Wednesday, June 08, 2022

State Officials Fight Wall Street to Protect Pensioners From ESG ‘Scam’

After failing to advance their agenda by passing laws in Congress, progressives have found that they can impose their will on Americans just as effectively through our financial system. And while some state officials have recently started to fight back, they are heavily outgunned.

The world’s largest asset managers, BlackRock, State Street, and Vanguard, have signed on to the global Net Zero Asset Management Initiative and together use the $20 trillion of other people’s money that they manage to pressure companies whose shares they own into pursuing environmental and social-justice causes. Progressive state pension fund managers in California, New York, Maryland, and even Texas are doing the same with the trillions in retirement funds that they manage.

The various elements of this ideology have come together under the umbrella of “environmental, social and governance” finance (ESG), and its advocates now include the world’s largest banks, asset managers, pension funds, rating agencies, proxy agents, as well as numerous international corporate clubs including Climate Action 100+, the Global Investors Statement to Governments on Climate Change, the Net Zero Asset Managers Initiative, and the Glasgow Financial Alliance for Net Zero.

ESG also has the support of the Biden Administration’s Securities and Exchange Commission, which announced it will require all listed companies to provide extensive reporting on their greenhouse gas emissions. It has the support of the Department of Justice, which just declared it would focus on “environmental justice,” and the Department of Labor, which announced it will no longer enforce a Trump-era regulation that barred private pension managers from including political causes such as ESG in their investment decisions.

The collective goal of these groups is to leverage their financial power to enforce the behavior that they want to see, targeting in particular fossil fuel producers and the gun industry. “Behaviors are going to have to change,” BlackRock CEO Larry Fink stated in a panel discussion last March. “You have to force behaviors and, at BlackRock, we are forcing behaviors.”

BlackRock is the world’s largest asset manager, with $10 trillion in assets under its management. In his 2022 letter to CEOs, Fink wrote that “every company and every industry will be transformed by the transition to a net zero world.” Bloomberg News reported that ESG financial assets are growing exponentially and will reach $50 trillion by 2025, representing more than one-third of the $140 trillion in assets under management worldwide.

But some state officials see the ESG movement as a misuse of money that was entrusted to asset managers by pensioners. A study by the Boston College Center for Retirement Research reported that ESG investing reduced the returns to pensioners by 0.70 to 0.90 percent per year, largely because ESG investment funds, which are actively managed, charge higher fees than non-managed index funds. This means higher profits for asset managers, less money for retirees.

BlackRock Chair and CEO Laurence D. Fink attends a session at the World Economic Forum (WEF) annual meeting in Davos, on Jan. 23, 2020. (Fabrice Coffrini/AFP via Getty Images)
And for all the added costs, many question whether ESG investing is doing much for the causes it claims to support. A research report by Columbia University and the London School of Economics stated that companies in ESG funds have “worse track records for compliance with labor and environmental laws, relative to portfolio firms held by non-ESG funds.”

Tesla CEO Elon Musk recently called ESG “an outrageous scam,” adding that “it has been weaponized by phony social justice warriors.”

“If BlackRock has their own money and they want to be activist investors, I think people have the right to deploy their own capital as they see fit,” said Scott Fitzpatrick, Missouri State Treasurer. “The problem here is that it’s other people’s money they’re using, and people don’t want their retirement money used for political purposes.”

Increasingly, state officials are discovering how state pension money is being used to support “the religion of global climate change,” said Derek Kreifels, CEO of the State Financial Officers Foundation. “Now we’re seeing the veil drop on how they’re weaponizing it. Now they’re starting to include all these other [social] issues as well.”

Activist asset managers vote the shares they manage to influence corporate executives, and this explains to a great extent why Disney, a producer of family entertainment, now advocates for sex education in elementary schools; why Delta, Coca Cola, and Major League Baseball fought against Georgia’s voter I.D. law; and why Citibank has fought against laws restricting abortion in conservative states and has curtailed lending to gun makers and retailers—all of which are political causes that have nothing to do with running their businesses. The Wall Street Journal reports that activist asset managers are now putting pressure on Walmart, Lowe’s, and TJ Maxx to take a stand against abortion restrictions.

But for all the headline-grabbing statements from CEOs on political and social issues, progressive asset managers have been content to operate quietly behind the scenes in boardrooms, shareholder meetings, and global conferences.

“If they were ever to admit what they’re really doing, they would be creating untold liability for themselves,” Fitzpatrick said. “It’s inviting lawsuits galore for people who can say, ‘you have violated your financial duty to us.’”

“As an asset manager, the only thing you have is trust,” said Utah State Treasurer Marlo Oaks. “If you violate that trust, your business is gone. The investment managers that are pushing this agenda are ultimately risking the very franchise that they’re using to drive it.”

By colluding against fossil fuel companies, Oaks said, banks and asset managers “are actively implementing economic sanctions. We need more capital going into oil and gas production and there are great opportunities there to make money. Why isn’t the money going there? Why aren’t capital markets working, like they have in the past? It’s because of ESG.”

One by one, conservative states are starting to push back through legislation and legal actions. Kreifels said that 23 states have taken some form of action, 13 of which have introduced formal legislation, to prevent state money from being used to support political causes. This, The New York Times wrote, has had a “chilling” effect on progressive initiatives, though how much of an effect remains to be seen.


Biden Tackling Out of Control Gas Prices by Beginning Emergency Production - of Solar Panels

Instead of funneling resources to alleviate the pain of soaring gas prices in the U.S., the Biden administration has turned its focus to solar and clean energy.

President Joe Biden will authorize the Defense Production Act to boost the domestic manufacturing of solar panels, CNN reported.

The DFA will allow the Energy Department to speed up production of solar panel components, energy-efficient heat pumps, building insulation, electric transformers and other equipment needed to transform the power grid.

“The White House also announced it will leverage the power of the federal government’s purse for clean energy, using federal procurement to increase U.S. solar manufacturing,” CNN reported.

Along with the DFA, Biden is also using his executive powers to issue a 24-month tariff exemption on imports of solar panels and their parts, NBC News reported.

This tariff exemption is being put in place despite the Department of Commerce trying to run an investigation to look into whether Chinese solar manufacturers have been improperly funneling solar parts through other Asian countries, which has stalled the progress of solar energy in the U.S., NPR reported.

Biden seems intent on boosting solar and clean energy in the U.S. despite the complications.

But due to arguments about climate change and droughts that are causing problems in California, the Biden administration is taking this opportunity to focus on funneling money and manpower to clean energy initiatives.

“What we’re seeing is a confluence of the impacts of climate change — the droughts out West, for example, reducing the output of our hydropower resources,” an official said, CNN reported.

The official then added that it is crucial to deploy more clean energy, like solar, to make up for that lost electricity generation.

In the meantime, however, gas prices are continuing to climb. Americans are feeling the squeeze at the pump and are unhappy about it.

The national gas price average has climbed every day for several days. It is now $4.87 per gallon, AAA reported.

In fact, the price of gas has doubled since Biden took office in January 2021, the New York Post reported.

On Jan. 20, 2021, when Biden took office, the national average cost of a gallon of gas was $2.39.


UK: The great renewables ripoff

Back in March, the Energy and Climate Information Unit, a think tank funded by green billionaires, made a great deal of noise about so-called “negative subsidies” paid out under the Contracts for Difference Scheme. With market prices for electricity having soared, generators in the scheme found that they were having to pay back large sums of money into the scheme, rather than taking money from it as they normally do.

The sums involved are not insignificant. The net repayment into the scheme was £133 million in the final quarter of 2021, and the ECIU declared, somewhat breathlessly, that consumers have benefited to the tune of £660million by April 2023.

One small (well, rather large actually) problem with this claim was that the beneficiaries of these repayments were actually the electricity suppliers. That’s because the CfD scheme only dictates that the money gets that far: there is no mechanism in the legislation to return it to consumers. Essentially the scheme relies on market forces to bring prices down, but with the electricity supply market in dire financial straits, that isn’t going to happen any time soon. So consumers end up being ripped off.

But that’s not the only problem. At the start of April, the annual uplift to CfD prices kicked in, and a princely 7% or so was handed out across the board. The price increase has two components. The first is an indexation adjustment, which is another ripoff of consumers because only a very small percentage of a windfarm’s costs are subject to inflation. The second is an adjustment for increased grid charges. Since the increase is mostly down to the ever-expanding presence of windfarms on the grid, this is essentially a transfer of costs from guilty to the innocent. Another rip-off in other words.

The CfD strike price uplift was enough to wipe out negative subsidies for a few weeks. After that, there was a sudden collapse in gas prices, and therefore electricity market prices. While one might have hoped that this would filter through to consumers, this is certainly not the case in the CfD scheme, where the low prices meant that consumers were back to handing money over to windfarms. Old-fashioned subsidies have been running at £1-6 million per day to windfarms for a few weeks now. So yes, consumers are being ripped off again.

The ECIU’s £660 million figure, earned between October 2021 and April 2023 means an average daily rate of (minus) £1.1 million. The expectation would therefore have been that by now we should be at around £70 million of repayments. Instead of that, we are at £10 million, and in a few days time the cumulative position could be back to zero.

It’s ripoff after ripoff after ripoff.


Australia: False promises of cost-of-living relief from renewable energy

How’s your first polar blast of winter going? So much for global warming. It’s enough to freeze the testicles off a brass monkey.

Even in Queensland, where winter is usually like a Pommy summer, the heaters and air conditioners are in overdrive as people seek refuge inside from the icy weather. And to make matters worse, we’re in the grip of a massive surge in power and gas prices. Some businesses have seen their gas costs quadruple in the past few months.

Experts blame the big rises on a global shortage of coal and gas. The Australian Energy Market Operator says wholesale prices are up 141 per cent in the past 12 months.

So much for promises of cost-of-living relief by our political leaders.

The fact is – when it comes to renewable energy driving down the cost of electricity – we’re being sold a pup.

For 15 years, we’ve heard mostly Labor and Greens MPs talking up the transition to renewables and how it will drive down power prices. I call bulldust. Power prices have escalated while we’re chasing renewable pipedreams.

Any politician who bobs up with an argument that our transition to net zero by 2050 will reduce electricity prices is talking rubbish.

Remember Prime Minister Anthony Albanese talking about helping with cost-of-living pressures during the election campaign? The politicians, frankly, are full of excrement on cost-of-living relief. There’s more chance of me playing five-eighth for the Blues on Wednesday than pollies driving down cost-of-living pressures.

The Milky Bar Kid, former PM Kevin Rudd, is the zero renewables muppet-in-chief.

When his predecessor, Liberal PM John Howard, brought in a renewable energy target in 2001, it was set at a tokenistic 2 per cent. When Rudd took office in December 2007, things changed.

By 2010, the Labor-Green Alliance had enshrined a 45,000GWh renewable target set for 2020 – 41,000 of which sat under the Large-Scale RET, and the balance under the Small-Scale Renewable Energy Scheme (SRES). Had the 41,000 GWh LRET remained in place, it would have amounted to around 30 per cent of Australia’s electricity market in 2020.

“The message for coal, long-term globally, is down and out,” Rudd told Sky News in 2017. We need “a heavy mix of renewables”, which was why he was proud the government had introduced the renewable energy target.

Rudd upped the target by more than 450 per cent in an uncosted promise before the 2007 election. It was crazy, as the Productivity Commission politely tried to tell him in a 2008 submission. The target would not increase abatement but would impose extra costs and lead to higher prices.

It would favour wind and solar while holding back new ideas. Rudd, of course, knew better. Not for the last time, he ignored the Productivity Commission and pushed ahead with his renewable target of 45,000GWh by 2020, of which 41,000GWh would come from wind and solar.

If the policy was designed to punish Australian consumers, it was a roaring success. Household electricity bills increased by 92 per cent under the Rudd-Gillard governments, six times the level of inflation. Rudd went further, and further. He is close to Albanese.

The winter chills around power prices have only just begun.




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