ESG, the acronym for “Environmental, Social and [corporate] Governance” has become something of a buzzword recently in the investment community, particularly for those funds and corporations who want to virtue signal a holier-than-thou nature with their investments, in lieu of making investments that they believe to be the most profitable. According to the Corporate Finance Institute (CFI), ESG is “The framework for assessing the impact of the sustainability and ethical practices of a company” (note that in the context of ESG “sustainability” refers not to the viability of a company over the long term but the extent to which the “E” is catered to). This cultural phenomenon has led to greater interference in the free market as companies compete for investment by attempting to score highly on these largely arbitrary and subjective metrics.
Claims made against the opaqueness of ESG as a corporate whitewashing are well-made. Very interesting point about Tesla, feels like people are missing the forest (widespread adoption of electric vehicles and finally making them 'trendy') from the trees (is Tesla hitting ESG metrics).
Some of the conjecture is a bit misplaced IMO, the most libertarian capital markets have been shown to spectacularly fail at fair and effective resource allocation in the presence of information asymmetries and natural monopolies (healthcare the best example), and the best argument against it seems to run afoul of the no-true-scotsman fallacy - "if only we had more liberalisation, we could finally escape the clutches of crony capitalism."
I think ESG and intervention has a role to play, if only because Austrian economics has yet to be tested in anger, and it would be an extremely dangerous game to play when, quite often, people's lives are on the line. Instead we should, IMO, focus on transparency and accountability, and iterating upon the current system to align it with meaningful outcomes, as opposed to throwing up our hands and giving up on well-intentioned initiatives.
Claims made against the opaqueness of ESG as a corporate whitewashing are well-made. Very interesting point about Tesla, feels like people are missing the forest (widespread adoption of electric vehicles and finally making them 'trendy') from the trees (is Tesla hitting ESG metrics).
Some of the conjecture is a bit misplaced IMO, the most libertarian capital markets have been shown to spectacularly fail at fair and effective resource allocation in the presence of information asymmetries and natural monopolies (healthcare the best example), and the best argument against it seems to run afoul of the no-true-scotsman fallacy - "if only we had more liberalisation, we could finally escape the clutches of crony capitalism."
I think ESG and intervention has a role to play, if only because Austrian economics has yet to be tested in anger, and it would be an extremely dangerous game to play when, quite often, people's lives are on the line. Instead we should, IMO, focus on transparency and accountability, and iterating upon the current system to align it with meaningful outcomes, as opposed to throwing up our hands and giving up on well-intentioned initiatives.