ESG was dead before it was even born. Many financiers simply peppered their existing asset management strategies with ESG. Some even reverse-engineered their strategies to make it look like they have been responsible investors for thirty-some years.
According to Pensions & Investments, BlackRock and State Street are among the prominent money managers closing ESG funds. In a hopeless attempt to save ESG, clueless money managers now welcome nature-related disclosure guidelines and attempt to deploy new messaging strategies. Blissfully forgetting that the foundational principles of ESG violate nature’s principles and cannot be corrected by altering the message.
The goal of ESG was not bad; the execution was. Establishing a new compass for finance as the arbitrage of innovation was a good idea. To do so, hinging on the evolutionary incompatible compass of sustainability was not. Amidst the decline of available energy, called entropy, sustainability cannot exist in a world of constant change requiring the renewal of human adaptability to nature’s entropy. Sustainability and renewal are polar opposite vectors.
Hence, any asset management firm latching on to ESG admits they know nothing about the first-principles of nature that determine the renewal of returns, nature’s alpha, that can be derived from its compliance.
Adopting and adhering to nature’s first-principles is crucial in tapping into the predictable and consistent returns delivered by nature’s proven alpha. The alpha you cannot pursue when you do not adhere to nature’s first-principles. Reach out when you want to learn more.