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Zuckerberg, other moguls say they’re ditching ESG and DEI, but are they for real?


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In the past 18 months, Environment, Society and Governance (ESG) Program. it suffered declines in corporate DEI programs, declining investment dollars and the collapse of the Net-Zero Insurance Alliance.

In the last month alone, major banks have pulled out of net zero alliances and Target dismantled many of its Diversity, Equity and Inclusion (DEI) programs. ESG seems to come unglued. But don’t be fooled.

A closer look at what the banks have said reveals that they are still full of incorrigible ESG financiers. Many of the lauded changes are superficial or cosmetic rather than indicative of a fundamental philosophical shift.

Diversity, equity and inclusion initiatives have been the subject of heated opinions, praise and criticism. (Adobe Stock)

Dozens of Fortune 500 companies (incl McDonald’s and Walmart) representing trillions of dollars in market capitalization and millions of employees who canceled or terminated their DEI programs in 2024. ESG-branded mutual funds have bled cash over the past two years. And the new administration has promised to scrap DEI in federal agencies.

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The Net-Zero Insurance Alliance fell apart with a mass exodus of insurance companies over the past year and a half when many attorneys general expressed concern that participation in such an alliance could violate antitrust and collusion laws. US states pulled billions of dollars from Blackrock over ESG concerns.

These changes are welcome corrections to the misguided and deeply ideological goals of ESG advocates. The last dominoes to fall are the big US financial institutions. Goldman SachsWells Fargo, Citigroup, Bank of America and JP Morgan have withdrawn from the global Net-Zero Banking Alliance.

Even Blackrock, once a vocal proponent of ESG, has pulled out of the Net Zero Asset Managers Initiative. While this may appear to be in line with other ESG returns, cynicism is warranted.

If you look at the press releases of these major financial institutions, you will see that they are unrepentant and still intend to achieve net zero goals. For example, Goldman stated: Our priorities remain helping our clients achieve their sustainability goals and measuring and reporting on our progress.Citigroup was even more blunt: “We remain committed to achieving net zero.”

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Blackrock was most explicitly unrepentant. “[O]your membership in some of these organizations has caused confusion… and subjected us to legal investigations… [But this] it doesn’t change the way we develop products and solutions for clients or how we manage their portfolios.” Translation: “We just want to distance ourselves from problematic PR, but we’re not changing a single thing about the way we do business.”

The moves by these big banks seem to mimic Blackrock CEO Larry Fink’s strategy of not using the term “ESG” because it was a political hot potato, but remaining committed to “sustainability.” Blackrock continues to invest heavily in green infrastructure and renewable energy projects.

That’s fine if their clients specifically request such investments. But as American Airlines learned last week, pension fund managers have a fiduciary duty to seek the best financial returns for their clients and can be held accountable for using the funds they manage for other purposes.

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While superficial progress has been made with US financial institutions withdrawing from destructive global net-zero alliances, they appear disingenuous when it comes to truly changing the way they behave. This should not be surprising considering that the bank staff has not changed much. Nor do we see evidence of a change of heart when it comes to ESG.

Instead, they seem to be worried about public pressure and criticism from outside incoming federal administration and from government officials. Pulling out of those alliances also gives them a freer hand to signal net zero intentions without having to fulfill them by a fixed date.

But if ESG policy was disruptive and destructive before, it is now. Ideological ESG priorities diminish the ability of companies to function well and benefit their contractual stakeholders. It is hard enough for companies to be profitable without achieving various social justice priorities.

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Banks would do well to clarify their commitment to maximizing shareholder value and doing business with everyone. The pursuit of long-term profits successfully benefits shareholders, workers, suppliers and customers.

Most corporations, especially incorrigible financiers, need to clean house in their HR departments to focus on value creation rather than racial identity politics or expensive virtue signaling on environmental and social issues. And like The case of American Airlines shows that companies that fail to do so can very easily breach their fiduciary duty to customers and shareholders.

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