Sustainability does not exist anywhere in the universe, as the availability of energy is always decreasing, as noted by Nobel Prize physicist Richard Feynman (1918-1988). In technical terms, entropy is the asymmetric and irreversible conversion from an organized state into an unorganized state. Meaning nothing grows or exists forever, and a finance strategy of renewal, attached to nature’s first-principles is required to improve human efficacy to generate consistency of returns.
ESG is an embarrassing evolutionary false-positive deployed by financiers who know nothing about the nature of the assets they invest in. To deploy any sustainable finance strategies suggesting endless growth, referred to by environmentalist Edward Abbey (1927-1989) as growth for the sake of growth as the ideology of a cancer cell, is to proliferate the societal equivalent of cancer. And when financial arbitrage supports the ideology of cancer, the innovation it selects proliferates societal cancer. Examples abound. We have yet to produce innovation that improves human adaptability to nature’s entropy.
EVA supersedes ESG as it attaches to a higher normalization of truth. We change the normalization of truth from manmade conjecture with ESG to our best proxy of nature’s truth with EVA. After all, regenerative human excellence and human longevity are defined by nature, not by man. So, it behooves finance to arbitrate the way nature arbitrates if it wants to produce returns as consistent as nature has evolved over 17 billion years, 4.5 billion years so far on the pale blue dot we call home.