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Carl Rhodes says the US business & investment culture war over ESG is really an argument over the best way to do capitalism

Personal Finance / analysis
Carl Rhodes says the US business & investment culture war over ESG is really an argument over the best way to do capitalism

By Carl Rhodes*

Five years ago it would have been unimaginable, but today there is a global movement convinced the world’s largest corporations are engaging in stealth warfare to transform liberal democracies into neo-communist dictatorships.

At the heart of this corporate-led Marxist revolution, apparently, is the trend towards businesses not just focusing on profit maximisation but taking into account environmental, social and governance responsibilities (called ESG for short).

According to ESG opponents this is putting democracy on a downhill road to socialism – or worse.

Purportedly central to this sinister plan is United States company BlackRock and its chief executive, Larry Fink. BlackRock is the world’s biggest funds manager, overseeing more than US$10 trillion in investments on behalf of clients such as superannuation funds. Fink is paid more than US$30 million a year, and his wealth is estimated to be more than US$1 billion.

You might think this would make Fink a very unlikely champion of destroying capitalism. But due to his support for ESG – particularly for business taking action on climate change – he’s been accused of advancing a form of “corporate socialism”, with ESG criticised as “socialism in sheep’s clothing”.

All the way to the president

Concerns about the “woke” politics of ESG don’t just live in the dark recesses of the internet. In the US it has become a mainstream fixation. Anti-ESG opinions abound in the pages of The Wall Street Journal and on the infotainment network Fox News. It is a hot battlefield in the culture wars.

In 2020, the Trump administration proposed a rule requiring pension funds to put “economic interests” ahead of “non-pecuniary” concerns – in other words, to force them to ignore issues of long-term social and environmental sustainability and focus on short-term profits.

The Biden administration reversed this plan. But last month the US Congress passed a bill to reverse that reversal, with support from two Democrats in the Senate. Biden then used his presidential power to veto the bill – the first veto of his presidency.

In all likelihood ESG will be a major campaign issue in the 2024 presidential election. The speaker of the Republican-majority House of Representatives, Kevin McCarthy, has accused Biden of wanting “Wall Street to use your hard-earned money to fund a far-left political agenda”. Republican presidential contender and Florida governor Ron DeSantis has also been railing hard against the “woke ESG financial scam”.

Ron DeSantis signs copies of his book at an event at the Cradle of Aviation Museum in New York, April 1 2023. Justin Lane/EPA.

A short history of stakeholder capitalism

What’s notable about all these emotive denunciations of ESG is that they demonstrate little understanding of how capitalism works.

This point was made by Fink in his 2022 annual letter to the chief executives of the companies in which BlackRock has invested clients’ money.

In today’s globally interconnected world, a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders. It is through effective stakeholder capitalism that capital is efficiently allocated, companies achieve durable profitability, and value is created and sustained over the long-term. Make no mistake, the fair pursuit of profit is still what animates markets; and long-term profitability is the measure by which markets will ultimately determine your company’s success.

The idea that business owners have responsibilities to wider society is not new. It dates back at least to the 17th century when the modern corporate form began to emerge through innovations such as joint-stock ownership and the legal privilege of limited liability.

The origins of the corporate social responsibility and ethical investment movements can also be traced back hundreds of years – generally to groups and individuals motivated by religious values – and have been mainstream business ideas for decades.

Why? Because paying attention to social and environmental sustainability, ESG advocates argue, produces better long-term investment returns. If it didn’t, businesses wouldn’t be interested.

Arguing over the best way to do capitalism

This is not to say the application of ESG principles isn’t above criticism – for going too far, or not going far enough – being mere window-dressing for the status quo.

But such arguments are over the best way to do capitalism. It’s all about as far from interest in a neo-Marxist insurgency as can be imagined. Debating the best way to produce shareholder value has nothing to do with wanting a “revolutionary dictatorship of the proletariat” and to see private property abolished – key features of Marxism.

A climate activist is arrested at a protest in New York against BlackRock for the company investing in the fossil fuel industry, October 26 2022. Justin Lane/EPA.

Capitalism is changing, that is certain. But it is doing so in a way that has accepted, and is willing to commercially exploit, changing public sentiment concerning climate and change social inequalities.

This is what businesses that make money do. They listen to customers, and other stakeholders - their workers, suppliers, the communities in which they operate, and the governments that regulate them. They plan for the future. They mitigate future risks.

Impoverishing democracy

So what explains this fantastical rhetoric about ESG being the road to Marxist tyranny? In my view, it shows just how much the intellectual foundations of conservatism and liberalism have been debased in a media marketplace that favours reactionary emotionalism over tempered thought.

Economic conservatism (rooted in the belief in free markets, globalisation and small government) has become disconnected from social and political conservatism (especially as related to climate activism, social justice and diversity and inclusion).

All of this is a fatal distraction from the broader political and economic problems we face both locally and globally. It pushes serious discussions – such as what to do about economic inequality, political polarisation and declining social capital – into the background.

There are biting criticisms to be made about ESG that don’t make the headlines. You don’t often hear business-friendly ESG supporters campaigning for increases to the minimum wage, progressive taxation, worker solidarity or the need to curb the runaway train of executive compensation. Climate and social justice are pressing issues, to be sure. But they shouldn’t push fair economic distribution and shared prosperity off the agenda.

Ironically, the bogus labelling of ESG as a Marxist plot also helps do this. It serves the interests of the very elites populist pundits and politicians claim they oppose. It works against the interests of the working-class people they claim they care about. That is not socialism.The Conversation

Carl Rhodes, Professor of Organization Studies, University of Technology Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Larry is a $30million per annum fink. Don't think Marxism or Socialism. Think Crony Capitalism World Government. With Larry at the top table. Think private jets flying from behind a large fence, to a destination behind another large fence. Think Animal Farm Pigs.



If companies act in harmony to the benefit of themselves they are a cartel and will be staring down the barrel of an anti-trust suit.  They need to be investing heavily into the back pockets of the dominant political machines of their country.  Standard Oil and Ma Bell are history Blackrock does not want to repeat. 


Borrowed from a friend:

Beyond ESG (enviromental/social/guidance) investing protocols lies the CEI (corporate equity index).

Social engineering through corporate control brought to us by the people the genuine left used to hate more than anyone ... the 1% of 1% of 1% who own everything.

Stakeholder capitalism is corporate fascism where an economy is controlled by corporations and their legislative lap dog state. Do not be fooled people. New Zealand is not racist, not transphobic, not homophobic etc etc.

The folks in the woke cult are being used so blatantly - 'useful idiots' as Lenin called them. Don't let them use their divide and conquer tactics to consolidate more of our economy into the hands of Blackrock and Vanguard et al.

If it smells like bullshit and keeps your feet warm for a little while it probably is bullshit.…


Maybe blackrock shouldn't exist? Why should this enormous firm, which was unheard of before 2021, decide to dictate investment in firms based on ESG agendas.

Because it provides so many of the ETF products used to 'diversify', for index funds etc, it ultimately has enormous influential power. Why was it totally ignored, never discussed, never even acknowledged as possessing this power despite being such an enormous firm?


V M,

 "unheard of before 2021". Perhaps by you, not be me and many others. it was founded in 1988, though it it did become globally known for many years after that.


To anyone not working in finance, Blackrock was practically unheard of. It seems to have risen to immense prominence in markets in the post GFC period though.


I don't find the learned professor's arguements convincing although I must admit I haven't been following ESG issues at the political level in the USA . However, I have become increasingly irritated at the trends to consider ESG an important part of corporate life here in NZ.

Setting aside the arguements between the "haves" & the "have nots" that has been going on since ancient times, nor the accumulation of power (& money) via monopolies (as much a problem with state organizations as commercial companies),......this latest fad to suggest the public have a "stake" in the activities of commercial entities which somehow requires said companies to report on their hiring of staff and appointment of directors to show the "diversity", plus the impact of company activities on the environment,  etc., etc., is just more "woke" nonsense.

The simple fact is that people float companies and invite shareholders to contribute capital,  to produce goods or services which, if willing customers eventuate, will result in the enterprise making some profit to distribute to the company owners. The more profit made, the happier the shareholders.

The one significant caveat is that in doing the above, all involved should comply with the laws created by a legislature elected by the public at large.

All that is going to eventuate from this current "ESG" nonsense is a lot of argy bargy about any degree of "greenwashing" and be a distraction from NZ's urgent need to improve general productivity and have solid companies producing products that customers really want.



I generally agree with ESG. It seems the way forward and we have to keep moving forward with progressing humanity.

We need to have a global outlook when it comes to ethics and human rights. We shouldn't tolerate so-called realism or spheres of interest and turn a blind eye to what is going on in other countries for the sake of commerce for example.

The West leads the world by example. Imagine if ESG was developed by Russia or China. Wouldn't that be an extraordinary thing? This is what leading the world looks like.


There is more 'investment' expectation, than there is remaining planet.

In that scenario, riding a ponzi, why wouldn't you divert attention virtuously?


This article is a PR piece.

ESG is about control and BlackRock have made themselves the ref and the rule maker if you don't play by their rules capital is sucked out.

Ideological investment is an oxymoron it leads to mal-investment the sooner the two are separated the better. investors should investment for best returns and government should make rules about what is acceptable or not. This should not be outsourced to the likes of black rock.