How I accidentally came to own part of an ESG company, and what I’m doing to fight back

insights from Jonathan Broadbent

ESG stands for Environmental Social & Governance. It’s quite the trendy buzz in investments and world markets.

Hardly a day goes by without someone either forwarding an article questioning ESG or asking me what my thoughts are on the matter. Is ESG a good or a bad thing? The answer depends, like just about everything else these days, on your political leanings. Broadly speaking, if you believe that government intervention is a good thing, that government can solve problems or issues, then ESG is probably for you. If you’re leery of more government control, then you may want to avoid ESG.
I’m going to pause here and say very specifically that UnWoke Investing is designed – first and foremost – to be a FREE resource to help people understand what “woke” ESG is, identify it in their investments, and get out of it, replacing it with something that is not “woke.” There is an option to work directly with us, but that is only if you want our direct involvement/guidance. We hope that people the world over will learn more about how their own money may be applied to things that they personally do not agree with.

What is ESG?
To understand what ESG is, and isn’t, it will help to understand where it came from and how it snuck into society. The predecessor to ESG is something called Socially Responsible Investing (“SRI” for short). Socially Responsible Investing has been around for several decades. It was basically a way for people to choose to invest in ways that did not run counter to their beliefs. If someone did not like a certain type of company, country, or industry, their investments could be shaped in a way that avoided those investments. I purposefully never had an opinion on SRI. As a professional, I was interested in being the strongest Fiduciary possible (I’ve helped in the management of group retirement plans for decades, which involves all sorts of prudence, due diligence, stewardship, something called “exclusive duty,” and fiduciary responsibility, which means that I was obligated to understand SRI).
Like most things in the world of Finance, SRI continued to morph and evolve. Eventually, it moved beyond simply the ability to opt-out of a certain company, country, or industry, and companies began to market their services as surrogate judge. They would manage your money for you, their pitch went, and would apply their principles to the companies in which they chose to invest. They applied their own screening tools and asked for investors to trust them, that they were pure of heart and would select only “good” companies, based upon their judgement. This worked, to a large extent. They attracted a lot of money. How they did, ultimately, I’ll leave to the investor to decide. In this type of investing, there are two objectives – a good return on investment and adhering to some sort of principle of investing in order to avoid “bad” companies, countries, or industries, however the manager of the money might define that.
But then ESG came onto the scene. It usurped SRI at breathtaking speed. Instead of passively allowing investors to decide if, how, or what screens they might want to apply to their investments, ESG seeks to turn the investing world completely upside-down, only allowing certain companies to capture investors’ money.
Hint: very few people actually utilized SRI. I had occasion to host some education sessions on SRI when it was a big thing. People were very curious about it, so we did lunches and seminars and people from the companies offering SRI crisscrossed the country pitching the idea. Beyond some mild curiosity and relatively few investors, (compared to unconstrained investment managers), SRI never really experienced a new business boom. It turned out investors, in spite of all the talk of the evils of certain types of investments, didn’t much care. Overwhelmingly, they simply wanted a return on their investment.
Perhaps the people running SRI were paying attention. This complacency has most certainly been used against We The People – the investors. With the introduction of ESG we now have exactly the opposite of Free Markets.
ESG allows for the artificial selection of winners and losers in the investing world. Worse, as it’s been implemented, it encourages managers (the people who select investments for you) into companies that they might not choose, or even like, under normal circumstances. Your money might be diverted from good, understandable and reasonable investments – companies that are solid and profitable, for instance – into investments that have no solid reasoning. They might have no profits, or bad management, or be too new to know, or own no patents… they might not even have a product and just be in concept stage, with no revenue, yet investment managers are being pushed to give them money. A prime example of this is the company Solyndra Solar, which was based in California. They received quite a bit of money and loan guarantees, along with investor interest, because they fit a “green energy” objective; however, they went bankrupt, taking a lot of money nowhere in the process. This was some years ago, but if ESG had been in place back then, I am quite certain they would have scored high on the ESG scale.
The ESG scale varies, depending upon who is publishing the data, but it’s mostly all the same. For all intents and purposes, ESG appears to be evaluating all possible investments through a “Green New Deal” lens. If something scores high on Critical Race Theory’s “Diversity Equity & Inclusion,” has a Chief Diversity Officer, or otherwise shows adherence to the components of the Green New Deal, then it will score high on this scale. And, much like America’s schools moving away from Academics and into ranking performance on “Social Emotional” issues, Regulators, Exchanges, Investment Managers, and the world of Finance are highly encouraged NOT to look at the underlying issues or performance, but instead focus on the superficial. Continuing the Education analogy: where schools now score/rank at least partly based upon their ability to create “social activism,” investment managers and the places in which they choose to invest are now being ranked based upon their “woke” characteristics, not their balance sheet (or other fundamentals).

ERISA and ESG
I am what is referred to as an ERISA subject matter expert. There are a few dozen of us in the country. The ERISA part is not very exciting – it’s an area of Finance where very few people want to work. (I’m a big fan of Mike Rowe, from “Dirty Jobs.” If he knew about ERISA, I imagine he’d call it the “dirty job area of Finance.” It’s really quite boring, for everybody, and we generally make a lot less money than our more known counterparts, but I’m happy here.)
In 2015 and 2016 I spent some time on the phone with a company based out of Southern California that was interested in developing ESG metrics. I was attractive to them because I know ERISA. They offered me shares of ownership if I’d help them. So, I served on their Advisory Board for two years and now own a small, non-voting interest.
At the time, I simply thought that ESG was a catchy new way of referring to SRI. Boy, was I mistaken!
One of the first things I did in my effort to help them grow was to introduce them to another company based out of the Pittsburgh area that is a leading provider of fiduciary analytics to Pensions, Endowments, Trusts, Individuals, and Group Retirement Plans. The two are now partnered and are blurring the lines between Fiduciary Duty/Stewardship and a pursuit of good looking ESG optics. Oddly, as we dig into the resulting reports, we are finding it to be an uneasy union. We’ve run reports on many major investment managers and find little or no correlation between high ESG scores and high Fiduciary scores. Further, we’re not seeing clear application of ESG standards in the investments. Companies that might be expected, such as wind, solar, batteries, and what are generally thought of as “green” do not appear to make up large portions of high scoring managers, and some managers who score high on ESG are investing in things not generally in the ESG realm, such as Alcohol Distribution and big Pharmaceutical companies. The implications of this are that instead of the anticipated Environmental Social & Governance screens, this might simply be a marketing tool or a tool with which to artificially control winners and losers.
For the individual investor, this might seem frustrating. For institutional investors, this could prove devastating. Ultimately, if they are unable to answer questions about the reasoning behind their selection of – even the passive allowance of – ESG managers, then they may face monstrous liability for the eventual results.
(Generally, anyone who is responsible for someone else’s money is subject to a higher standard of care. All sorts of rules and laws apply, like “exclusive duty of care,” “stewardship,” and “fiduciary duty.” Suffice it to say that mistakes made in this arena have much more major implications than allowing yourself to be steered into a bad investment personally.)
I have communicated my interest in divesting my ownership of the company and have informed them that I am now at odds with their product(s)/mission. It remains to be seen how/when this is resolved, but for now, I treat them with respectful distance, but am opposed to what they’re doing.


What’s next for ESG?
I get this question a lot. Beyond the abovementioned artificial control over what should be Free Markets (markets that are free to explore good and bad companies/investments without government or outside interference), it is being speculated that ESG might also come to be weaponized against We The People. I don’t just mean citizens of the United States, where the term has its roots, I mean the citizens of the world; those of us who wish to be free from government control.
It is very possible and very conceivable that ESG could be used to control the every movement of individuals. If, for instance, a digital currency is created and managed by a government/governments, then we could be penalized for buying from companies with low ESG scores. We might even find that access to our money is limited or blocked if we ourselves are not scoring high enough in our social and lifestyle activities.
Such things are speculation at this time – although maybe not as far off as you might think, considering the fact that a Social Credit System is in place in China right now. Tie together existing credit card/debit card tracking and all the “loyalty cards” we sign up for at a steady clip, along with the known data-mining that comes along with online shopping, and it’s not difficult to imagine someone might want such a program put in place in other countries, perhaps even globally. Anyone able to control such a marketplace would have supreme power and control over virtually all aspects of life. Who can travel, when, where, what they may purchase, when they have access to their money, and more, all based upon whatever Government might demand of us. Food, medicine, housing, transportation, civil services, access to credit, all tied to a score that we must constantly strive to maintain, at the whims of whoever controls the metrics that would be applied to us.
This scenario is one possible ADDITIONAL example of a misuse of ESG; however, as noted above, ESG is already being used to control where your money is invested.

Enter UnWoke Investing
Fundamentally, we believe in free markets – as free from government or outside interference as might be hoped. We believe investors’ money should be allowed to – in many instances MUST go to – companies, countries, or industries that have good fundamentals (think: balance sheet, earnings, price-to-earnings ratio, management, maybe some patents, market position, research & development) and show promise. The idea of investing in a company – any company, for any reason – that does not exhibit good characteristics and is instead picked for investment based upon an ESG score runs completely counter to the way the world of Finance is supposed to work.
Everything we do is FREE. It is designed to quickly help people understand “woke” ESG investing, find it in their investments/portfolio, and then make changes to get their money out and into UnWoke Investments.
Simply evaluate the investments you currently have, then move as much as you’d like into the carefully screened and selected non-woke companies we are recommending. You will be switching from paying management fees to direct investing (“self-directed” investing), with our guidance.
There is an option to work with us directly, which will help us fund future social media and research activities, but this is entirely elective. This is not necessary, but will help us. We will personally help decide how much of each of the UnWoke companies to invest in and guide you through making the changes. There will be bonus material and access to some additional reports. We’ll also run a profile to illustrate your current management fees/costs. The first 76 people who elect this additional, personal level of service will pay $1,000 flat-fee per year. The next 76 people will pay $2,000. By switching to direct, self-directed investments, you’ll be eliminating management fees. You’ll have some trading costs, but these are fees you pay your provider for trades and are one-time, as opposed to perpetual ongoing management fees.