As I predicted would happen, the craze about investing using the relatively new metaphor of Environment, Social, and Governance (no marketing genius at work here) abbreviated as ESG, or to give the theorem more implied gravitas when referenced as Impact Investing, now leads many financiers to congratulate themselves using what some outsiders have referred to as the new greenwashing techniques of the standardized practice and future of finance.
Who dares frown upon investing in society? I do.
Awards are now handed out to the financiers who comply with ESG metrics, many of those metrics established by precisely the financiers who conjured up the theory, with financiers therefore implicitly writing their own report cards.
The appraisal of whether an investment complies with ESG standards is done by peer review with some very soft, fuzzy and fluid boundaries of the meaning of environment, social, and governance.
I have yet to meet a financier with a thorough understanding of the evolutionary principles that determine the excellence of the environment, social issues, and governance. However, finance people uneducated in evolutionary biology and anthropology are precisely the people dreaming up the investment thesis that is supposed to yield the repeatability of long-term humanitarian value.
The financial industry is now awash with Grammy-style celebratory gatherings, where the financiers rate and applaud themselves, just like music producers are the ones who award themselves Grammys. Never mind the public as the ultimate audience and consumer of said value.
The above charade is amplified by a dumb press mindlessly amplifying the ESG idiocracy, as in The Morningstar publishing an article and chart of how ESG investing is really taking off.
Am I the only one to realize creating an index across asset-classes and then congratulating yourself on compliance with the index is manmade foolery of the first and highest order?
Never mind the thesis of sustainability, upon which both ESG and Impact Investing hinge, being an evolutionary oxymoron that turns the appraisals of investment techniques into foolish dog-and-pony shows. I do not mind finance people having fun, but the serious problem, less evident to the innocent observer, is how an investment thesis lacking evolutionary integrity actually damages humanity – as all suppositions of sustainability defined as cause confounded with consequence do.
Indeed, renewal is the omnipresent evolutionary cause at best leading to a mere proxy of sustainability. Grave depravity of reason is inherent to ESG and Impact Investing confounding cause and consequence.
I have challenged ESG on numerous occasions and will continue to do so, only to ensure the arbiters of innovation do not again destroy, in the words of Albert Einstein, the thesis that determines what humanity can discover.
You see, finance plays a pivotal role in human evolution, as the thesis of financial arbitrage determines how the fractal of human ingenuity and capacity is allowed to expand. Meaning, if a financier does not understand or care about the anthropological value of the innovation in question, the expansion of human evolution is directly impacted by the limited purview of the financier.
We must devise a strategy of finance in compliance with how nature’s investible assets expand. The principles of which I explain in a masterclass.
Sustainability does not exist anywhere in the universe. Instead, everything in nature – including the evolution of humanity – revolves around renewal, and so should our investment allocation thesis.
The tenets of renewal, consistently applied by nature and honed to perfection over 4.5 billion years on earth, are direct opposites from the humanitarian nepotism conjured up by manmade make-believe of sustainability.
And since investment strategies like ESG and Impact Investing violate nature’s principles (see the chart above), they are inherently evolutionary false-positives. Any time wasted on pretending otherwise will lead to the inevitable qualification of investible assets as false positives and thus, by virtue of its impact and selection of investible assets, yields a systemic dumbing down of human discovery.
So, every time I see these gloating articles about ESG and Impact Investing I cringe. I cringe because we do not seem to realize how the most intelligent species on earth, blissfully parading a pageantry of positivity down a manmade path of evolutionary idiocracy, is well on its way to live the shortest of all major species.
We can and must do better.