Posted on 03/11/2023 6:17:58 AM PST by MtnClimber
Corporations that remain neutral on social and political issues outperform companies that lean left.
Capitalists invest money, and manage companies, to do well financially. Proponents of so-called woke capitalism claim that companies can do “well” financially by doing “good” politically. The idea is that advancing a political agenda will also enhance profits and shareholder returns. Whether this does good is a matter of opinion, but whether it does well can be measured.
Woke capitalism makes its way into financial markets through an ill-defined concept known as environmental, social and governance investing. Huge investment managers use their ownership of shares to pressure companies to jump on the ESG train. But while individual investors are free to support whatever causes they wish with their dollars, those who invest other peoples’ money have a fiduciary duty to focus solely on clients’ financial interests. Thus it’s important to know whether politically focused companies actually do produce superior financial results.
To answer this question, we used research from 2ndVote Analytics Inc., a company that scores U.S. large-cap and midcap companies on their social and political engagement on five-point scale. Analytics evaluates company data on six social/political issues—the environment, education, abortion, Second Amendment rights, other basic constitutional freedoms and support for a safe civil society—and also generates a composite score. Company scores, updated quarterly, range from 1 (most liberal) to 5 (most conservative), with 3 meaning neutral or unengaged.
On average, roughly a quarter (or 221) of the S&P 900 large/mid-cap companies studied scored 3—taking no political or social stance on any of these six issues—during the period from June 30, 2021 (when the data was first available), through Jan. 31, 2023. Of the remaining companies, the political tilt was strongly to the left. More than 59% scored liberal, and under 15% conservative.
(Excerpt) Read more at wsj.com ...
Well it seems the go woke go broke saying got a good workout with SVB.
Pay wall. Bottom line distillation?
ESG funds performed worse, with most losing 2.5% to 6.3%. A simple index composed of only neutral companies gained 2.9%, significantly outperforming both broad-market and ESG indexes in up and down markets.
It’d be nice if we could see enough to evaluate their methodology to see how strong it is.
ESG stands for E nvironmental S ocial and G overnance.
It is a scoring system to see how well it complies to a certain set of agendas. On a personal level it is fine if people want to chose their investments on their own moral principles.
What has been happening though, is it has begun to be used like the Chinese Communist Party’s Social Credit Score. Additionally, State Pension management officials and other large funds have been going to those investment firms they hold a significant investment in - say 15% of an entire fund - and demanding that they only do business with groups with high ESG scores and withhold investment in groups like firearms manufacturers or sales, oil companies of any kind, media companies that aren’t liberal enough and an array of other businesses. Those large investment firms then go to banks and threaten them if they do business or give out loans to groups that are negatives on *their* ESG score - even if it costs them money.
This is how small groups have leveraged their whackadoodle ideas on broad swaths of the financial sector.
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