Business
ESG will impose considerable harm on Canadian workers, doesn’t reflect the reality of how markets actually work
From the Fraser Institute
By Steven Globerman, Jack Mintz, and Bryce Tingle
The ESG movement—which calls for public companies and investors in public companies to identify and voluntarily implement environmental, social, and governance initiatives—will cause substantial harm to the economy and
workers, finds two new essays by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Investor support for ESG is starting to wane, which isn’t surprising as the considerable harms ESG mandates pose come to light,” said Steven Globerman, resident scholar at the Fraser Institute and author of It’s Time to Move on from ESG.
The essay summarizes the arguments against imposing top-down ESG mandates. In particular, evidence shows that (1) ESG-branded investment funds do not perform better than conventional investment funds, (2) companies that proclaim to pursue ESG-related activities are not more profitable than companies that do not, and (3) mandating ESG-related corporate disclosures imposes additional costs on public companies and diverts resources away from productivity-enhancing investments, harming workers.
A separate new essay in the Institute’s series on ESG, Putting Economics Back into ESG written by Jack Mintz and Bryce Tingle of the University of Calgary, highlights how the current concept of ESG mandates being pursued in Canada are incompatible with basic economic theory and fail to understand how markets actually work. As a result, ESG mandates will (1) discourage new businesses from locating in Canada, (2) investors will be reluctant to invest in Canada, (3) Canadian companies will be less competitive than their international peers, (4) capital will leave Canada for jurisdictions without restrictive ESG mandates, and (5) economic growth will slow and workers will suffer as a result.
But these harms can be minimized if the definition of what constitutes ESG is expanded, securities commissions are not tasked with regulating ESG, but instead focus on ensuring market integrity, and if governments prosecute fraud in ESG branded funds, and likewise, governments impose liability for the use of ESG ratings, which have been found to be invalid and unreliable.
Crucially, both essays conclude that public policy objectives, such as those addressed by ESG initiatives, should be decided by and acted on by democratically elected governments, not private sector actors.
“There is no reason to believe that managers and business executives enjoy any comparative advantage in identifying and implementing broad environmental and social policies compared to politicians and regulators,” said Globerman.
“The evidence is clear—the private sector best serves the interests of society when it focuses on maximizing shareholder wealth within the confines of the established laws, not complying with top-down imposed ESG mandates that will harm the economy and ultimately Canadian workers.”
- The ESG movement calls for public companies and investors in public companies to identify and voluntarily implement environmental, social, and governance initiatives—ostensibly in the public interest.
- One school of thought supporting ESG is that doing so will make companies more profitable and thereby increase the wealth of their shareholders.
- However, academic research to date has failed to identify a consistent and statistically significant positive relationship between corporate ESG ratings and the stock market performance of companies.
- In fact, research instead suggests that adopting an ESG-intensive model might compromise the efficient production and distribution of goods and services and thereby slow the overall rate of real economic growth. Slower real economic growth means societies will be less able to afford investments to address environmental and other ESG-related priorities.
- The second school of thought is that companies, their senior managers, and their boards have an ethical obligation to implement ESG initiatives that go beyond simply complying with existing laws and regulations, even if it means reduced profitability. However, corporate managers and board members cannot and should not be expected to determine public policy priorities. The latter should be identified by democratic means and not by unelected private sector managers or investors.
- Given that there are indications that investor support for ESG is waning, it is apparent that the time has come for corporate leaders and politicians to acknowledge that it’s time to move on from ESG.
Authors:
Alberta
“It’s Canada’s Time to Shine” – CNRL’s $6.5 Billion Chevron Deal Extends Oil Sands Buying Spree
From Energy Now
Canadian Natural Resources Ltd.’s $6.5 billion acquisition from Chevron Corp. marks the latest in a string of deals that has helped make it the country’s largest oil producer and brought Alberta’s massive oil sands deposits almost entirely under local control.
CNRL has feasted on the oil sands assets of foreign energy producers over the past decade, snapping up stakes and operations from Devon Energy Corp. and Shell Plc as they shifted away from the higher-cost, higher-emissions oil sands business. Investors have applauded the strategy, which allows CNRL to boost output and make the operations more efficient.
That trend continued on Monday, with CNRL shares climbing more than 4% after the deal with Chevron raised its stake in a key oil sands mine and a connected upgrading facility, while also adding natural gas assets in the Duvernay formation.
“These assets build on the robustness of Canadian Natural’s assets,” said CNRL President Scott Stauth said on a conference call Monday. The deal boosts CNRL’s stake in the Athabasca oil sands project, which it first bought from Shell in 2017, to 90% from 70%.
The acquisition was largely expected and boosts CNRL’s oil and gas output by roughly 9%, adding the equivalent of 122,500 barrels of oil production per day.
“It’s just been a matter of time,” Eight Capital analyst Phil Skolnick said by phone, noting that CNRL had been seen as the logical buyer for Chevron’s oil sands business.
While CNRL also boosted its dividend by 7% on Monday, Desjardins analyst Chris MacCulloch cautioned the company’s additional debt to finance the acquisition “may disappoint some investors” given it plans to temporarily slow capital returns.
Still, MacCulloch said the deal is positive overall for CNRL as it further consolidates assets in the region. “There’s no place like home,” he wrote in a note.
Chevron, for its part, is the latest in a long line of US and international oil producers — such as BP Plc, TotalEnergies SE and Equinor ASA — that have shifted away from the oil sands after spending billions to build facilities in the heavy-oil formation. That has left the oil sands largely in the control of Canadian firms including CNRL, Suncor Energy Inc. and Cenovus Energy Inc.
“There’s no remaining, obvious assets available,” Ninepoint Partners partner and senior portfolio manager Eric Nuttall said after Monday’s deal. Ninepoint owns 3.1 million shares in CNRL, data compiled by Bloomberg show.
Many of those oil sands deals have been struck at prices that favor the Canadian buyers, which have consolidated land, reduced costs and boosted returns in recent years.
“It’s Canada’s time to shine,” Nuttall said, adding that he expects foreign investors will return to the country’s oil producers in the future.
From the Daily Caller News Foundation
Tesla CEO and X owner Elon Musk said Vice President Kamala Harris will launch “lawfare” in an effort to shut down X “by any means possible” if she wins the 2024 presidential election.
Musk sat down for a two-hour interview with former Fox News host Tucker Carlson, a co-founder of the Daily Caller and Daily Caller News Foundation, released on Monday. Musk said that should Harris win the presidency, he anticipated that he and his companies would face legal action.
“If she wins, how can they let X continue in its current form, in its current role in American society?” Carlson asked Musk about the future of the social network if Harris wins the presidency.
“They won’t,” Musk responded. “They will try to shut it down by any means possible.”
WATCH:
Former Secretary of State Hillary Clinton called for Americans to be “criminally charged” for spreading what she viewed as disinformation during a Sept. 17 interview with MSNBC host Rachel Maddow, and warned that a lack of censorship was causing a loss of “total control” in a Saturday interview with CNN host Mike Smerconish.
Carlson asked Musk to explain what he meant when he said a Harris administration would use “any means possible” to shut down X.
“They might try to pass laws,” Musk said. “They’ll try to prosecute the company, prosecute me. The amount of lawfare we’ve seen taking place is outrageous.”
Musk noted the Biden administration had sued SpaceX for failing to hire asylum seekers
“I mean… the Department of Justice, for example, launched a huge lawsuit against SpaceX for failing to hire asylum seekers,” Musk continued as Carlson expressed shock. “Not those granted asylum, but asylum seekers. Now, there’s also a law called International Traffic in Arms Regulations that because SpaceX develops advancements in technology that can be used in nuclear ICBMs… we have to be careful who we hire. We can only hire a permanent resident or a citizen.”
The Justice Department announced the suit against SpaceX in August 2023, claiming the company “discouraged asylees and refugees from applying to the company” in legal documents. The Equal Employment Opportunity Commission (EEOC) sued Tesla in September 20203. claiming black employees faced harassment and threats, including nooses.
The Biden administration launched other investigations and lawsuits into companies Musk is tied to, including Tesla, since he purchased Twitter in 2022. Musk predicted a dirty tricks campaign in May 2022, as his purchase of Twitter was in progress.
Musk has been an outspoken supporter of former President Donald Trump’s bid to return to the White House, funding America PAC, speaking at Trump’s Saturday rally at Butler, Pennsylvania, at the site of an attempted assassination of the former president and donating to efforts to elected House GOP candidates.
Harris did not immediately respond to a request for comment from the Daily Caller News Foundation.
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