Heads in the sand on sustainability
The campaign against ESG investing is costing taxpayers hundreds of millions of dollars, but a lot of voters don't want to hear that truth
Be like an ostrich: keep a clear eye on what’s really going on around you. (Photo by Gopinath KM on Unsplash)
Ostriches get a bum rap. They don’t, in fact, bury their heads in the sand because they think that hides them from predators.
Think about it: A flightless bird weighing about 250 pounds and standing six feet tall at the shoulders wouldn’t have survived for the past 20 million years, as scientists say the ostrich has, if it was that dumb. No, ostriches poke into the sand briefly to rotate the eggs they’ve left there to incubate, and to chow down on the tiny pebbles that can help them digest fibrous foods.1
So let us be done with this libel of an honorable bird. Let’s instead praise the fact that ostriches avoid being lunch for leopards and crocodiles and such not by self-delusion, but by using their evolved skills, namely, by peering about from their admirable height, running really fast and kicking fiercely.
Humans, on the other hand, stick their heads in the sand.
Not literally, you know, but in the sense of that unfortunate ostrich analogy. We routinely bypass our evolved skill of reasoning by refusing to accept empirically verifiable reality if it conflicts with our predisposed notions. As a species, our capacity for denialism is unsurpassed.
Take, for example, our great faith in economic growth as a measure of success. The U.S. economy grew at an annual rate of 2.7 percent last quarter, as measured by the Gross Domestic Product, which we’re told is good news. Politicians of all stripes love economic growth. It pushes incomes up and poverty down, meaning we consume more goods and services and have a better standard of living. Economic growth yields higher tax revenues, which can be used for such things as better health care and education, and it leads firms to invest more, which increases the scope for more growth.2
But in calculating GDP, there’s no allowance for the depletion of natural resources. That is, we count the economic activity in building and operating a sprawling Amazon warehouse, but not the impact of that complex on water absorption by the soil it sits upon and on the open space it obliterates. Accounting principles require businesses to take depreciation into account — the equipment in that warehouse will wear out someday, so its value as an asset drops over time — but we don’t have a similar depreciation schedule for the earth.3
Yet we’re sticking our heads in the sand if we don’t recognize how our economic activity is diminishing the earth’s resources. Efforts in recent years to slow or reverse human-caused climate change are a step toward accounting for our depletion of the earth, but scientists warn that we’re not doing nearly enough to avoid some of the worst effects of global warming. Absent big lifestyle changes, including getting rid of fossil fuels and reducing our wasteful consumption habits, the earth faces a future of political upheaval and relentless human suffering caused by climate disruptions.
You would think that those who want us to have a safer and more secure future would be eager to take a clear-eyed look at the challenges of climate change. It’s not just that we want our grandchildren to be able to enjoy a hike in the woods and food on the table from an agricultural system that isn’t hobbled by drought and flood. It’s about financial security, too: If you’re an investor who cares about economic growth — or just somebody with a 401(k) or money in a pension fund — you know that it’s safer to have your money in the hands of those with an honest view of the risks they face, and a plan to deal with them.
Just now, though, we’re facing a partisan backlash aimed at firms that are responsibly taking environmental issues into account — that is, more broadly, that are considering environmental, social and governance (ESG) issues in determining where to invest. This denialism refuses to recognize two facts: First, companies are responsibly preparing for their future -- and thus protecting investors -- when they are open about the challenges they face in protecting natural resources and advancing human rights, diversity and compliance with regulatory policies. Second, companies with high ESG performance have in recent years generally yielded higher returns for their investors than what’s delivered by the overall market.4
The controversy over ESG has financial implications because of the way that state and municipal governments pay for everything from fixing roads to buying parkland. They use big underwriting firms to sell their bonds, counting on saving taxpayer dollars by the underwriters’ ability to sell at low interest rates. But some states led by Republican governors have recently blacklisted the biggest Wall Street banks from underwriting that public debt because those banks are consciously investing more heavily in firms that pay attention to better environmental, social and governance practices.
More than $35 trillion has been invested based on ESG criteria in recent years, but now some governors — including Ron DeSantis in Florida and Greg Abbott in Texas — label that “woke capitalism,” and say they won’t tolerate it. It turns out that their head-in-the-sand stance is costing taxpayers in their states hundreds of millions of dollars, though a lot of those taxpayers won’t pay any attention to that fact.
Here's why DeSantis and Abbott and their ilk are sand-eaters: The smaller firms that ignore ESG criteria, and which are thus favored by the hard right, typically don’t get taxpayers the lowest possible borrowing costs. That means the anti-ESG stance is actually imposing a hidden tax in their states. Researchers last year concluded that in Texas alone, the state’s municipal borrowers are paying as much as $532 million more because of the Republicans’ campaign against smart investing. In Florida, where DeSantis’ “anti-woke” campaign included an attack on Disney after the company stood up for the rights of its LGBTQ workers, the state’s borrowing costs are similarly higher now as a result of the anti-ESG campaign than they were before 2022.
Perhaps the Republican officials know that their stances are costing taxpayers millions — thereby hampering economic growth — and they’re doing it anyway to please the MAGA force in their party, the activist base that wants to support fossil fuel companies, suppress minority votes, marginalize LGBTQ communities and criminalize reproductive rights. The politicians may figure they can appease the radicals yet slip their destructive tactics past the majority of voters because of Americans’ willingness to look the other way from the facts — in this case, the reality of higher taxes to cover those borrowing costs — when it comes to our political biases.
“If socialism means state control of production, distribution and exchange of goods and services, then Florida and Texas fit the description,” Matthew A. Winkler, the editor-in-chief emeritus of Bloomberg News, recently wrote, in an insightful piece that tracks the true cost to taxpayers of the anti-ESG campaign. His piece points to the irony of right-wing governors manipulating state investments to bar the free-market benefits of lower interest rates that their states could enjoy, if only the politicians weren’t determined to manipulate state resources to score a political point.5
What, again, is that point? That it’s bad for America if private companies pay attention to citizens’ well-being, but good for states to punish those private decisions? Texas has barred Citigroup, Goldman Sachs Group Inc. and JPMorgan Chase & Co. from handling state investments because of the firms’ support for gun safety regulations and alternative energy. Florida considers training in diversity, equity and inclusion (DEI) to be the kind of action that warrants blacklisting.
The really smart people in the finance world know exactly what’s going on here. Winkler points to Larry Fink, the CEO of BlackRock Inc., the nation’s largest money manager, who told his shareholders that Wall Street’s embrace of ESG is “capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies upon to prosper.”
Is the alternative that the right wants, then, that we should encourage companies to ignore such issues, lest they risk, by exercising foresight on behalf of investors, the wrath of an ambitious and influential politician? That would seem to be an affront to common sense, not to mention an attack on capitalism and a drag on economic growth. Maybe the conservative politicians didn’t fulfill their obligatory reading of Ayn Rand, who is often identified as the intellectual guide for this generation on the American right. Rand noted that while we are free to ignore reality, we cannot ignore the consequences of ignoring reality. “Man is free to choose not to be conscious,” she wrote in 1961, “but not free to escape the penalty of unconsciousness: destruction.” 6
If you’re inclined to give a pass to the “anti-woke” politicians because they seem for some reason less offensive to your own political bias than their alternatives, it might be good to remember this: Truth is threatened not just by those who deny it, but also by those who ignore the deniers. A head in the sand is never useful for long, as any clear-eyed ostrich knows.
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NEWSCLIPS FROM THE UPSTATES
Dispatches from our common ground *
Wherein each week we look around what we call the nation’s Upstates — those places just a bit removed from the center of things — to find illumLinating news and intriguing viewpoints, which you might not otherwise see.
This week, we share reporting published here:
Helena, Mont. (The Montana Standard, mtstanmard.com)
Worcester, Mass. (Telegram & Gazette, telegram.com)
Wilmington, N.C. (Wilmington StarNews, starnewsonline.com)
Evansville, Ind. (Evansville Courier & Press, courierpress.com)
Controversy swirls around open lands
Demonstrators supporting access to public lands have become commonplace in Montana this year as controversy has grown over cutbacks, both proposed and implemented, in land protection, according to reporting by Tom Kuglin and Seaborn Larson of the Lee Newspapers. Fueling some of the controversy is the language in the 2020 ballot initiative that legalized recreational marijuana, which included a provision directing 20 percent of the state’s proceeds from marijuana taxes to expand public land access through the state’s Habitat Montana fund. State legislators, who have legal control over appropriations, seem to be leaning toward ignoring the voters’ instruction, at the urging of Gov. Greg Pianoforte. Pending legislation would eliminate the funding for Habitat Montana and redistribute it to law enforcement, corrections, drug courts and veterans services.
Initiative targets college students’ food insecurity
Almost half of U.S. college students are food insecure — that is, they reported going without food in the previous 30 days. Aiming at that, legislators in Massachusetts are following a blueprint set in place already in six states to establish a money pool accessible by the state’s public universities, colleges and community colleges to fund initiatives to address the problem of hunger on campus. Kinga Borondy reports in the Telegram & Gazette that students at Worcester State University are pushing for the fund. Studies also reveal that 13 percent of students attending community colleges report being homeless.
PFAS contamination of wells wider than first thought
It was six years ago that first reports emerged of contamination of the Cape Fear River by the chemical compounds known as PFAS, per- and polyfluoroalkyl substances. Matthew Prensky reports in the Wilmington StarNews that the extent of the contamination of private wells is finally beginning to emerge from well testing, revealing that one in 15 wells in the state of North Carolina, and one in five around Wilmington, are contaminated by PFAS. For more than 30 years, Chemours, and before them DuPont, dumped untold amounts of PFAS into the air, ground and waters of the Cape Fear region, Prensky reports. PFAS have been linked to many health effects, including cancer. Experts say the contamination is likely even greater than current testing results reveal. “We're only seeing a portion of what's really out there,” one researchers said.
Legislature targets school libraries
Indiana’s Republican-run state legislature is moving toward forcing the removal of “harmful material” from school libraries, but what constitutes that term is in dispute. Sarah Loesch reports in the Evansville Courier & Press that the bill’s sponsor describes his goal as "trying to prevent (K-12) students from being exposed to books that are absolutely raw pornography." But the president of the state PTA said that in the bill’s original form, it would ban a large number of classic novels, including “The Grapes of Wrath,” by John Steinbeck, “For Whom the Bell Tolls,” by Ernest Hemingway, and all the works of authors Toni Morrison and Gabriel Garcia Marques. "I think it would be nice if our kids was exposed to books about math, science, geography, things along those lines," the bill’s sponsor said.
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Fox News was “deliberately lying” — but will that matter?
As a longtime journalist and First Amendment advocate, I can’t recall ever before rooting for a plaintiff who is suing a news organization for defamation. But these days I’m surely on the side of Dominion Voting Systems in their litigation with Fox News. Then again, I don’t consider Fox to be a “news” outfit, by whatever broad standard we might want to declare.
As previously confidential documents in the lawsuit have now made clear, Fox commentators (Sean Hannity, Laura Ingraham, Tucker Carlson) and executives (including Rupert Murdoch himself) didn’t believe the folderol being sprayed by Donald Trump and his team after the 2020 election — the claim about being cheated out of the election, that is. Carlson privately called the charges “ludicrous” and “off the rails;” Hannity texted about “F’ing lunatics,” referring to Trump’s acolytes. Yet the Fox airwaves were repeatedly and constantly filled with the lies — giving credence to everything from imaginary algorithms shaving votes from Dominion machines to fictional ties between the company and Venezuela. It was all done to try to lure back the right-wing viewers whom Murdoch worried would be lost for good if the network was perceived as straying from its allegiance to Trump. That is, they did it for the money.
“I have never seen a defamation case with such overwhelming proof that the defendant admitted in writing that it was making up fake information in order to increase its viewership and its revenues,” Harvard Law Professor Lawrence Tribe told the Guardian. “Fox and its producers and performers were lying as part of their business model.”
It’s unsurprising to any reputable journalist, because Fox has never been anything other than a shill. No reputable journalist works for Fox News. But what’s tragic is that news organizations are facing enough difficulty surviving and trying to do their work these days, thanks to the changes wrought by the digital revolution and the attacks on media credibility generated by Trump and his imitators. This episode only reinforces for people — other than Fox viewers, since the Fox fans aren’t hearing this news, you know — that you can’t trust the media.
The journalists I have worked with all my career are dedicated to trying to find and report what’s true, a commitment they make so that you can better understand what lies beyond your own experience. It’s a sad reality that the worst of the business is represented by Fox, and that’s one mighty bad apple that threatens to rot the whole barrel.
So please don’t assume that what you read about Fox is typical. In fact, I consider it the worst journalism scandal of modern times, and a gross aberration. In that light, I hope you’ll stick with and support your local newsroom, to encourage the best efforts to keep Americans armed with what they need to know to be responsible citizens in this democracy.
Thank you for reading, and for joining me in looking at *our common ground, this America. If you’re a paid subscriber, special thanks to you — and in the middle of next week, you’ll get The Upstate American Midweek Extra Edition, exploring the creation of the essay above. And if you’d like to learn how to write op-eds and opinion essays, please join our class through. The Memoir Project, by clicking the link on this button: