Andy Puzder

(Senior Fellow at the School of Public Policy at Pepperdine University, for Prager University.)

Why do millions of people invest in retirement accounts?  The answer is obvious: to have money to live on when they’re no longer working.  The best way for those accounts to grow is to invest in companies that make a profit. Less profit for those companies means less money for retirement.

This might seem like common sense but it’s becoming less common, thanks to a new investment strategy called ESG. ESG stands for Environmental, Social, and Governance. If you’re wondering what that means, you’re not alone.  Generally, it means that a company’s first concern should no longer be how much money it makes, but rather how much social good it does. In other words, get woke, or get shamed.

If you’re an oil company, for example, you’re out of luck because, by the nature of your business, it’s assumed you’re destroying the planet. Never mind that you’re powering homes and hospitals. That doesn’t count.  In fact, if you’re a company just trying to make a profit, you’re the problem.

ESG proponent Klaus Schwab, chairman of the World Economic Forum, puts it this way: “We can’t continue with an economic system driven by selfish values, such as short-term profit…”

The message is clear: we need ESG to save us from ourselves.

Really?

The pursuit of profits has fueled many of mankind’s greatest innovations and greatest companies.  It led Elon Musk to build electric cars, Andy Grove to design computer chips, and Reed Hastings to develop the world’s most popular streaming service.  Everything from aspirin to commercial airplanes, to yes, solar panels and wind turbines came about because of the desire for profit.  Profit is why you have a job, clothes, a house, food, and every other necessity, not to mention luxuries.  It’s the reason why you can live in Phoenix and stay cool, or live in Buffalo and stay warm.

The genius of capitalism is that it requires businesses to do good things for society to make a profit.

Think about it:

If you want to start a business—whether it’s a dog hotel or a shoe factory—you’ll have to create a product or service that helps others—at a price they can afford.  If you want to hire employees, you’ll have to offer attractive wages and safe working conditions. Otherwise, nobody will work for you.  If you want customers, not only will you have to make a good product, but you’ll need to cultivate a good reputation. That means treating those customers well and offering competitive prices.

In a free enterprise system, you can’t make money without providing a social good. Capitalism is, by its very nature, conscientious.  It turns out, then, that profit isn’t selfish—it motivates us to contribute our talents to help others.

ESG threatens this system. By denigrating profit, it lessens the incentive and the means to do good. Without profits, companies won’t have the capital to provide jobs, pay investors, or fund innovation.

But that’s the world ESG wants you to live in: a world where profit takes second place to a preoccupation with income inequality, race and gender sensitivity, and climate alarmism.

But even if you wanted to address those concerns, how would ESG help you do it?  That’s a fair question because there’s no consensus on ESG standards.

Here’s a good example: