Despite BlackRock CEO Larry Fink saying he would no longer use the word ESG, the SEC has announced an interesting new regulation that may shed light on ESG funds.

The Securities and Exchange Commission recently announced a rule requiring environmental, social, and governance funds to be 80% aligned with the funds stated goals. This could reveal a long-held secret of ESG funds: to be competitive, they are packed with more profitable investments that are not green.

ESG is a type of investing where non-financial factors are considered in the decision-making process. ESG has grown quickly over the past few years, pushed by global action to meet the net zero goals of the Paris Accords. Globally, those non-financial factors are primarily focused on sustainability. However, in the US there has been an added focus relating to LGBTQ+ issues that some have deemed political, causing controversy.

The growth of ESG has sparked regulation for sustainable reporting standards for businesses. The European Union was the first, with the European Sustainability Reporting Standards that were approved in July and set to go into effect January 1. The ESRS will require publicly traded and large privately held companies to report greenhouse gas emissions, actions taken by the entity to reduce GHG emissions, and other green policies. Eventually it will expand to small and medium-sized enterprises. While reporting will be mandatory, no environmentally friendly action is required. The SEC is set to release similar standards for the US in October.

ESG’s are a way for corporate elites to continue to make money while enabling them to virtue signal. Consequently, the practice has resulted in their engaging in a scheme called greenwashing where companies that engage in ESG policies make misleading statements regarding their investment priorities that can even enable money laundering.

On Monday, the SEC fined Deutsch Bank for engaging in efforts that could set the stage for the firm to conduct greenwashing in which the SEC decided the bank lacked safeguards to prevent such efforts, like money laundering, in addition to misrepresenting Deutsch Bank’s ESG standards. Not surprisingly, most companies are not ready to implement ESG policies to begin with.

The SEC’s new regulation might be a good way to end the ESG racket since it will seemingly force them to be transparent. ESG’s are really a sinister way to force environmental policies on companies, including ones that are alien to a company’s ability to operate.

PHOTO CREDIT: Pixabay