Woke Capitalism

Wow…wow, wow, wow!

So, I read two articles that addressed this topic of “woke capitalism” and it seems like that this will be the next “war”. I do wonder if this “war” was precipitated by what is going on in Florida with Disney and “Don’t Say Gay”. I’m not really familiar with the intimate details other than Disney, under pressure from its employees, apparently pushed back on the “Don’t Say Gay” law(s) and the politicians of Florida took offense. I don’t even know the specifics of what the law covers and right now, I don’t really want to delve into it because it is just a lot of noise and don’t want to be involved mentally on yet another issue.

I just wish the people would get tired of this.

But I am following the one related to the ESG reporting which I thought was innocent enough, but I should have known better. There’s been a lot of discussion and webinars surrounding ESG and I have attended some webinars on the accounting for ESG. A lot of companies are trying to figure out how to do the carbon reporting that would fall under the E (E for environmental) since climate change appears more real every day. It’s really hard to deny that there is something going on with the weather and that we need to do something, so companies want to show how they are trying to reduce their carbon footprint. I think in other countries around the world there are regulations on reporting, maybe more than the US so international companies definitely need to get a handle on ESG reporting.

I think even the SEC is thinking of stepping in to standardize the reporting so that there is no greenwashing or false reporting.

But as the article on Idaho – “Idaho pushes back against “woke capitalism” reporting” – illustrates, there are some good arguments for being careful about ESG reporting. One of the things we need to be careful about is using ESG rating to determine creditworthiness of governmental entities or private firms. At the moment, I don’t see any connection between ESG reporting and creditworthiness, so I understand the pushback. That pushback appears valid. The government will have to be very careful on the wording of regulations.

There is a LOT of noise though on “woke capitalism” and it appears mostly around ESG reporting – or more specifically on the environmental portion of the reporting. Larry Fink of Black Rock has been getting some heat from Republicans for his campaign on pushing companies to reduce their carbon footprint. Ted Cruz has asked that Larry Fink “be barred from voting on behalf of its investors to prevent it from advancing its own political interests.”

Even Jamie Dimon of JP Morgan appears to be getting some heat since he has said “I’m not woke”.

So why are Republicans so hot and bothered about the ESG reporting? Well, I have my own theory, of course. I think the drama has to do with the climate change going on and it is getting very hard to refute what is going on: just in May, a couple of high temperature records fell. May was hot and the heat season appeared to have begun earlier than usual. The Southwest is still undergoing a drought, so the fire season this year is expected to be bad. New Mexico has been having fires lately. Of course, we’ve been having flooding in recent years and tornado season seems to have begun in a rather strong fashion. It remains to be seen what the hurricane season has in store for us (I’m DREADING it; the Gulf of Mexico waters are already very warm). I don’t really hear the Republicans pushing back on the topic of climate change – it’s just very hard to deny something is going on with the weather. So, instead, they are fighting the ESG reporting because they can’t say anything about climate change.

We’ll have to see how this shakes out.