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Is ESG Signalling Civilisational Decline? With Jeet Sidhu

Peter McCormack

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Is ESG Signalling Civilisational Decline? With Jeet Sidhu - WBD530 Peter McCormack

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In this interview, I talk to Jeet Sidhu and we discuss whether the promotion of obviously deficient ESG standards is a signal of a wider societal malaise: decivilisation, overregulation, political incompetence and consistent policy failures. Is human flourishing on the ropes?

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Environmental, social, and corporate governance (ESG) is a framework that was established by the UN in coordination with financial institutions in 2004. It was an attempt to expand the boundaries of the Friedman doctrine, which limits the social responsibility of businesses to increasing shareholder value. ESG essentially seeks to introduce altruistic goals for businesses.

The business community's reaction has been both rational and ironic: it has sought to use and capture ESG to maximise profits for shareholders. According to Bloomberg, ESG is the fastest growing asset management class, which is expected to exceed $50 trillion in value this year. Yet, according to EY, ESG is confusing, opaque, and subject to rampant greenwashing.

Is this exploitation of a worthy initiative an isolated anomaly that can be corrected? Or, is it evidence of a wider and more malevolent decline in society? The reality is that this isn’t the only major fault within our systems. Everyone is aware of the soft corruption of competence and the hard corruption of honesty. These have cascaded and infected our institutions.

We now live in a world that has exploited and tainted progressive language: selfish designs are hidden behind worthy declarations. We have rejected hard truths in return for expedient fiction. To what end? Are we more resilient? Do we have more efficient systems? Is society fairer? Seemingly not. This seems like an existential decline. Now is the time for honest new ideas.

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00:03:43: Introductions
00:05:31: Jeet's background and view on climate change
00:11:39: The arrow of influence, and incentives driving the ESG movement
00:16:11: Overregulation, decivilisation and loss of knowledge
00:27:35: The right balance of regulation
00:42:00: The absence of competence in decision-makers
00:51:48: Selectorate theory, and using moral language to push self-interests
00:58:51: BlackRock and the origins of ESG
01:05:14: Commercial elites vs political elites
01:09:46: Where ESG has gone wrong
01:16:01: Energy transition and grid reliability, and the nuclear argument
01:22:27: Russian sanctions and energy in Europe
01:26:24: Failure of social policy interventions
01:29:45: Externalities of energy production
01:40:07: The unpopular solution is often the correct one
01:49:57: Unrealistic timescales for transition to zero carbon emissions
01:51:55: Social risk in deviating from popular opinion
01:53:54: The university system
01:59:02: Final comments

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