ESG…. TIME TO MOVE ON
Environmental, social and governance (ESG) is the umbrella term that covers large organisation behaviours according to system devised by Blackrock, promoted by McKinsey & Co as well as organisations such as Bloomberg.
Then, suddenly, Blackrock announced it no longer believed in ESG during 2024 after the ‘Council for Inclusive Capitalism’ headed by Lynn Forester de Rothschild admitted ESG was a failure in 2023 and several major scandals. The whole show collapsed along with Diversity, Equity & Inclusion (DEI) – a related large organisation scoring system. Why score DEI and ESG? For ‘ethical’ investment profiles, with large investment companies such as Blackrock.
Organisations – government through to companies – need good governance. They need to treat employees and shareholders fairly, and they should not discriminate. However, to turn these positive ideas into point scoring for investment quality is literally gaming the system.
So… why are we talking about dogma when collective economies from South Africa to Europe to the USA are facing ruin?
Dogma is a luxury of a lush profitable economy, not one facing huge and often unwelcome external pressures. Most advanced economies are past the point of entertaining such ideas. Organisations, governments, carbon credit traders can all demand anything they want – there is no more money left to pay them.
If we consider the thousands of well-paid fake jobs and fake organisations that milked DEI as well as ESG, and imagine all that cash instead directly going into the pockets of citizens – or more accurately, not leaving their pockets – what would that do for the economy?
That’s before we consider battery electric vehicles (BEV), which do have a consumer demand – just not a 100% of new vehicle demand as imagined by many investors and governments. The reality is BEV due to price differential, issues around energy availability and range, is limited to be between 10 to 15% of the new car market, boosted to 23% when Governments shower tax cash to narrow the initial price gap. Remove the subsidy, and the market share recedes to 15% of new vehicle sales – nowhere near 10%, not even close.
The following ‘luxury mantras’ no longer apply – and they never did:
- BEVs are a requirement for full autonomy (SAE Level 5, full-time driverless)
- BEVs have zero emissions
- A great ESG score produces a great organisation
- Full compliance with DEI produces equity.
The answers:
- Full autonomy (SAE Level 5) exists only as demonstration systems and could use any sort of powertrain – most powertrains have full electronic control.
- The correct term for a BEV is a zero tail pipe emission vehicle.
- ESG scoring like any system can be gamed.
- DEI tends to encourage the opposite of fairness.
There is a degree of common sense in this, based on sound values taught by those around us from family, school and our professional life. Knowing right from wrong is the cornerstone.
The time really has come to assess what has been achieved by DEI and ESG based policy, extract any value (don’t expect much) and move on. There is not much time left to adopt clear thinking to save what remains of our collective economies.
In the automotive business vehicles will be powered by internal combustion engines for at least another 20 years, especially in Africa. They will use petrol/diesel, they might have assistance of electric systems, and some consumers may insist on BEVs. The future is fragmented, complex and full of danger – hence the need for crystal clear thinking.
Story by Andrew Marsh
