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The ESG Proposition: Economic Insights for the Critical Thinker
Analyzing the Economic Implications of ESG Policies
Connor Sell
December 16, 2023
Whether this is your first time, or your twentieth time dropping by the Airplane Mode community - thank you for being here, I’m glad you made it! This edition will be a little bit different, hopefully to make the read a little quicker, but give you more in the process. I want to hear your thoughts on it, are you against taking the poll below and/or joining the conversation in the comments?
Estimated read time: 5 Minutes
Nothing in this article should be construed as financial or investment advice. Consult a professional for financial and investment advice. This article for informational purposes only.
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ESG - Ethical Investing Works?
I reached out to Mr. Roy Resto, former Board of Directors member for the Aviation Suppliers Association, and now President of AIM Consulting Solutions. I asked Roy, really respecting his experience and perspective, what he thought would be this next generations “true north” would be in terms of leadership, amongst all the technological changes that are to take place (3D Printing, automation, machine learning, etc.). I had not asked about ESG, but his answer has really stuck with me since. To mention it implies that it’s a bigger issue than an “aside” that’s thrown in the lower third of the news channel and gets five minutes on MSBNC every now and again.
When I asked him about leadership and new technologies in the next ten years, he answered in a way that I believe we can all understand and appreciate. He simply said:
“The 'True North' for firms seeking to implement new technology is that they don't become so enamored with the technology that they overlook the basic fundamental analysis tools used to evaluate any project; ROI, Contributions to Productivity, Net Present Value, Market Forecasts, Pricing, the Regulatory Environment, Market Segmentation and differentiation, the R&D landscape, etc. These are the 'dots' which, unless properly connected can lead to counterproductive investments in technology.”
He said, don't forget about the return. Don't get ahead of yourself. Keep important numbers in mind and use them as guides. What really made me think was this last sentence, and I really value his honesty and wisdom.
“Also, the fixation on ESG must not trump the results of these tools.”
The fixation on ESG… Hmm, it’s true, it’s become a fixation. Just my observation.
I don’t want you to read my ramblings, and one article won’t change your mind, no matter what side of this issue you’re on (set of issues), but I want to show you the economic results of such a fixation and experiment - from a purely economic standpoint. I’m going to leave a few items below for your consideration, and no matter where you’re standing on the compass rose regards to ESG, it will interest you to see Larry Fink taking a hard left turn after just a handful of years.
I hope these next items will bring you the strongest possible “steel manned” talking points the next time this issue comes up in your life. Alternatively, if you support ESG, are you completely against reviewing the below and admitting that maybe we just ought to go back to the drawing board?
I think the world of Larry Fink, but I’m not sure I want him to be my emperor.
28,598 Voters on this X Poll and 25,452 of them think DEI and ESG are an existential threat to the United States. This comes above climate change and nuclear war.
“Climate change has become a defining factor in companies’ long-term prospects. Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect. But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”
ESG Closures and Repurposes vs. New Launches bear out the results of Larry Fink’s Original Thesis on the issue.
Financial Times
Google Generative AI Search Results for “States with Anti-ESG Laws”
Focus, Focus, Focus
Focus is a major theme for Airplane Mode. We are focused on Signal over Noise. You can have the best book collection in the world, the strongest signal in the world, but if you have too much noise around you, it’s all for not. Focus is how you tune to that signal, and filter noise.
A Stanford Neuroscientist, Dr. Andrew Huberman, has produced some extremely effective techniques for focusing, backed by, you guessed it, neuroscience!
What many people perceive as a focus problem is often a thoroughness problem. One route to improving focus is to *direct your efforts to thoroughness without the expectation of focus arriving first*. Put simply, thoroughness improves focus, no matter how slow the process may be.
— Andrew D. Huberman, Ph.D. (@hubermanlab)
7:41 PM • Dec 13, 2023
Ace
Ace hasn’t done neuroscience at Stanford, he doesn’t even read Neuroscience Monthly, but he does know that you need a sharp mind to survive. He drinks a Lions Mane tonic in the AM, reads at least 25 pages every day, and listens to Mozart, Bach, and Beethoven on the regular. Yes, he’s an OG. A Triple OG.
I think what the study of history really helps you do is to learn how to think, how to think about complex problems. We as historians, we start with this, it's all about the question, how to ask those right questions and then how to conduct really multidisciplinary research and then to draw conclusions based on the evidence, rather than, as is too often the case these days, to use some sort of a social science theory and then try to fit a complex situation into a theory which creates a veneer of understanding, a deceptive veneer of understanding.
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