Whenever people in finance pat themselves on the back by saying they are doing good by investing using ESG, they are sorely mistaken.
False Positive
ESG hinges on sustainability, which does not exist anywhere in the universe. Our universe and our planet are subject to entropy. A phenomenon concisely described by Richard Feynman as the irreversible decline of available energy. Quite the opposite of sustainability.
It is not a very bright idea for people in finance, as the arbiters of innovation expanding the fractal of humanity, to latch on to principles that violate nature’s first-principles. Our understanding of nature has evolved dramatically over the last hundred years, and so must the principles by which finance aims to support nature.
Tread Carefully
The reputation of finance is at stake here.
Today eleven times the size of production, as a contribution to GDP, the efficacy of finance greatly defines how humanity evolves. Finance instantly and without the need for democratic approval arbitrates how humanity evolves.
And when finance uses the improper evolutionary theory, like ESG, or no humanitarian theory at all, as in the past, the fallacies will challenge the reputation of finance regardless of the returns. Returns for the sake of returns do not improve human adaptability to nature’s entropy.
Governments are now publicly under pressure to provide answers to many forms of nature’s entropy, including pandemics and climate change. Putting bandaids of false positivity on either will not improve human adaptability.
E for Environment
Our environment is a big concern, yet with our global population soon in decline, it will give us some breathing room. We should tidy up the mess we make, for sure. No argument there.
But the real issue impacting human excellence is not the environment, but the first-principles of nature humanity must abide by. We must evolve following nature’s gameplay to reduce and preempt our compounding friction with our environment. Earth’s environment has evolved for 4.5 billion years without us and will for another 3.5 billion as if we never existed.
So, the E must change in meaning from Environment to Evolution. Human evolution.
S for Social
Everyone feels nice and fuzzy about values that supposedly support society. However, nature does not care about our social status. Nature only evaluates humanity based on the excellence of our renewal, whatever produced such renewal.
As coagulated in social endeavors, the sum of human wants has proven not to line up with humanitarian needs defined by nature. The desire for a Kardashian lifestyle for all of us does not improve human renewal.
So, the S must go.
G for Governance
Governance is crucial, but not in the way we govern today. Our government currently influences and interferes in the outcome of systems that are not, with results that are irrelevant if not damaging to the excellence of human renewal.
Government must develop the theory of human gameplay compatible with nature’s gameplay to improve human adaptability to nature’s entropy.
So, the G must change into an A for adaptability.
Depravity Of Reason
In remarkable clarity, even the SEC has issued stern warnings about the fuzzy logic of ESG.
When you are hell-bent on doubting that human evolution revolves around renewal instead of sustainability, the second-level breakdown from the acronym letters should make you realize how irresponsible ESG investing truly is.
