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Economy and Society: ESG-related opposition to Federal Reserve nominee – Ballotpedia News  Ballotpedia NewsEconomy and Society: ESG-related opposition to Federal Reserve nominee – Ballotpedia News  Ballotpedia NewsEconomy and Society: ESG-related opposition to Federal Reserve nominee – Ballotpedia News  Ballotpedia News

Impact Investing Forum 2024

London. April 24-25, 2023.

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Economy and Society is Ballotpedia’s weekly review of developments in corporate activism, corporate political engagement, and the Environmental, Social, and Corporate Governance trends and events that reflect the growing intersection between politics and business. ESG Developments This Week in Washington, D.C. ESG-related opposition against Federal Reserve nominee. President Biden nominated Sarah Bloom Raskin as the Federal Reserve’s vice chair for supervision and, therefore, the Fed’s chief regulator. Many business-affiliated organizations have reacted negatively to the nomination due to their perceptions of Bloom Raskin’s views on climate change and the need for the Fed to support energy transition. The U.S. Chamber of Commerce was one of the first to express opposition to Raskin’s nomination. It published the letter it sent the Members of Senate Committee on Banking, Housing and Urban Affairs: “The Chamber urges members to raise important issues with Sarah Bloom Raskin during consideration of her nomination to be Vice Chair for Supervision of Federal Reserve System Board of Governors. This position helps to enforce and develop regulations that are the foundation of competitive financial markets. Some past statements and actions of Ms. Raskin have raised concerns in the U.S. business community. The Committee should examine ….. Ms. Raskin has criticized the Federal Reserve for allowing oil companies to access emergency 13(3) facilities during COVID-19. In her writings and public comments, she has advocated for federal regulators transitioning financing away from fossil fuel industries. * Does the Federal Reserve have the authority to direct capital away or towards politically preferred industries? * Please explain her proposal to deny oil companies access to the Federal Reserve’s 13(3) emergency lending facility. This includes those specifically authorized by Congress under the CARES Act . The Federal Reserve is designed to follow its statutory mandate and remain free from political influence. The history of Governors is one of professionalism and collegiality in their interactions with each other, and deferring to the Chair when setting the Board’s agenda. We are concerned about the possibility of similar politicization at Federal Reserve. This is evident after the recent push by Board members from the Federal Deposit Insurance Corporation. We urge you to get a commitment from Ms. Raskin in order to preserve the political independence and continue its statutory mission.” Western Energy Alliance wrote the Senate Banking Committee expressing concern about Raskin’s nomination. 70% of the nation’s energy comes from us. We support life-sustaining functions like keeping Americans warm in winter, getting them to school and work to improve their lives, powering ICUs, enabling medical devices, and delivering food at the table. Oil and natural gas are the main feedstock for thousands upon thousands of products that are used every day. These include everything with a computer chip, to COVID vaccines that have saved the lives of millions. Natural gas and oil from the United States are produced under strict environmental controls using industry-driven technologies. This makes it one of the most sustainable in the world. Our country’s number one reason for reducing greenhouse gas emissions is natural gas electricity generation. This has been true for more than a decade. Without the energy we provide, the world would be much less safe, healthy, and environmentally-protected. We strongly oppose President Biden’s nomination of Sarah Bloom Raskin to Vice Chairwoman for Supervision of the Federal Reserve, which is the most powerful overseer of the American bank system. She is a strong advocate of debanking the very industry that drives America. Multiple public statements by Ms. Bloom Raskin seem to contradict the President’s goal of providing affordable, reliable energy ….. Ms. Bloom Raskin’s preferred policies would cause havoc in the economy as financial systems would be reoriented towards subjective, political factors and not firm principles of maximising returns and capitalizing human endeavors that produce value in the market. The only true arbiter of value is the free market, not activism. Their intrinsic value and investment worthiness is evident by the fact that oil, natural gas, and other fossil fuels are used in almost every aspect of modern life. Further, activists press banks and investors to make financial decisions that reflect a political agenda they are unable to achieve through the normal democratic process. Activists have not been able convince the American people or the majority of their representatives to stop using oil/natural gas in the absence a viable, reliable alternative. This would result in fundamentally changing Americans’ lives, safety, and prosperity. As they have not been able to convince Congress to prohibit Americans from using and producing oil and gas, activists like Ms. Bloom Raskin are simply ineligible for the Federal Reserve.” On Monday, 24 state financial officers sent their own letter to the White House. They expressed their concerns about Raskin’s views on climate change and their view that it poses a serious threat to the U.S. financial sector. Raskin previously advocated that all financial institutions need to reevaluate their relationships and invest in sustainable alternatives to fossil fuels and carbon. Raskin stated that the Fed should penalize banks and other financial institutions if they fail to take steps to distance themselves fossil-fuel companies. The signatories were financial officers from Nebraska and Arkansas, Missouri, Utah. Louisiana, Arizona. Florida, Georgia. Idaho, Indiana. Kentucky, Mississippi. North Carolina, North Dakota. Ohio, Oklahoma. Pennsylvania. South Carolina. South Dakota. West Virginia, Wyoming. Raskin will testify before Senate Banking Committee on February 2. Wall Street and the private sector ESG pioneer Jerome Dodson are worried about an ESG bubble. He is concerned that the strategy he helped to create has turned into a bubble. He also laments that it seems to be a marketing tactic. “Few people have benefited from the boom ESG investing than Jerome Dodson. Dodson founded Parnassus Investments almost 40 years ago. This little-known firm was dedicated to governance, environmental, and social factors. After selling their shares in the business, the 78-year old retired in October. Dodson praises the ESG’s ability to push investors and corporations alike to take action on issues like worker rights and environmental protections over the years. Dodson stated that investors and companies are exaggerating the impact of their strategies and putting more money into them. Dodson stated in an interview that the ESG bubble was “a little disconcerting”. It’s great that ESG is being discussed more. It’s good that more people are talking about ESG. But, if you look at how money managers decide if a company’s social responsibility is being met, it’s not very strict and they don’t really follow the criteria. We have a lot money coming in and they use ESG to market To counter overstated claims, Dodson stated that investors should be more thorough in their analysis of companies and press them for details on the actions they are taking on ESG issues. He advised investors not to accept general answers. He suggested that investors should be able to specify the standards they use in their strategies and that regulators should ask fund managers for more information about their ESG strategies. ESG has been one of the most popular areas of investing in recent years. This huge growth has prompted former sustainability executives and academics criticize ESG for having little impact in tackling systemic social and environmental issues. In education Financial Times: “Business Schools find sustainability difficult to teach” Media outlets have covered the increase demand for ESG education at both American and European business schools over the past several years. The Financial Times published a piece two weeks ago about the challenges associated with teaching ESG. It stated that there had been a surge of interest in ESG education in business schools in recent years. This shift has been reflected in shifting attitudes among students and faculty. Instead of focusing on maximizing shareholder returns, this is now about a greater benefit to a wider range stakeholders. GIBS is one of over 800 schools that have signed up for the Principles for Responsible Management Education. The UN supports this initiative to promote sustainability education in business and management schools, so that graduates can balance economic growth with larger goals such as the Sustainable Development Goals and climate change. Despite the increased attention, academic leaders still face difficult challenges. They must decide how to prioritize the different skills and values that are associated with ESG, how to integrate them into teaching and research, and how to determine the extent to which this will affect the future of business education . Robert Strand, the executive director of Berkeley’s Haas Business School’s Center for Responsible Business, has noticed a growing demand from employers for ESG analysis skills. He says that the problem is that there are not enough business school faculty in America. . . We need to catch up But there is confusion and disagreement about what constitutes responsible education in business. “ESG can mean different things to different groups. Professor Glenn Hubbard, a former dean at Columbia Business School , argues that we need to know how to measure it and hold people responsible. Even though some are more supportive of the new focus on responsibility, there is still strong disagreement about how it will be taught and what knowledge will displaced — if only to ensure that students can find jobs in a world that is, in places at least, ambivalent about ESG. The debates within companies about ESG have expanded to include business schools. A three-part series was published by James Mackintosh in Streetwise, a Wall Street Journal column on potential ESG downsides. It covered ESG and the possible downsides. Mackintosh said that the series would continue in different columns over the coming weeks and months. Mackintosh’s first column, “Why the Sustainable Investor Craze is Flawed”, noted that the financial industry saw an opportunity to make money while helping people feel good about their own self-worth. These investments, despite claims to the contrary do not make the world a better place. ESG funds, as they’re known, promise to invest only in companies that have better environmental, social, and governance attributes. This is to save the environment, improve worker conditions, or, in the case U.S. Vegan Climate ETF to prevent animals being eaten. As noisy lobby groups push for pension funds, university endowments, and central banks to shift their investments, money has flowed into ESG funds. The Principles for Responsible Investment, which is supported by the United Nations, claims that $121 trillion in assets are under management by signatories. Even assuming double-counting, this represents most of the world’s managed cash. Streetwise will be exploring the explosion in ESG investing over the next few weeks and why I believe it is mostly, but not entirely, a waste of time. I will also discuss some solutions and how to use your money in order to make a difference. Both parts of this claim are problematic for me. The growing market for green bonds clearly shows the problems. Stocks with sustainability labels aren’t much different ….. Green bonds are not likely to make investors more money. The yield on green bonds is typically lower than that of standard bonds from the same issuer. This guarantees underperformance because it takes the same risks that the government and company will fail to repay the bonds. Worse, the rapidly expanding sales of sovereign green bonds of developed countries are doing nothing for the environment, and most corporate green bonds achieve nothing either.” And in his third column-“Sustainable Investing Bubbles Can Change the World–and Sink Your Portfolio”-Mackintosh argued the following: “If you want a company to do more of what it does, one way to accelerate its expansion is to buy its stock; get all your friends to buy its stock; persuade fund managers, Reddit readers and pension funds to buy its stock; and watch the price soar. The board will eventually take advantage of the bubble you created to raise very little money for the company and invest it in its business. Done. This is what happened to clean-energy businesses. There was a small bubble in their stocks that ended early 2021. The downside was that while many of these companies raised cash to invest in clean-energy projects, those who stuck with the strategy saw their stocks plummet 45% from their peak. Global investing is dominated by environmental, social, and governance investing. I will be examining this topic in a series. ESG investing aims to drain capital from companies that are not clean and redirect it to clean ones. In practice, this is not the case. In practice, that’s not happening very often. Investors get too much from bubbles. The price then crashes. Investors who don’t flee in the nick of time lose big. ESG adherents also have the problem of not creating a bubble that encourages companies to do more of what they want.
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Read MoreEconomy and Society: ESG-related opposition to Federal Reserve nominee – Ballotpedia News  Ballotpedia News


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