A Rasmussen Reports poll found that American adults say there are “more important” issues for companies to focus on than promoting environmental, social, and corporate governance (ESG). When companies engage in ESG they often divert business funds toward causes such as climate change and diversity, equity, and inclusion.
The poll finds that only nine percent of the adults in America said they think the most important issue for companies to focus on is “promoting causes like diversity and environmentalism.” In contrast, 82 percent said there are other issues businesses should focus on.
Of the 82 percent who said there were other issues a business should focus on, 69 percent who said companies should focus on “providing quality goods and services,” and 13 percent said companies should focus on “increasing profit.”
When the respondents were asked how important it is for a company to share the same social and political values as the consumer, 58 percent said it was “important”, and of that, 28 percent said it is “very important.” Moreover, 34 percent said it was not important that a company shares your social and political values, and eight percent were not sure.
The poll further discovered that 87 percent said that the “quality of a company’s products and services” was important for making consumer decisions, with 70 percent of those saying “very important.”
Based on the findings of the Rasmussen Reports poll, it would indicate that the vast majority of American adults still believe in the classic shareholder model of a business. This entails that a company should be focused entirely on maximizing its return to its shareholders. This in turn incentivizes the business to focus on providing quality goods and services to meet consumer demand. This model of running a business is entirely objective. However, when when companies decide to endorse political causes that is entirely subjective and not necessarily in the interest of their shareholders, customers and stakeholders.
Rasmussen Reports also discussed the implications of money managers applying ESG principles to their investments. Rasmussen found:
President Joe Biden’s Labor Department recently announced a new rule that will permit money managers to play politics with trillions of dollars of people’s retirement savings.
The administration is pushing environmental, social and governance investing, which allows retirement fund managers to select stocks of companies based on their positions on social and environmental issues.
Put simply, retirement savings will be used as leverage to force companies to reduce their carbon emissions and establish racial and gender quotas and other social justice fads completely unrelated to securing a high return on workers’ lifetime savings.
A money manager should be focused one thing: maximizing the return for his investors. This identically mirrors the shareholder theory, where a fund manager’s shareholders are those who entrust the wealth manager to allocate their money into advantageous positions that will provide excellent returns to their portfolio. When you mandate that the investments must adhere to certain political convictions, your number one priority is no longer to maximize returns. In fact, this may even significantly reduce the retirement savings of those who invest in these funds.
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