In the 1990s, Time magazine ran a famous story about “The Committee to Save the World” with a picture of Robert Rubin, Alan Greenspan, and Lawrence Summers on the cover. At the time, the enormous hedge fund, Long-Term Capital Management (LTCM), found itself on the losing end of a trade in the Russian Ruble. Its impending bankruptcy threatened the stability of the whole financial system – and so these officials worked to cobble together a rescue package from Wall Street and avert disaster.
When it comes to the advocates of ESG in the world of finance, we find just the opposite: The committee to destroy the world economy. They have actively colluded to drive the global world economy into the ground. Andy Puzder’s book: A Tyranny for the Good of its Victims: The Ugly Truth about Stakeholder Capitalism exposes the destructive tendencies and the reckless hubris of ESG’s biggest advocates.
You may have heard about Larry Fink and Blackrock pushing ESG. You’ve heard right. Puzder makes it crystal clear that, yes, Larry Fink is in fact the bad guy behind the ESG curtain. But he didn’t act alone. Other prominent investors and officials joined Fink’s crusade – folks like Michael Bloomberg who chaired the Sustainability Accounting Standards Board and Mark Carney, former governor of the Bank of England and the Bank of Canada, who strong-armed financial institutions to sign onto the Glasgow Net-Zero Alliances.
Carney and Bloomberg are big players in financial markets, so their full-throated advocacy for ESG reporting, goals, and commitments should not be ignored. And of course we shouldn’t leave out Klaus Schwab, the long-time advocate, father even, of stakeholder capitalism. These men self-consciously assumed the role of conductors and directors of the investment community’s (and corporate America’s) forced march to net zero and diversity requirements.
Fink, through his massive asset management firm Blackrock, almost single-handedly imposed his ESG agenda on corporate America. With trillions of dollars of assets under their management, Blackrock was (and still is) the largest single shareholder of most Fortune 500 companies. Through investor “engagement” and the threat of voting against board recommendations, Fink had huge influence in corporate boardrooms. And he wasn’t shy about using his influence. He wrote annual letters to CEOs “suggesting” they should prioritize net zero, diversity, and sustainability.
Puzder savors the irony of this radical investor activism being perpetrated by the CEO of a firm specializing in passive investment products. How could an asset manager know the right policies and goals for thousands of companies across dozens of industries? Also, by what right can Blackrock vote the shares they manage on behalf of their clients when those clients have not given their approval?
One challenge of assessing ESG policy is sifting through the jargon of ESG. Fink and others use financial terminology like “risk” and “opportunity” and “value” to justify pushing ESG; yet they could never quite show that ESG investing would yield the best return to their clients. For a few years, ESG fund returns looked pretty good because they were often heavily weighted in technology stocks. But when the stock market correction came in 2022 and 2023, ESG investing took it on the chin. While the S&P 500 index fell by 14.8 percent in 2022, Blackrock’s major ESG S&P 500 index fell over 22 percent.
Meanwhile, Puzder points out that the “S&P 500 energy sector index rose 54 percent.” The poor financial performance of ESG funds and portfolios poured cold water on the delusion that the entire global economy was undergoing a profound energy transition. It also undermined Fink’s prominent claim, echoed by the SEC under the Biden administration, that “climate risk is financial risk.”
With the claim that ESG promotes superior financial returns significantly weakened, Fink was less able to resist pressure and litigation. Eventually, Fink dropped the term ESG altogether – though it had been a linchpin of his directives to business executives and a key piece of Blackrock’s investment offerings. Furthermore, he didn’t even write a letter to CEOs in 2024.
Puzder highlights the many state governments and think tanks involved in rolling back ESG. “The Resistance,” as he calls it, scored all kinds of wins in 2023 and 2024 – withdrawing billions of dollars from Blackrock’s management, pressuring insurance companies and banks to withdraw from international “alliances,’ and separating state business and funds from banks that were actively working to undermine key industries in the state. Many companies also began rolling back their DEI policies in response to pressure from activists like Robby Starbuck, increased legal liability, letters from state officials, and, of course, the new Trump administration.
The ESG debate still rages on shareholder meetings and proxy (shareholder voting) contests. Although the “Big Three” asset managers (BlackRock, Vanguard, and State Street) have scaled back their pro-ESG votes, they continue to support ESG initiatives. Even more problematic are the two proxy advisory firms: Institutional Shareholder Services and Glass-Lewis. These companies don’t seem to have budged from their position recommending that shareholders support every pro-ESG proposal.
Though awareness and activism in proxy-voting has increased, the recommendations of the proxy advisory firms remain the default for trillions of dollars of capital. Compounding the problem, these proxy advisors are privately owned and in foreign hands. They also do not have the same legal fiduciary duties to act solely in the long-term financial interest of their customers. That means they are relatively insulated from public feedback and public pressure.
The broader message of Puzder’s book, though, is that free market capitalism brings prosperity while stakeholder capitalism and other forms of collectivism destroy wealth. He sprinkles anecdotes and comments about the nature of economic development throughout the book – talking about the industrial revolution, Hong Kong, China, the Soviet Union, and global GDP growth. The “war on profit” he accuses Fink and his allies of is bad for investors, retirees, and the economy.
Puzder points out that restricting fossil fuel development, which drives up energy prices, doesn’t affect wealthy elites nearly as much as it affects the poor:
The net-zero ‘transition’ is a classic example of a luxury champagne-socialist belief. Larry Fink and his friends have the luxury to push for policies that drive energy prices through the roof because they can and will afford to ride in limousines, yachts, and private jets no matter how high prices get. Their wealth walls them off from the concerns of their inferiors – concerns like paying the rent, staying warm, buying food, or filling up the tank.
The very real costs of the ESG agenda cannot be undone. Fields of expensive and inefficient wind turbines will stand as a testament to a government-engineered renewable energy craze. The diminished economic clout of Europe may never be reversed. And people around the world must adapt to higher electricity prices.
The cultural damage, particularly in the United States, of DEI and other Social initiatives is profound. Of course, companies like Disney, Target, and Budweiser paid a steep price for their social activism – a point Puzder spends a good deal of time making. But DEI, and its sibling identity politics, has increased hostility and polarization more broadly. And they have raised the stakes of “winning” political power. They have also reduced Americans’ trust in business and other institutions and have unjustly cast a shadow, as affirmative action did, over the qualifications of women and minorities in corporate America.
The tide has certainly gone out on ESG – leaving thousands of people employed by the ESG industrial complex (analysts, compliance, diversity officers, etc.) scrambling. But Puzder warns market advocates not to declare victory or to relax yet. He argues the past decade of debate over ESG is only the most recent episode in the struggle between collectivists who desire power and everyone else who wants to live a peaceful and prosperous life.
This perennial struggle will never end because neither side can be fully defeated, and so neither can one side ever fully win. The US, though, has “economic freedom and individual liberty….[as] essential parts of our national DNA.” Let’s hope that DNA holds true and that the body politic becomes increasingly immune to the collectivist virus, which has most recently taken the form of ESG.
Paul Mueller
