Goldman Sachs Jumps Aboard the ESG Bandwagon

Posted by mshupe 11 months ago to Business
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It seems that government contracts to ESG greenwashed companies, and lawsuits against non-ESG players has improved the performance of socially responsible investing funds. They are not chronic performance laggards they once were.
SOURCE URL: https://www.centerforindividualism.org/the-modernization-of-capitalism-run-over-by-an-irresistible-force-capitalism/


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  • Posted by freedomforall 11 months ago
    JUST US.
    This may be the first honest act in the history of Goldman Sachs. Of course, the fa├žade is a complete fraud and Goldman will be shorting what they recommend to their customers as soon as they can do so without attracting undue attention.
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  • Posted by 11 months ago
    I don't know if we can make a generalization like that, I'm sure Goldman has a ton of talented and honest people. It sounds too much like those who categorically impugn Fox. It is egregious that Wall Street firms are so brazenly crony and not advocates for capitalism
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  • Posted by CircuitGuy 11 months ago
    I think this article wrongly dismisses an attempt to solve the real problem of separation of owners and businesses. The ability to form corporations where the owners aren't involved in management and don't share liability is a powerful way to fund good ideas. But it also creates structures where businesses do things their owners disagree with. Management may even be pressured to do things they don't want to do because their boards are looking to analysts' estimates. They know mutual funds and ETF have an obligation protect the interest of investors who fund them, and they will punish stocks that are doing something bad for near-term earnings.

    Many retail investors like the ability to invest in a broad swath of companies with no liability, but they wish fund managers and corporate boards would act in a way they would act if their wealth were all in a local business they owned and controlled. If they owned one shop, they wouldn't think of trashing the environment, cheating vendors/employees, maintaining dangerous working conditions, etc. They wish their investment in public companies through ETFs and mutual funds were managed the same way. Mutual funds (e.g. Domini) tried to provide us that in the 90s, and now it's ETFs with "crowdsourced" "blueprints for business behavior"
    (whatever that exactly means). The crowdsourcing makes some sense. The investor is spreading his wealth among hundreds of equities and bond via the ETF; maybe the ETF should spread how it votes its proxies and which investments it owns among the fund's thousands of investors.

    I do not know if this is the answer. I actually think it isn't. I held some so-called socially conscious funds when I was getting started twenty years ago, and I found it didn't work because their values didn't necessarily align with mine. I don't mind investing in "immoral" things like gambling, sex trade, drugs, etc in a legal way that provides customers what they want. Also, sometimes the socially conscious funds are highly correlated to major indicies. They just filter out stocks that represent a few percent of the portfolio, and you end up with an ordinary large cap fund with a higher expense ratio.

    So I completely get the suspicion of any particular fund, but I do not agree at all with dismissing the idea of a fund that tries to operate according to investors' values. It actually seems like a huge problem of our time. Many people who think they don't like capitalism just don't like the means of production being separate from the owners. Seeing a problem and trying to fix it isn't being sanctimonious. It's what makes capitalism work. Good for Goldman Sachs for attempting to do something about this problem.
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    • Posted by 11 months ago
      Thanks for the feedback. I agree that SRI type mutual funds give investors a way to invest according to some of their personal values, and that more choice is better. As you mention, its almost impossible to align a fund perfectly with anyone's unique value set. The point of the article is to dismiss the idea that capitalism needs to be modernized, and that these sanctimonious reformers are the ones to do it. Also, I don't think many people dislike capitalism because it separates owners from management, they dislike because they've been indoctrinated to think profit is bad, and those who pursue profit are bad, and there is a greater mythical common good. I don't think they are trying to fix a problem, they are predators and they're selling guilt and membership in their definition civil society. There has been nothing in the history of the world more civil that free markets.
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      • Posted by CircuitGuy 10 months, 4 weeks ago
        "the idea that capitalism needs to be modernized"
        Yes. It unclear what Whitaker means. If it were someone else, it could mean eliminating public equity shares with limited liability and making it easier to pierce the veil on private share. Obviously he doesn't mean that.

        As the article suggests, it more likely means tolerating more gov't intrusion into private property, with that intrusion controlled by voters and politically-connected firms like GS.

        I wonder if there's a way GS could create a product to address the issue of companies acting contrary to investors' values that would not be seen as selling guilt.
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  • Posted by chad 11 months ago
    There are always a number of people who will understand the value of a free market and those who will try to control it for their own benefit. Whenever control is introduced it means the use of violence to dictate outcome rather than allowing free exchange which will benefit more participants. I doubt if Goldman Sachs leadership will decide their business model for the past 100+ years is to be put aside, they have discovered a crowd source to exploit and will do so. Those who would be free compared to the collective have been more competitive and innovative and vastly outnumbered by the collective. Consequently remaining free always requires the ability to move quickly and remain unobserved. Once the collective notices the individuals their libertines are in jeopardy.
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  • Posted by 11 months ago
    Tech like Google are not friendly. But how convenient that tech is the highest performing sector at the time they introduce the fund and then claim the funds very short term performance is because ESG friendly companies are inherently more profitable.
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