A satire in 4 parts exploring Environmental and Social Governance (ESG) - Can it really save us from environmental disaster?
Part 1. Larry Fink - The Vicar of FIBLEY?
Imagine if Larry Fink hadn't become the CEO of BlackRock, the most powerful financier in the world. Imagine he’d chosen the life of a clergyman instead administering to the well-hoofed flock of a home counties village just beyond the M25. It’s a tough ask, but bare with me.
Each Sunday, from the pulpit of the ancient parish church of St.Fiduciary and St. Prudence he expounds the virtues of good clean financial living and the benefits in this world and the next of a righteous and properly audited P&L account.
Within this idyllic setting one of the highlights of the parish year is the annual village fête at which the good Reverend judges the cake competition.
This may not sound too onerous a task, yet, in previous years, our epicureanally challenged priest has made some devastatingly bad choices when handing out the 'Cake of the Year' prize.
Take the 2015 winner; the ‘Volkswagen Soufflé’. Larry’s better judgment was severely hampered when he laid eyes on this entrant's inflated size and immediately awarded it First Prize. Yet, moments later, as local dignitaries sampled the puffed-up confection, a cloud of foul smelling gas filled the marquee asphyxiating several members of the Ladies Circle. An incident they still refer to at their coffee mornings as the 'emission scandal’.
Then there was the unfortunate 'Deepwater Flambé' incident of 2010. To most observers, this was always a disaster waiting to happen yet, to Larry, this piece of cake pyrotechnics represented the 'show stopper' he’d been looking for to promote his 'save the steeple' fund. Of course as its candles were lit the chocolate fountain burst into a fireball leaving its creators, Brian and Petronella, with a hefty $14 billion fine for contaminating of the village water supply and damaging a local beauty spot. For B & P this truly was a fête worse than death. (b'dum tish!)
I could go on... The giant 'Enron Bubble'? A failed attempt to put the parish on the map by baking the world's biggest pyramid cake.
And let's not forget the 'Boeing Bombe'; a rushed entry into the 2019 competition. So hurried was the construction of this flight of fancy that several early attempts ended up in a heap on the floor with truly horrible consequences. Rushed through without proper checks.
So, with such a miserable track record, is it any wonder the Rev. Fink is now far more cautious when handing out the gongs? Indeed, since 2019, he has insisted all entries must contain high levels of the ESG - the latest 'must have' ingredient for anyone interested in making lots of dough, bread and other baking-related euphemisms.
The Venerable Fink nowadays misses no opportunity to expound the virtues of ESG which, he claims, makes the world a better place. Problem is, although there is much fanfare about the benefits of this mysterious substance, few, if any, know exactly what it does or how to measure it.
Predictably a multitude of self-styled experts have entered the tent claiming to know the secret of ESG and how to get it, but if this were true, you'd expect there to be more agreement as to the fundamentals, such as ingredients or quantities to use. No such guidelines yet exist.
And what exactly does ‘ESG’ stand for? While the agreed terminology seems to favour some form of 'Environmental and Social Governance', others suggest it's really short-hand for 'Encourages Solid Growth' or 'Evangelical Spreadsheet Gratification', while more cynical observers feel it’s more likely to mean 'Evade Superficial Guilt' or even 'Elaborate Signalling Gambit’.
Whatever its meaning, the Right Reverend Fink has taken this ethereal substance to heart seeing it both as an insurance against unfortunate future scandal and, more importantly, as a means of raising still greater returns at his cake stand. In fact, it was after Larry had been shown a (pie) chart that illustrated how ESG-accredited products could command up to 15% more investment than 'legacy' options that he saw how ESG surely represented the future.
Yet, despite all of this seemingly good news, some within his congregation question the Rev's new-found zeal. What exactly lies behind this Damascene Conversion? After all, prior to his epiphany, Larry had been more than happy to 'follow the money'. So are we now expected to believe he is genuinely focussed on the health of his flock or does he remain primarily concerned with the health of their bank balance? Critics believe this new-found zeal has more to do with a desire to raise his glorious erection. I'm talking, of course, about his Steeple Fund.
Although little discussed, some sitting in the pews on the left also point to Fink's unhealthy interest in weapons manufacturing, a predilection he defends in his sermons by claiming they contribute to a safer world. So much for turning swords into ploughshares. And he's more than happy to turn a blind eye to slights-of-hand such as carbon offset schemes, which effectively transfer domestic problems to other parishes.
With this in mind it's fair to ask whether this turbulent priest's pursuit of ESG goes much further than the fiscal. Is he the conscience of the free-market - a sort of Chaplain of Industry, or merely an unfunny Vicar of FIBLEY? We'll never know, and indeed, it’s fair to ask whether it really matters. So long as the congregation feel safe in his hands AND continue to invest in the steeple fund what's not to like? At the final analysis, the answer is, as you may already have guessed, a curate's egg: Good in parts but a win-win outcome none-the-less. In this respect the very Reverend Larry Fink is truly preaching to the choir.