RCI's Guide to Politicized Capitalism: Environmental, Social, and Governance Investing

Part of RealClearInvestigations' Guide 
to Politicized Capitalism 
(Home page and overview here)

On This Page: ESG Investing, 
A Thumbnail Overview
(See also: State Pushback and Non-ESG Investing)

The financial services industry exerts outsize influence over the global economy. It underwrites companies, makes markets in their securities, advises them, rates and indexes them, and, perhaps most important, actively and passively invests in them and enables others to do so – often with the asset managers voting their wishes by proxy.

Investment banks and asset managers use this market power to press companies to act in accordance with their wishes – or end up disfavored on Wall Street. Increasingly, those wishes promote "environmental, social, and governance" (ESG) principles that invariably reflect politically progressive priorities.

As RealClearInvestigations has reported, "Big Three" asset managers BlackRock, Vanguard, and State Street dominate woke capital with total collective assets of more than $20 trillion – in the range of America’s annual GDP. Together, they own more than 20% of the average S&P 500 company. Largely on account of their ESG push, today over $18 trillion or a third of funds under professional management are invested using ESG and related criteria. There are now approximately $2.7 trillion in assets managed in more than 2,900 ESG funds, and each year sees new record inflows into the space.

Financial services companies also hold disproportionate sway over government regulations. The SEC, for example, has proposed potentially highly costly climate disclosure rules that would force companies to grapple with the unpredictable impact of climate change by disclosing reams of new information to investors.

The rules are modeled in part on the disclosure framework favored by the influential Task Force for Climate Disclosure, now chaired by billionaire and media mogul Michael R. Bloomberg. BlackRock, a TCFD founding member, had lobbied for it.

Major alliances of financial and related players pushing public and private green energy policies are detailed in the “Three Key Woke Players” section of our guide.

ESG Rating Guides

The resources below offer insights into where companies stand on "environmental, social and governance" issues:

• Morningstar ESG Risk Ratings: Searchable ratings covering ESG performance of more than 14,000 companies focusing on three central building blocks: corporate governance, financially material ESG issues, and “black swan” events – those that are unpredictable/unrelated to a given industry, material, and often event-driven, such as a war.
• MSCI’s Ratings & Climate Search Tool: Searchable ratings on a variety of ESG criteria for over 2,900 companies.
• Bloomberg's ESG Dataset: The financial data provider, led by key ESG disclosure backer Michael R. Bloomberg, offers clients ESG metrics and ESG disclosure scores for more than 14,000 companies in 100+ countries, organized across 2,000+ fields spanning key sustainability topics, with historical data going back to 2006.
• Ecountabl: Large database of company performance data and business characteristics related to social and environmental issues, indexing data to shopping and personal spending via an app.