Hi from Geneva, Switzerland. Peter Vanham here, filling in for Alan.
I’m Fortune’s newly minted executive editor, responsible for the Connect learning platform. I’ll also be joining Alan in writing on corporate America’s turn to stakeholder capitalism and sustainable business practices.
Speaking of which, in the latest backlash to ESG, Texas state comptroller Glenn Hegar yesterday listed BlackRock and nine other asset managers using ESG investing as “financial companies that boycott energy companies.” He warned BlackRock and Co. would be “subject to divestment” by the state’s multibillion-dollar pension funds.
That does not seem like a pleasant prospect, and it sure looks like Hegar means it. “The ESG movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but…to push a social and political agenda shrouded in secrecy,” he said.
The comptroller’s words sound eerily similar to what Florida Gov. Ron DeSantis and his State Board of Administration decided earlier this week. They too will ban “social, political, or ideological interests” when making investment decisions for the state’s pension fund.
Initiatives like these will force the companies in question—and many others, no doubt—to reassess their embrace of environmental, social, and corporate governance investment practices.
That is almost certain to end in a “damned if you do, damned if you don’t” scenario. It’s hard to please both sides in a thorny political debate. Just ask Disney, which tried to do just that following Florida’s “Don’t Say Gay” initiative, only to anger all parties involved.
Partially, these asset managers have themselves to blame. Hegar is right to call out current ESG investing practices as “opaque.” As The Economist pointed out earlier this summer, much of what financial firms label as ESG investments, is in fact anything but. For ESG to rebuild its credibility, that needs to change.
Yet it would be wrong to discard environmental, social, and corporate governance altogether. The vilification of ESG is also partially a deflection tactic, taking attention away from the shortcomings many U.S. (and Texas) companies still have in shifting to more sustainable business practices.
Seen from this angle, going along with ESG critics now will only lead to more painful adjustments down the road. Coming out of a summerlong heat wave, my appetite for such deflect-and-delay tactics is low.
More news below.
‘Quiet quitting’ backlash
‘Quiet quitting,’ the viral term that only recently entered the workplace lexicon, is stirring up plenty of opinions. Advocates of the movement—in which employees do only enough work to get by—say it’s a way to set healthy workplace boundaries, but critics like Arianna Huffington say those who quietly quit are cheating themselves and should focus on finding more fulfilling work. Wall Street Journal
Peloton x Amazon
Peloton on Wednesday started selling some of its connected-fitness equipment and apparel on Amazon for the first time as it tries to make buying a Peloton “as easy as possible,” says chief commercial officer Kevin Cornils. Until now, the exercise equipment and tech company had only sold its goods directly to customers on its website and via showrooms, but new CEO, Barry McCarthy, is determined to expand its distribution channels. Shares rose 20% on Wednesday. CNBC
The oversharing CEO
The pandemic and economic slowdown are demanding that CEOs lead with more emotional intelligence. Some bosses are struggling to balance displays of human vulnerability with oversharing, the latter of which leaves employees feeling uncomfortable and obliged to forfeit their own privacy. New York Times
AROUND THE WATERCOOLER
Famed short-seller Jim Chanos spots an arbitrage opportunity with AMC’s new ‘APE’ preferred stock by Lucy Brewster
South Korea risks a major population crash as the country marks its second consecutive year with the world’s lowest fertility rate by Yvonne Lau
Mark Cuban on why he’s ‘a fan’ of the upcoming Ethereum merge by Taylor Locke
Biden’s $10,000 student loan forgiveness could wipe out the debts of nearly half of all borrowers. But for others, it won’t even make a dent by Will Daniel
After more than 1 million Americans died from COVID, most companies still give just a few days of bereavement leave for ‘core’ family members by Trey Williams
An FDA change to vaccine authorization allowed Pfizer and Moderna to apply for BA.5 booster approval without key data by Nicholas Gordon
This edition of CEO Daily was edited by Claire Zillman.
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