Is That Really What Happens?

One statement by Sean Fieler in his Wall Street Journal op-ed raised some red flags for me. The op-ed itself is about how the environmental, social, and governance (ESG) movement is fostering monopolistic action in violation of U. S. law. Here’s his opening:

Russia’s invasion of Ukraine calls into question the wisdom of the environmental, social and governance movement’s policy centerpiece: restricting oil and gas investment. In addition to causing hydrocarbon shortages and strengthening the Organization of the Petroleum Exporting Countries and Russia, the coordinated effort to depress oil and gas production is potentially a violation of American antitrust law. This combination of bad policy and legal risk will likely prove too much for profit-minded ESG supporters, and the movement will lose much of its support.

ESG standards are top-down and coercive for a simple reason: Suppressing oil and gas consumption is unpopular. Given this political constraint, the ESG movement has steered clear of hydrocarbon taxation and focused on undemocratic efforts to restrict the supply of oil and gas via elite institutions, specifically corporate boards. This strategy has delivered spectacular results. Look at the movement’s victory over Exxon Mobil last year.

Here’s the meat of his argument:

Unfortunately for the ESG movement, its coercive tactics are possibly a violation of American antitrust law. Advancing the ESG agenda requires that the owners of capital collude to restrict the supply of certain goods and services. Regardless of the colluding parties’ motivations, this is a textbook antitrust violation.

and here’s his conclusion:

The notion that ESG proponents are colluding solely to make the world a better place is neither completely true nor a particularly robust legal argument. No matter how noble the ESG movement’s intentions, its proponents are profiting from their efforts. First, to the extent that members of Climate Action 100+ continue to invest in oil and gas companies, they are benefiting from the higher profits that have resulted from their effort to restrict the supply of oil and gas. Second, by excluding non-ESG money managers from bidding on certain contracts, the members of Climate Action 100+ are reducing the competition they face in the marketplace.

The impulse to do good underlies mainstream support for the ESG movement. That’s not going away. But the coercive and undemocratic tactics that characterize the push for decarbonization have likely peaked. As the ESG movement pivots, its proponents will need to recognize that prudent capital allocation decisions can’t be reduced to a reporting and box-checking exercise.

I’ve highlighted the passage in his conclusion that raised a red flag for me. In the history of the world has what he is describing ever happened? To the best of my knowledge authoritarian regimes have collapsed (Soviet Union), been defeated in war (Nazi Germany), or been removed by revolution (Bourbon France) but they have never simply “pivoted” away from authoritarian behavior. Quite to the contrary, I think they are strongly motivated to redouble their efforts, becoming even more authoritarian, confident that what they’re trying to accomplish will succeed if they just try hard enough.

I presume that you could claim that the ESG movement isn’t authoritarian or undemocratic at all or, as I think is more likely, you might conjecture that those who pursue it have only started to employ the “top-down and coercive” measures is using to accomplish its goals but I think that claiming that the movement will “pivot away” from its strategies is a fantasy.