How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies; says that the overuse of consultants, both by private businesses and governments “stunts innovation, obfuscates corporate and political accountability, and impedes efforts to fight climate change.”
The consulting industry dominates in key areas of our society — from politics…finance and healthcare. Resulting in dubious impacts on the lives of real people. For example, McKinsey’s increasingly ubiquitous influence in global public health has become a real menace to society. McKinsey and other big consulting firms have been successful at convincing policymakers that they should hand over the health of our societies to the consulting industry. Essentially making salespeople public health ‘experts’ in many countries, even though they know little to nothing about those societies and cultures.
The industry generated billions of dollars over the COVID-19 pandemic — essentially setting public healthcare policy and earning additional fees and commissions from the various procurement contracts they were given to manage. And it caters to those with the least amount of brain power and morality who want to get paid a lot of money for doing very little. That’s why it appeals so well to politicians and top-level corporate executives.
The system is fundamentally corrupt, executive level civil servants and corporate executives get hired by big consulting firms, not for their expertise but for their industry or government connections and network. It becomes an exclusive and white old boys club that no one else can enter.
So they help executives who want all the rewards but not the risk, not wanting to take the blame when strategies don’t plan out. It is an unspoken agreement between phony executives and the Big Con industry that part of the strategy for contracting them, is that they will take the fall for executives if things fail. This just means that consultants will have more problems to fix in the future, keeping them very busy and very wealthy. Effectively, the industry has corrupted its own clients and created a culture of non-performance, not taking any responsibility or accountability. In this system, corporate executives work solely in their own financial interests to secure good salaries and enormous annual bonuses, while the shareholders and the public are saddled with all the risk.
The industry’s business model is one of the overlords getting their clients to pay rents: retainers and big fee arrangements but bear no reputation or contract risk relative to their duplicitous advisory.
So before hiring a consultant or if you’ve already become a sucker for them, just be hyper-aware of the risk-reward scenario and compare the sales pitch value proposition to the actual value received.
And remember, in the digital age much of the information you need, you can find yourself. Many of these ‘consultant reports’ can be found with even a simple Google search. And according to Forbes, consultants are just telling you what you already know or you can find yourself, with a bit of research. However, they’ve been exceptional at the fine art of delusion in creating the illusion of value. But what they are really good at doing is holding your hand and designing nice but useless PowerPoint presentations, and of course, taking you to Starbucks five times a day.
