Should conservative investors try to fix ESG, or destroy it?
Tom Carter is the President of the American Conservative Values Fund, an ETF which conducts surveys that ranks companies in terms of the degree of left-wing ideological capture. You can find it at InvestConservative.com.
I recently talked with Tom on my podcast Meeting of Minds. Below are a few highlights from that discussion, lightly edited for clarity and length.
This is part 2. Part 1 is here.
Jerry: I think there's an alliance now between conservatives and liberals against the hard left, against the utopian left. And I think Musk is an example of that. I Musk is probably a liberal by most reasonable standards. That's what he would say.
Tom: He said he’s always voted that way.
Jerry: Yeah, because he believes in compassion and tolerance. But the left doesn’t believe in those things anymore. So he’s still a liberal, but he’s not whatever they are.
And they're showing up at the annual meeting and Tesla shareholders are booing them off the stage. That’s fascinating. That shows me how much ESG has overstayed its welcome, and overpromised, and frankly gotten obnoxious to the point where it’s alienating its allies.
Tom: I agree with that. And, you know, one last comment about Elon Musk: he tweeted something about three months ago, when the left was after him about his new viewpoints, and he said “these aren't new viewpoints. These are the same viewpoints I've always had; I've not moved, you have.” And then he showed a diagram of where he thinks the left is now versus where he is. I would call him at old-time Kennedy compassionate liberal. But he Is certainly not a hard, left-leaning liberal, of the sort that he feels is coming out against him.
Jerry: That’s basically what Reagan said: someone asked him why he left the Democratic party, and he said, “I didn't leave the Democratic party, the Democratic party left me.”
Tom: That's right.
Jerry: So let's talk about ESG. There's been somewhat of a debate where some Christian funds, and maybe even some of the conservative funds, have said “well, there’s a good kind of ESG. We’re not the bad kind of ESG.” From my standpoint, ESG was designed for what it is, from the ground up. It was always an imposition of politics onto finance.
I’ll ask you the same thing I asked Andy Olivastro, from Heritage, recently: fix it, or end it? Andy said “destroy it.” Bury it in the ground. So what says Tom Carter: is this is a fixable thing?
Tom: Well let me see if I can give you a bit of history about how ACVF came to be. It essentially was because of ESG, right? So, my partner and I, four years ago, were noticing that ESG, which was mostly driven by green energy and anti fossil fuel, left-leaning corporate governance, and things like that, was drawing a lot of dollars, and we looked around and said: what can a politically conservative investor do? Where can their money go? Is there something they can support that isn't ESG? That’s how ACVF was brought about.
From an ESG perspective itself, I think these are good things to look at, but they can be looked at in a myriad of different ways, and if you're just saying that it's anti fossil fuel and that's all you're looking at is ESG being, I think you're missing a lot of what ESG can be. So to define it, I think you need to define it from a product perspective of what you're trying to achieve. Not just saying “we're broadly ESG” because defining broad ESG is very difficult, because it can mean so many things.
Jerry: Would you call yourself ESG?
Tom: We would not.
Jerry: Why not?
Tom: The primary reason is that when the government looks at what you're doing, and you call yourself ESG, you've got to prove to them that you are. And you've got to prove that the reasons that you invest in certain companies, or don't invest in others, goes along with your ESG guidelines. And we're probably a bit more subjective about the way we select companies in our portfolio, or more importantly, the way we select companies to boycott in our portfolio, and so defining us as ESG is very difficult even though I would tell you that environmental, social, and governance aspects are implied in what we're doing.
Jerry Bowyer is financial economist, president of Bowyer Research, and author of “The Maker Versus the Takers: What Jesus Really Said About Social Justice and Economics.”