Latest / Conversations: Special Guests with Preston Scott / How Do You Fight ESG? Do you Even Know What It Is?

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How Do You Fight ESG? Do you Even Know What It Is? · Conversations: Special Guests with Preston Scott

• 0:20
  Speaker 1: Here we go.
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  Speaker 2: It's the third and final hour Thursday, Always Fun here
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  Speaker 2: on the Morning Show with Preston Scott and over there,
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  Speaker 2: I'm sorry, I just I just look at the way
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  Speaker 2: he's dressed each and every day, and it's it's it's
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  Speaker 2: a it's a highlight reel under itself. Lose Can you
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  Speaker 2: see over there in Studio one A. I'm here in
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  Speaker 2: Studio one B, and I'm joined by our good friend
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  Speaker 2: Sal Nowso with Consumers Defense, and.
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  Speaker 1: My man is styling over there, don't you don't you
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  Speaker 1: knock that? Yeah?
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  Speaker 2: Not just anyone can wear the make America Great hat
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  Speaker 2: hat again. We just make America Great again hat with
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  Speaker 2: a do rag underneath it.
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  Speaker 1: In a sport Yeah. Yeah, I'm I mean, much better
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  Speaker 1: than what I showed up in.
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  Speaker 2: Well, let me tell you, he just he's got his
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  Speaker 2: own style because it's it's not grunge, it's not goth,
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  Speaker 2: it's not bohemian.
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  Speaker 1: It's not it's it's Jose Can you see it's him?
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  Speaker 2: Yeah, it's it's can you.
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  Speaker 1: See love it?
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  Speaker 2: How you been?
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  Speaker 1: I've been great, super busy, glad to be in talking
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  Speaker 1: about something other than the state legislature.
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  Speaker 2: Yeah, let me you know, I went deep dive in
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  Speaker 2: my analysis and I said, you know, Sal's executive director
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  Speaker 2: of Consumer's Defense and it's all about defending consumers.
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  Speaker 1: How real deep there? How to do? You nailed it?
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  Speaker 1: That show over mission statement, right, walk off solid.
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  Speaker 2: Now let's break it down there, because we've only given
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  Speaker 2: a brief overview Consumer's Defense. If you were to describe
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  Speaker 2: to people, Okay, here's what we are dedicated to do.
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  Speaker 1: Yeah, what is it. Well, we're a nonprofit policy organization.
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  Speaker 1: We are the nonprofit policy arm of an organization called
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  Speaker 1: Consumers Research, which is the oldest consumer protection group in America.
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  Speaker 1: It's not a government agency, it's a nonprofit what they
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  Speaker 1: call a five oh one C three. And our mission
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  Speaker 1: collectively is to work across the United States and at
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  Speaker 1: the state level, because, as I've mentioned to you many
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  Speaker 1: many times as we've unpacked Florida's legislature, the state legislatures
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  Speaker 1: are the institutions with the most pronounced impact on individuals' lives.
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  Speaker 1: And so our goal is to advance policies that protect consumers, markets,
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  Speaker 1: and economies in the economy from basically the worst ideas
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  Speaker 1: of the left. And the way that we do this
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  Speaker 1: is there's five basic strategies. So there's research, policy research,
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  Speaker 1: there's policy advocacy, and then there's grassroots engagement kind of
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  Speaker 1: activating people at the ground level to be a part
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  Speaker 1: of the solution. There's media engagement, which this is absolutely
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  Speaker 1: a part of. And then there's litigation. And I'm not
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  Speaker 1: an attorney, so there are folks that do that, but
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  Speaker 1: those are the five avenues in which we kind of operate.
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  Speaker 2: Do you zero in on, for example, Florida would make
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  Speaker 2: sense one of the largest economies as a state in
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  Speaker 2: the world. Yep, Texas would make sense. In California, New York, Illinois.
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  Speaker 2: Do you focus on the big states? Are are all fifty important?
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  Speaker 1: I would say it's an amalgam of the big states
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  Speaker 1: where we are either doing our best to advance good
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  Speaker 1: ideas or try to beat back really really bad ones.
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  Speaker 1: And then there are the rest of the states where
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  Speaker 1: you've got either a Republican trifecta where you've got a
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  Speaker 1: Republican governor and a Republican legislature, and there's more of
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  Speaker 1: an environment in an atmosphere to advance some good ideas.
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  Speaker 1: So we're doing a lot in states like oh Lahoma
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  Speaker 1: and in Kansas and in Ohio and others where the
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  Speaker 1: landscape works to advance some good policy. And you know, namely,
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  Speaker 1: we've talked about ESG on the show many times. Sure,
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  Speaker 1: the focus of both Consumers Research and Consumers Defense probably
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  Speaker 1: over the last three to five years, has been in
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  Speaker 1: combating ESG at the state level.
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  Speaker 2: I want to talk more about that with me sal News,
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  Speaker 2: executive director Consumers Defense, and you can find out more
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  Speaker 2: just Consumers Defense dot com. And I'm going to even
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  Speaker 2: ask him how you might make a difference in linking
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  Speaker 2: up with what they do, how you can help advance
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  Speaker 2: the cause, because trust me, there's a cause. Has the
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  Speaker 2: emergence of ESG as a really big deal taken anything
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  Speaker 2: away from what you'd otherwise be doing.
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  Speaker 1: You know, it's a good question, And honestly, I don't know.
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  Speaker 1: I was brought in because the threat from ESG and
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  Speaker 1: the momentum it had gotten over the last three to
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  Speaker 1: five years had gotten so strong. So I'm not sure.
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  Speaker 1: But I would really call ESG, which the letters stand
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  Speaker 1: for Environmental, Social and Governance right, and I would say
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  Speaker 1: it's been the least known and least understood type of
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  Speaker 1: scheme that the left has used, and it's really undermining
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  Speaker 1: the constitutional process.
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  Speaker 2: Well, because people hear the letters and then they hear
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  Speaker 2: what the acronym stands for and they go out, I'm out,
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  Speaker 2: that's more than I want to be involved in. I'll
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  Speaker 2: let other people deal with that, and I think the
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  Speaker 2: average person checks out. But that gets to the next
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  Speaker 2: level of my analysis of consumers defense. And I said,
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  Speaker 2: when it's all said and done, you are protecting a
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  Speaker 2: consumer's wallet. Yes, absolutely, And so explain how ESG is
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  Speaker 2: a acting attacking a listener's wallet. Well, first off, I
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  Speaker 2: would say the idea of the concept is it's a
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  Speaker 2: way for the left to advance the policy objectives that
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  Speaker 2: they have without going through that pesky process known as
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  Speaker 2: making laws in generating reforms. So the way that this
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  Speaker 2: works is it's an alliance of sorts. It's an alliance
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  Speaker 2: between large asset management companies and big banks and the left.
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  Speaker 2: So on the asset management side, you have these huge
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  Speaker 2: companies like Blackrock and Vanguard and State Street. You've probably
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  Speaker 2: heard those names before. If you have a four toh
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  Speaker 2: one K or if you have a pension program. So
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  Speaker 2: Blackrock is the largest asset management company in the world,
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  Speaker 2: you give them your money to invest for you if
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  Speaker 2: you have a four to one K or if you're
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  Speaker 2: in a state pension program, and their goal is to
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  Speaker 2: generate returns. Now, they currently have over ten trillion dollars
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  Speaker 2: in assets under management with a t trillion dollars. So
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  Speaker 2: what they do is they have partnered along they have
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  Speaker 2: partnered with big banks, and in a lot of cases
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  Speaker 2: they own a share of these banks, and they're able
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  Speaker 2: to exert control over corporations and ultimately all of us
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  Speaker 2: in ways that are completely outside the realms of what
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  Speaker 2: should be allowed in a free enterprise or free market economy.
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  Speaker 2: And there's a number of ways that it works through
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  Speaker 2: either the E or the S.
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  Speaker 1: Or the g N. Doesn't it add up to bullying though, Yeah,
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  Speaker 1: it absolutely is. And so if you look at the
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  Speaker 1: E the environmental you have the LEFS goal of enacting
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  Speaker 1: the Green New Deal, it's a goal morally and economically
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  Speaker 1: bankrupt and it never gains a whole lot of traction
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  Speaker 1: in a substantive policy debate. So you enter Blackrock into
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  Speaker 1: the equation. Now, they should make their money by investment
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  Speaker 1: decisions based solely on risk and reward. What's going to
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  Speaker 1: generate the most profits for my four one k. Instead,
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  Speaker 1: what they're doing is they're investing your money, my money
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  Speaker 1: in companies based on a scoring system that will rank
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  Speaker 1: this company on how well it kind of how well
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  Speaker 1: it operates in a climate change battling scenario.
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  Speaker 2: Are they carbon neutral or buying carbon credits?
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  Speaker 1: Or do they have a diversity equity and inclusion policy,
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  Speaker 1: And they're basing investment decisions on these completely non investment
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  Speaker 1: related factors.
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  Speaker 2: And when it comes to the diversity, equity and inclusion component,
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  Speaker 2: it means it affects like, for example, company A better
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  Speaker 2: have in their downline, some DEI companies that have hired
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  Speaker 2: broadly and all of these things. It doesn't matter whether
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  Speaker 2: they're efficient, it doesn't matter whether they deliver their products effectively,
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  Speaker 2: It doesn't matter if they make their products well. What
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  Speaker 2: matters more is that DEI score right exactly. So it
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  Speaker 2: impacts bottom line profits because they the company may stink
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  Speaker 2: because they've got bad suppliers, but their suppliers have DEI
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  Speaker 2: going for them.
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  Speaker 1: You got it. And here's another way where it fits in,
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  Speaker 1: because we haven't yet tied in how the banks function
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  Speaker 1: in this equation. So the best way to do it
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  Speaker 1: is with an example. You've got a kind of a
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  Speaker 1: canary in the coal mine situation coming up with farmers
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  Speaker 1: in agriculture. Farming requires a lot of banking capital, loans,
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  Speaker 1: bridge loans, lines of credit, and in Europe you have
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  Speaker 1: banks lending money to farmers and ranchers and setting the
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  Speaker 1: interest rates not on the risk factors, but on if
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  Speaker 1: one rancher has more cattle because cattle emit methane which
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  Speaker 1: causes climate change, or incentives you get a better rate
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  Speaker 1: if instead of buying the diesel tractor, you buy an
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  Speaker 1: electric tractor. And if you talk to a farmer, they
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  Speaker 1: will tell you that electric tractors are one of the
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  Speaker 1: stupidest ideas you could have in agriculture.
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  Speaker 2: Is it difficult soun for this issue to become top
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  Speaker 2: of mind awareness issue for people.
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  Speaker 1: It's certainly a challenge. And one of the reasons is
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  Speaker 1: because it won it's a long game, and there are
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  Speaker 1: forces at work on the left in China, and then
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  Speaker 1: you're doing really well and they do and they play
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  Speaker 1: the long game better than better than the right does,
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  Speaker 1: I will freely admit. And the other part is it's wonky,
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  Speaker 1: it's in the weeds. It requires a lot of education
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  Speaker 1: to get not even grassroots, but even policymakers to understand
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  Speaker 1: the dynamics of it. Florida caught on really quick, a
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  Speaker 1: credit to the legislature of the governor and actually did
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  Speaker 1: something with some teeth. Yes, HB three from two sessions
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  Speaker 1: ago was phenomenal. But what we've seen is it took
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  Speaker 1: about three years, and in the third year of action,
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  Speaker 1: we saw seventeen or eighteen more states past something, and
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  Speaker 1: so I think the grand total is twenty seven states
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  Speaker 1: at this point have passed some degree of anti ESG legislation,
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  Speaker 1: and it could be as robust as what Florida did.
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  Speaker 1: Texas was very targeted, just going after companies that boycott
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  Speaker 1: the oil and gas industry and everything in between. And
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  Speaker 1: it not only involves that, but there's elements of it
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  Speaker 1: to the banking sector to protect people from being debanked
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  Speaker 1: where your bank decides, well, we don't like your philosophy
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  Speaker 1: or we don't like where you're directing your money, and
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  Speaker 1: so we're going to close off our accounts with you,
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  Speaker 1: and you're not going to be able to bank with
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  Speaker 1: us anymore.
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  Speaker 2: I feel as though with consumers defense, you are facing
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  Speaker 2: in a way what I face, and what I face
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  Speaker 2: is people not taking ownership of the issues and the
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  Speaker 2: knowledge that goes with those issues and making it their own.
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  Speaker 2: But just sort of I'll listen to Preston, I'll listen
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  Speaker 2: to Clay and Buck, I'll listen to Glenn. We'll let
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  Speaker 2: consumers defense and Justin Haskins, we'll let those people fight
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  Speaker 2: the fight on ESG. Boil this down and distill it
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  Speaker 2: to where what what should people be doing or be
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  Speaker 2: aware of that they can actively maybe even participate in
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  Speaker 2: to make a difference.
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  Speaker 1: And that's really probably the most important question on ESG
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  Speaker 1: because of the fact that it's so wonky, it needs
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  Speaker 1: a lot of grassroots engagement to really move the needle
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  Speaker 1: and get it to the top. I would suggest a
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  Speaker 1: couple of things. One is, individually, if you have a
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  Speaker 1: four oh one K, if you're in the private sector
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  Speaker 1: and you have investments mutual funds, look at where those
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  Speaker 1: funds are going or where those moneies are going. If
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  Speaker 1: you see the name black Rock, Vanguard or State Street
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  Speaker 1: in your portfolio and where your investments are, you might
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  Speaker 1: want to start asking more questions about what are the
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  Speaker 1: underlying investment strategies of those funds and make informed decisions
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  Speaker 1: on where your own money is going.
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  Speaker 2: Are those just picking on those three? Are those investment houses?
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  Speaker 1: Now?
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  Speaker 2: I know Blackrocks aware of the pushback, They're very aware.
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  Speaker 2: They've come out and admitted they're aware of this without
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  Speaker 2: saying they're going to do anything differently. Are they using
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  Speaker 2: now more covert strategies to kind of buffet or buffer
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  Speaker 2: themselves from it? Absolutely, so, they've stopped using the term
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  Speaker 2: ESG a whole lot. The underlying strategies are, to use
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  Speaker 2: the phrase of Larry Fink, who runs Black Rocks, right,
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  Speaker 2: they have woven ESG into the entire DNA of their
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  Speaker 2: investment philosophy. So even the funds that don't have ESG
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  Speaker 2: specifically articulated oftentimes are using ESG strategies in them. So
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  Speaker 2: where do you see that where I mean, do they have?
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  Speaker 2: Is it in a philosophy statement of the investor of
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  Speaker 2: whoever's managing the money? I mean, because there are buzzwords, yep,
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  Speaker 2: And then the buzzwords tend to stand out.
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  Speaker 1: So this one came from a call that Larry Fink
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  Speaker 1: has to all of his clients and investment people from
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  Speaker 1: back in twenty eighteen or twenty twenty, I believe, oh boy,
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  Speaker 1: and he admitted that ESG was woven into the DNA
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  Speaker 1: of the entire investment portfolio of Blackrock. Now, as a
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  Speaker 1: consequence of that, you now have two states, Mississippi in
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  Speaker 1: March and Indiana last week that have filed suit against
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  Speaker 1: Blackrock because they're claiming the company engages in fraud if
• 14:44
  Speaker 1: they're claiming to not have to have mutual funds that
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  Speaker 1: are not ESG related and the state pension moneies can
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  Speaker 1: go into those they in actuality do not. The state
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  Speaker 1: is investing money or Blackrock has that money, and regardless
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  Speaker 1: of if it says ESG or not, it has it
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  Speaker 1: woven into the DNA of.
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  Speaker 2: So that old statement could come back to bite him
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  Speaker 2: in a court trial.
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  Speaker 1: It absolutely is already coming back and it's going to
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  Speaker 1: go through the litigation process, administrative law.
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  Speaker 2: So when it comes to what an average listener, you know,
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  Speaker 2: if they're invested, here's what you look for. Any other ways, Yeah,
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  Speaker 2: I shameless plug, Yeah, yeah, that's why you're here. I
• 15:28
  Speaker 2: would direct you to consumers Research dot org, which is
• 15:32
  Speaker 2: the C three website that is the most robust side
• 15:36
  Speaker 2: of our network and our partners, where you can get
• 15:39
  Speaker 2: more information, you can monitor what's going on. You can
• 15:43
  Speaker 2: email me to get on a regular blast of where
• 15:46
  Speaker 2: we're going to be, the articles coming out, more information
• 15:49
  Speaker 2: of kind of of the kind, and then I would say,
• 15:53
  Speaker 2: get engaged, get plugged into the groups that are meeting
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  Speaker 2: on the conservative end. One of my tasks is I
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  Speaker 2: speak at small groups all over the country through partnerships
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  Speaker 2: and whatnot to kind of bring grassroots people into a
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  Speaker 2: place where they're educated on the topic and can kind
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  Speaker 2: of move ahead and move forward. Awesome, Thanks very much,
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  Speaker 2: We'll see you again in a couple of weeks. Definitely
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  Speaker 2: looking forward to it, all right. Salnuzo with Consumers Defense
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  Speaker 2: and again Consumersresearch dot org is that landing page to
• 16:26
  Speaker 2: learn more about specific things that are going on and
• 16:29
  Speaker 2: stuff to keep on your radar. Twenty eight past