Today I was moved to write a detailed response to an article I came across, titled From KYC to KYP: how one advisor weaves responsible investing into his practice. Here is my response.
I have examined the ESG, "responsible investing" and "sustainable" taglines for many years, doing my due diligence to decide if they have merits worth including in my practice. I have found them all to be so badly defined, to include so many biases, fallacies and outright falsehoods, and to be so fundamentally immoral that I want nothing to do with them.
The prime example is anything to do with carbon dioxide emissions, global warming, climate change, net zero and the linked ideas. In a world where 6 billion people would be incredibly jealous of the energy we have access to and the resulting life-enhancing technologies powered by this energy, and reducing poverty is the most important way to improve the lives of billions, the world can desperately use vastly more energy.
Fossil fuels currently provide over 80% of world energy and are the fastest-growing energy source as measured by the amount of energy created. Every single country that has emerged from poverty has done so using fossil fuel energy to enhance life and every country now trying to do so chooses fossil fuels as the primary energy source. Why? Because of the unique and currently irreplaceable qualities of fossil fuels, including availability, energy density, affordability, scalability, flexibility. Despite decades of taxpayer subsidies for wind and solar combined with policies impeding fossil fuels, the percentage of world energy from fossil fuels has been steady. Also, wherever wind and solar are adopted, to the degree they are added to the grid, the cost of electricity rises.
There are huge biases and great context-dropping when many people think about energy. While the advantages of fossil fuels are downplayed or completely ignored, the advantages of wind and solar are over-hyped. While the disadvantages of fossil fuels are over-hyped and demonized, the disadvantages of wind and solar are mostly overlooked. The most thoughtful examination of the flawed thinking process I have seen is provided by energy expert Alex Epstein, author of the 2022 book "Fossil Future" and of www.energytalkingpoints.com. Time and again Epstein provides evidence and ideas that no one has been able to refute, and opponents of his ideas are almost all afraid to debate him.
For a great look at how the UN social development goals can actually be met using just a fraction of the money wasted on climate change issues, I recommend the work of economist Bjorn Lomborg and his organization The Copenhagen Consensus. This includes his books "False Alarm" and "Best Things First."
For an excellent look at the science of what we actually know about our climate I highly recommend the book "Unsettled" by Steven Koonin, one of the world's leading scientists and former Obama appointee. Koonin aptly distills the science literature, showing where the gap between what we know and what is commonly believed has been created and persists.
In summary, my research shows that for those who actually care about improving human life, the ESG/RI/Sustainable movements as constituted are so far off-target as to be against human flourishing and I condemn them as immoral. I recommend that financial advisors and investment management companies do deep due diligence on this subject as I have, in which case they will find an overwhelming body of evidence that supports the rejection of the ESG/RI/Sustainable taglines. I want nothing to do with them and when clients very occasionally ask, I have clear and definitive evidence from every knowledge discipline to back everything I say on this subject.
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