7 ms·

The point of companies are to make money. As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing div

The point of companies are to make money. As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend. The article is right in a way - ESG is infecting companies. I do not want a company I invest in to "weigh in" on political issues [1]. I do not want to see banks put in racial quotas in order to get preferred rates [1]. I do not want to see a 'restorative decolonial' approach to ESG in companies [2]. For gods sake, I do not want laws to change to remove a companies requirement of a fiduciary duty so they can adopt more esg goals [3]. When did saying "I invest in a company for profit related reasons" turn into such a big boogey man. [1] - https://corpgov.law.harvard.edu/2020/06/17/using-esg-tools-to-help-combat-systemic-racism-and-injustice/ https://corpgov.law.harvard.edu/2020/06/17/using-esg-tools-t... [2] - https://www.linkedin.com/pulse/anti-racism-esg-just-might-save-world-hr-rewired/ https://www.linkedin.com/pulse/anti-racism-esg-just-might-sa... [3] - https://www.esginvestor.net/reforms-needed-to-free-investors-to-consider-esg-factors/ https://www.esginvestor.net/reforms-needed-to-free-investors...

Tepix 4y ago
> The point of companies are to make money. As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend. There are companies that have other primary goals.
- kennend3 4y ago
  > There are companies that have other primary goals. Here's the thing, they dont. You are buying into their BS. if "ESG" was important, why didnt these companies do it for decades? "ESG" has become the latest trend, and they are simply jumping on the bandwagon. We have banks in canada with massive marketing campaigns pitching "ESG". These very same banks have invested BILLIONS in the oil and gas sector. This clear conflict of interest (investing in oil/gas while pitching ESG) has come to the inevitable conclusion. A request to the competition board over false advertising. https://www.vancouverisawesome.com/highlights/rbc-competition-bureau-application-climate-change-5288687 https://www.vancouverisawesome.com/highlights/rbc-competitio... So to your point, which is it? Do these bank care about the environment or about its profits? If it is the environment, it seems being the world leaders in lending money to non-environmentally-friendly industries doesnt agree with that position. EGS is a marketing tool, not much more.
- OrangeMonkey 4y ago
  True. They are private companies, not Public. I am fine with this.
satyrnein 4y ago
> For gods sake, I do not want laws to change to remove a companies requirement of a fiduciary duty so they can adopt more esg goals [3]. What's wrong with people trying out different kinds of organizations, and likeminded people investing in them? > When did saying "I invest in a company for profit related reasons" turn into such a big boogey man. Nobody is trying to prevent you from investing how you want; you are the one who wants to stop others from investing how they want.
- OrangeMonkey 4y ago
  Let’s fast forward in financial regulation knowledge with a question perhaps. Why do you think the sec had to require that directors and executives have a fiduciary responsibility to shareholders? Why are executives fined and jailed when they violate this? Those answers should explain why there is an incentive to not allow public investable companies to fuck with their investor money in a way that isn’t necessarily in their best interest. If they want to do that, you can invest in private companies that the mom and pop investor can’t get hoodwinked into.
nend 4y ago
The problem is companies prioritize profits over humanities basic needs like a functioning planet and climate. Regulation should really be the solution imo. The cost of ruining the climate should be higher so companies are forced to change their practices. But if the government is incapable or unwilling to regulate it and you still invest in them in order to make money, then what you're really saying is "I'm going to invest in this company for profit related reasons even if the company is willing to destroy the planet in order to make more profit" Which deserves a negative response imo.
diydsp 4y ago
>The point of companies are to make money. You need to deliver value to get money. If people with money want the world improved, you must improve the world to get their money. > I do not want a company I invest in to "weigh in" on political issues [1] If people want companies doing political things and you do not do political things, they won't give you their money. > I do not want to see banks put in racial quotas in order to get preferred rates. Then don't expect "racial" people to put money in your banks and make you money. Don't expect people who care about racial diversity to put money in your bank. They have a choice. > As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend. Then demand your company responds to the needs of the people whose money you want. Companies aren't entitled to make money. They must respond to peoples' values and needs. "Valuations" isn't just a metric. It reflects the value of the company to people. If the company doesn't reflect its customers' values, its valuation won't increase.
- polotics 4y ago
  You forget the time-aspect in your statement about Money being a company's sole purpose. A bar may want to make money this month, and alcoholism be damned. An investment fund with a thirty-years horizon of commitments to future retirees must want to make money in a way that does not compromise the commitment to still make money in thirty years, and must be able to prove that it is watching that.
mc32 4y ago
Much of it is empty marketing. It’s another way to attract investment. Just as the idea crypto currency was used as a way to attract investment. People do the things that will bring investment. Those things are t always solidly economic reasons.
UncleMeat 4y ago
It is interesting to see this opinion so high up when it is abstracted, but as soon as you drop down to specifics in something like tech you get mountains of complaints about Google abandoning "don't be evil" or ad-tech companies in general being cancerous companies that harm society. If it were really all about the bottom line then these companies would be among the very best companies in the world. They make a shit load of money!
- OrangeMonkey 4y ago
  You seem to have become mistaken - I am talking about a companies fiduciary duty to shareholder and maximizing long term shareholder value. You are talking about popular sentiment.
- tablespoon 4y ago
  > It is interesting to see this opinion so high up when it is abstracted, but as soon as you drop down to specifics in something like tech you get mountains of complaints about Google abandoning "don't be evil" or ad-tech companies in general being cancerous companies that harm society. If it were really all about the bottom line then these companies would be among the very best companies in the world. They make a shit load of money! I think the determining factor is: is the issue politically contentious or not? A lot of the "evil" things Google, Facebook, or some random ad-tech company does are things that are commonly condemned by people across the political spectrum. All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1]. [1] It should be noted that "politically contentious" thing may not be addressing a particular issue itself, but rather a particular proposed solution to that issue.
  - klyrs 4y ago
    > All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1]. Indeed, ESG has join the boogeymen CRT, woke and cancel culture of the right wing elite's puppet show.
    - 4y ago
gadders 4y ago
https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." In a way, you could call this the Corporate/Investing equivalent of effective altruism. Generate as much profit as possible and let employees/shareholders use that cash to support the causes they choose.
- Orothrim 4y ago
  If the company kills people in the process of generating as much profit as possible, it should be stopped. You are saying it should be stopped by the 'rules' which clearly means that governments should be forcing rules that focus on the ESG objectives? That seems like a dangerous path to walk. Any intelligent business manager knows that it is better to act early and in ways you choose than to be forced down a road you don't want later.
  - what-the-grump 4y ago
    As opposed to what? Having the companies pretend to go woke and stop killing people? Self regulating for profit entities that are socially responsible. In what world would that work. Regulations exist for a reason.
luckylion 4y ago
Shouldn't you welcome the changes? Unless it's mandated, everyone going for those things should be seeing worse outcomes, e.g. banks discounting fundamentals and including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? You'd just need to invest into companies that are explicitly not focusing on ESG. Of course, there's probably some concern that it'll be normalized and the government goes "well, now that half of companies are doing it voluntarily, we can just force the other half to also do it so it's fair", but that aside it sounds like it should provide a good signal for you where not to invest.
- chii 4y ago
  > banks ... including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? if a bank is including a racial markup, it may be because they believe there's more risk with that loan (which must be made up via said mark up). If it's actually true that such a loan is riskier, then the bank acted correctly. if it was actually wrong - that a racial mark up was unjustified financially - then a competitor bank that correctly makes this conclusion would offer the lower, correct rate, thus capturing said racial group as customer away from the more discriminating bank!
  - OrangeMonkey 4y ago
    > If it's actually true that such a loan is riskier, then the bank acted correctly. Oh my god. We are not going to speed run racial discrimination in lending products again. Once is enough for me. This is actually specifically illegal. > "What are the U.S. fair lending laws? Fair lending laws in the United States prohibit lenders from discriminating based on specific protected classes (such as race, color, national origin, and religion) during any aspect of a credit transaction." [1] [1] - https://www.investopedia.com/the-history-of-lending-discrimination-5076948 https://www.investopedia.com/the-history-of-lending-discrimi...
    - zarathustreal 4y ago
      I wonder if that law has had any impact on the issue? Have there been any followup studies to verify that the targeted groups did indeed become more creditworthy?
schiffern 4y ago
> I want to see increased valuations... increasing dividend > For gods sake, I do not want [environmental, social, or governance] goals When did saying "I invest in a company for the endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" turn into such a big boogey man?
- chii 4y ago
  When did "profit" equate to "endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" in the first place?
  - bsenftner 4y ago
    When finance abstracted Capital to the point that Wall Street became an end onto itself, and every justification for amoral financial behavior was levied as fiduciary responsibility, that is when US Business became the equivalent of an out of control Cancer. The US American form of capitalism is an exploitative Ponzi scheme, which is ironic considering the Christianity that is supposed to be afloat. In a more mature and moral society Capitalism would not be the Jack Booted Thug we have manifested. Plain fact: the human race is not as mature as it thinks it is.
    - astrange 4y ago
      Nobody cares about "fiduciary responsibility" in this case. CEOs are not required to maximize profit for their shareholders. If they'll go right ahead and say that in public, you can safely say the lawyers aren't warning them about it. https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans https://www.businessroundtable.org/business-roundtable-redef...
  - marginalia_nu 4y ago
    If a nice looking quarterly report is set as the single overriding goal above all other goals, it will by definition override all other goals, time horizons and externalities.

Tepix 4y ago

> The point of companies are to make money. As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend. There are companies that have other primary goals.

kennend3 4y ago
> There are companies that have other primary goals. Here's the thing, they dont. You are buying into their BS. if "ESG" was important, why didnt these companies do it for decades? "ESG" has become the latest trend, and they are simply jumping on the bandwagon. We have banks in canada with massive marketing campaigns pitching "ESG". These very same banks have invested BILLIONS in the oil and gas sector. This clear conflict of interest (investing in oil/gas while pitching ESG) has come to the inevitable conclusion. A request to the competition board over false advertising. https://www.vancouverisawesome.com/highlights/rbc-competition-bureau-application-climate-change-5288687 https://www.vancouverisawesome.com/highlights/rbc-competitio... So to your point, which is it? Do these bank care about the environment or about its profits? If it is the environment, it seems being the world leaders in lending money to non-environmentally-friendly industries doesnt agree with that position. EGS is a marketing tool, not much more.
OrangeMonkey 4y ago
True. They are private companies, not Public. I am fine with this.

satyrnein 4y ago

> For gods sake, I do not want laws to change to remove a companies requirement of a fiduciary duty so they can adopt more esg goals [3]. What's wrong with people trying out different kinds of organizations, and likeminded people investing in them? > When did saying "I invest in a company for profit related reasons" turn into such a big boogey man. Nobody is trying to prevent you from investing how you want; you are the one who wants to stop others from investing how they want.

OrangeMonkey 4y ago
Let’s fast forward in financial regulation knowledge with a question perhaps. Why do you think the sec had to require that directors and executives have a fiduciary responsibility to shareholders? Why are executives fined and jailed when they violate this? Those answers should explain why there is an incentive to not allow public investable companies to fuck with their investor money in a way that isn’t necessarily in their best interest. If they want to do that, you can invest in private companies that the mom and pop investor can’t get hoodwinked into.

nend 4y ago

The problem is companies prioritize profits over humanities basic needs like a functioning planet and climate. Regulation should really be the solution imo. The cost of ruining the climate should be higher so companies are forced to change their practices. But if the government is incapable or unwilling to regulate it and you still invest in them in order to make money, then what you're really saying is "I'm going to invest in this company for profit related reasons even if the company is willing to destroy the planet in order to make more profit" Which deserves a negative response imo.

diydsp 4y ago

>The point of companies are to make money. You need to deliver value to get money. If people with money want the world improved, you must improve the world to get their money. > I do not want a company I invest in to "weigh in" on political issues [1] If people want companies doing political things and you do not do political things, they won't give you their money. > I do not want to see banks put in racial quotas in order to get preferred rates. Then don't expect "racial" people to put money in your banks and make you money. Don't expect people who care about racial diversity to put money in your bank. They have a choice. > As a shareholder in a company, I want to see increased valuations, good free cash flow metrics, and an increasing dividend. Then demand your company responds to the needs of the people whose money you want. Companies aren't entitled to make money. They must respond to peoples' values and needs. "Valuations" isn't just a metric. It reflects the value of the company to people. If the company doesn't reflect its customers' values, its valuation won't increase.

polotics 4y ago
You forget the time-aspect in your statement about Money being a company's sole purpose. A bar may want to make money this month, and alcoholism be damned. An investment fund with a thirty-years horizon of commitments to future retirees must want to make money in a way that does not compromise the commitment to still make money in thirty years, and must be able to prove that it is watching that.

mc32 4y ago

Much of it is empty marketing. It’s another way to attract investment. Just as the idea crypto currency was used as a way to attract investment. People do the things that will bring investment. Those things are t always solidly economic reasons.

UncleMeat 4y ago

It is interesting to see this opinion so high up when it is abstracted, but as soon as you drop down to specifics in something like tech you get mountains of complaints about Google abandoning "don't be evil" or ad-tech companies in general being cancerous companies that harm society. If it were really all about the bottom line then these companies would be among the very best companies in the world. They make a shit load of money!

OrangeMonkey 4y ago
You seem to have become mistaken - I am talking about a companies fiduciary duty to shareholder and maximizing long term shareholder value. You are talking about popular sentiment.
tablespoon 4y ago
> It is interesting to see this opinion so high up when it is abstracted, but as soon as you drop down to specifics in something like tech you get mountains of complaints about Google abandoning "don't be evil" or ad-tech companies in general being cancerous companies that harm society. If it were really all about the bottom line then these companies would be among the very best companies in the world. They make a shit load of money! I think the determining factor is: is the issue politically contentious or not? A lot of the "evil" things Google, Facebook, or some random ad-tech company does are things that are commonly condemned by people across the political spectrum. All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1]. [1] It should be noted that "politically contentious" thing may not be addressing a particular issue itself, but rather a particular proposed solution to that issue.
- klyrs 4y ago
  > All/most "ESG" criteria are politically contentious things that seem to strongly align with one political/ideological block [1]. Indeed, ESG has join the boogeymen CRT, woke and cancel culture of the right wing elite's puppet show.
  - 4y ago

gadders 4y ago

https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." In a way, you could call this the Corporate/Investing equivalent of effective altruism. Generate as much profit as possible and let employees/shareholders use that cash to support the causes they choose.

Orothrim 4y ago
If the company kills people in the process of generating as much profit as possible, it should be stopped. You are saying it should be stopped by the 'rules' which clearly means that governments should be forcing rules that focus on the ESG objectives? That seems like a dangerous path to walk. Any intelligent business manager knows that it is better to act early and in ways you choose than to be forced down a road you don't want later.
- what-the-grump 4y ago
  As opposed to what? Having the companies pretend to go woke and stop killing people? Self regulating for profit entities that are socially responsible. In what world would that work. Regulations exist for a reason.

luckylion 4y ago

Shouldn't you welcome the changes? Unless it's mandated, everyone going for those things should be seeing worse outcomes, e.g. banks discounting fundamentals and including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? You'd just need to invest into companies that are explicitly not focusing on ESG. Of course, there's probably some concern that it'll be normalized and the government goes "well, now that half of companies are doing it voluntarily, we can just force the other half to also do it so it's fair", but that aside it sounds like it should provide a good signal for you where not to invest.

chii 4y ago
> banks ... including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? if a bank is including a racial markup, it may be because they believe there's more risk with that loan (which must be made up via said mark up). If it's actually true that such a loan is riskier, then the bank acted correctly. if it was actually wrong - that a racial mark up was unjustified financially - then a competitor bank that correctly makes this conclusion would offer the lower, correct rate, thus capturing said racial group as customer away from the more discriminating bank!
- OrangeMonkey 4y ago
  > If it's actually true that such a loan is riskier, then the bank acted correctly. Oh my god. We are not going to speed run racial discrimination in lending products again. Once is enough for me. This is actually specifically illegal. > "What are the U.S. fair lending laws? Fair lending laws in the United States prohibit lenders from discriminating based on specific protected classes (such as race, color, national origin, and religion) during any aspect of a credit transaction." [1] [1] - https://www.investopedia.com/the-history-of-lending-discrimination-5076948 https://www.investopedia.com/the-history-of-lending-discrimi...
  - zarathustreal 4y ago
    I wonder if that law has had any impact on the issue? Have there been any followup studies to verify that the targeted groups did indeed become more creditworthy?

schiffern 4y ago

> I want to see increased valuations... increasing dividend > For gods sake, I do not want [environmental, social, or governance] goals When did saying "I invest in a company for the endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" turn into such a big boogey man?

chii 4y ago
When did "profit" equate to "endless unrestrained amoral growth ethic turning human society into the control theory equivalent of a cancer cell" in the first place?
- bsenftner 4y ago
  When finance abstracted Capital to the point that Wall Street became an end onto itself, and every justification for amoral financial behavior was levied as fiduciary responsibility, that is when US Business became the equivalent of an out of control Cancer. The US American form of capitalism is an exploitative Ponzi scheme, which is ironic considering the Christianity that is supposed to be afloat. In a more mature and moral society Capitalism would not be the Jack Booted Thug we have manifested. Plain fact: the human race is not as mature as it thinks it is.
  - astrange 4y ago
    Nobody cares about "fiduciary responsibility" in this case. CEOs are not required to maximize profit for their shareholders. If they'll go right ahead and say that in public, you can safely say the lawyers aren't warning them about it. https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans https://www.businessroundtable.org/business-roundtable-redef...
- marginalia_nu 4y ago
  If a nice looking quarterly report is set as the single overriding goal above all other goals, it will by definition override all other goals, time horizons and externalities.