Speaker 1: Hello, and welcome back to another episode of The Mark
Speaker 1: mass Show. Or of course, each and every week we're
Speaker 1: talking about the way the world is changing through what
Speaker 1: I call the decentralized revolution. If you haven't noticed, the
Speaker 1: world is changing, but you maybe don't understand what the
Speaker 1: heck is going on, and of course we talk about
Speaker 1: it each and every week most importantly so you can
Speaker 1: understand where things are going. I was talking with my
Speaker 1: show producer Cue before we were recording and going through
Speaker 1: some of the show notes and talking about some of
Speaker 1: the different topics and you know, some of the big
Speaker 1: news topics that came out this week. He's like, Yeah,
Speaker 1: I don't know if it's that big of a story
Speaker 1: because it's not like tradeable. There's nothing that someone's going
Speaker 1: to do to change their investment portfolio off of this.
Speaker 1: And that's absolutely right. What we talk about day to
Speaker 1: day isn't for you to go make a trade in
Speaker 1: your portfolio tonight on your e trade Charles Schwab or
Speaker 1: whatever and profit from this. What it is is it's
Speaker 1: about getting the direction right because the world's changing.
Speaker 2: And so.
Speaker 1: In the quote that's been used way too, way too
Speaker 1: moch used, I would say, but I'm going to use
Speaker 1: it anyway. And that's from the great Wayne Gretzky, the
Speaker 1: great one, one of the best hockey players of all time,
Speaker 1: and he said that the reason why he did so
Speaker 1: good paraphrasing was because he always skated to where the
Speaker 1: puck was going to be, not where the puck was right.
Speaker 1: So you've heard that before, so sorry for me to
Speaker 1: tell you again, but that's really the way it is.
Speaker 1: The reason why it's used so much is because it's
Speaker 1: so true. And so what we want to do is
Speaker 1: we want to position ourselves to where things are going,
Speaker 1: not where they are. If we go to where they are,
Speaker 1: by the time we get there, it's going to be
Speaker 1: too late. And so we want to know where things
Speaker 1: are going, and so we look at the long lens.
Speaker 1: Warren Buffett, of course, you know, good old uncle Charlie
Speaker 1: Warren Buffett. His partner Charlie Munger, has another quote that
Speaker 1: I like to use all the time, and he says
Speaker 1: that the big money is not made in the buying
Speaker 1: and the selling, it's made in the waiting. So you
Speaker 1: put those two things together, it's made in the waiting.
Speaker 1: Waiting for what waiting for the right opportunity waiting for
Speaker 1: that big fat pitch to come. But more importantly, when
Speaker 1: I get into that position, I have to also wait
Speaker 1: or to develop. And so this is about the direction
Speaker 1: of where things are going, so we know that we're
Speaker 1: aligned properly as they continue to materialize. So in this hour,
Speaker 1: we're going to talk about the energy crisis and how
Speaker 1: the transition is causing the failure, how it's the transition
Speaker 1: that's causing the energy christap. We're going to talk about that.
Speaker 1: We're going to look at what the transitions are. We're
Speaker 1: going to look at this ESG, break that down environmental
Speaker 1: social governance. We're going to talk about moving from reliable
Speaker 1: to unreliable energy. We're going to talk about why these
Speaker 1: transitions fail. We're going to cover the origins, the companies
Speaker 1: that are taking advantage of this, if there is any
Speaker 1: real progress, and so much more. This is a big show.
Speaker 1: I know I've talked about ESG a little bit in
Speaker 1: the past, We've never done this deep of a dive,
Speaker 1: and it's important for you to understand this because it
Speaker 1: is literally changing the world. Without energy, I mean I
Speaker 1: can't even say without energy, Without energy, the whole world's dead.
Speaker 2: I mean we need energy.
Speaker 1: The law of energy states that energy cannot be created,
Speaker 1: energy can only be transferred. So everything in life is
Speaker 1: about energy. For example, for you to live, your body
Speaker 1: must burn calories. A calorie is a unit as a
Speaker 1: measurement unit of energy. Right, So the sun produces energy,
Speaker 1: it grows a plant, or the cow eats the plant,
Speaker 1: and that energy from the plant is from the sun
Speaker 1: to the plant, and then from the plant to the cow.
Speaker 1: And then I eat the cow, which gives me energy
Speaker 1: and protein, and then that gives me energy to burn
Speaker 1: as calories.
Speaker 2: And so that's how the whole world works.
Speaker 1: And then I can dig oil out of the ground,
Speaker 1: which is more energy, which think that powers my car,
Speaker 1: and on and on and on. So it's important to
Speaker 1: understand that all of humanity's prosperity and flourishment comes because
Speaker 1: of energy. You know, things used to be really bad
Speaker 1: a long time ago, and really all of history is
Speaker 1: a story of people being cold and hungry. That's most
Speaker 1: of history people being cold and hungry. Read back through
Speaker 1: the early nineteen hundreds, eighteen hundreds to seventeen hundreds.
Speaker 2: You've seen the movies.
Speaker 1: The Game of Thrones, and it looks like all like, oh,
Speaker 1: look at them living in these beautiful castles and life
Speaker 1: is so good. No no, no, no, no, that's not how
Speaker 1: it worked. They were cold and they were hungry, and
Speaker 1: that's how most of the world is. Without energy. There
Speaker 1: was famines, there was droughts. But then we got energy,
Speaker 1: and we could build tractors that could build canals and
Speaker 1: bring water in amazing and it's through the use of
Speaker 1: energy that we've been able to flourish. And you can
Speaker 1: trace back every prosperous nation back to the amount of
Speaker 1: energy that they have. And that's really where the United
Speaker 1: States took off in the lead because we were able
Speaker 1: to harness oil and energy, which led to the industrialization,
Speaker 1: which allowed to massive prosperity through using energy to manufacture
Speaker 1: goods and services that the world wanted, and so forth.
Speaker 1: We're gonna talk about all this. I'm gonna break it
Speaker 1: down and again, if you want to be, if you
Speaker 1: want to be where the puck is going, you have
Speaker 1: to understand this. If you want your investments to be
Speaker 1: in the right place, then you need to understand this.
Speaker 1: Now I like to say it's not true, but of course,
Speaker 1: if you're not already in position, then I suppose you
Speaker 1: should be getting into position. But this is not financial advice.
Speaker 1: But you are listening to the Mark Ma Show. If
Speaker 1: you miss any of this, don't worry.
Speaker 2: I got your back.
Speaker 1: Check me out on the podcast. Just search the Mark
Speaker 1: Ma Show on any of your favorite podcast players. And
Speaker 1: if you could just do me a huge favor while
Speaker 1: you're there, just click on the like review button on
Speaker 1: the podcast. Share it with somebody who you think could
Speaker 1: benefit from it.
Speaker 2: That'd mean the world to me, I'll ask. Okay, so
Speaker 2: let's talk about this for a little bit.
Speaker 1: I want to break this down. We got a lot
Speaker 1: to cover. So first of all, ESG, what is it?
Speaker 1: More importantly, how did we even get here? Okay, now,
Speaker 1: if you want to look at how we got here,
Speaker 1: we kind of have to go back to the origins
Speaker 1: and what we can see that the origins of ESG
Speaker 1: and ESG investing really came by the key decision makers
Speaker 1: who wanted to use social responsibility as like an investing thesis.
Speaker 1: And I have no problem with that. As a matter
Speaker 1: of fact, I'm a huge proponent of that. As a
Speaker 1: matter of fact, I constantly pound the table on that
Speaker 1: we should be voting with our money. So I shouldn't
Speaker 1: be giving my money to things I don't like. So,
Speaker 1: for example, I've been writing a financial newsletter for the
Speaker 1: last seven years where I do give people information on
Speaker 1: what they should be buying and selling. If you want
Speaker 1: to check that out, just go to my website at
Speaker 1: one Mark Moss and you can find out how to
Speaker 1: get access to the newsletter there. But in this newsletter,
Speaker 1: I used to recommend that we bought stocks in China.
Speaker 1: As a matter of fact, we did really really well
Speaker 1: investing into Chinese companies in Chinese stock markets and Chinese
Speaker 1: funds and things like that. Emerging markets are a great
Speaker 1: place to get alpha right out to get profits. But
Speaker 1: about when the pandemic came out, all of a sudden,
Speaker 1: I just thought about it, and I'm like, I don't
Speaker 1: really want to be supporting China anymore.
Speaker 2: There's millions of places to invest. Why do I.
Speaker 1: Need to put my money into those I don't agree
Speaker 1: with them, so I'm no longer going to give them
Speaker 1: my money. So I believe in using your money to
Speaker 1: voice your vote, but also to build the world that
Speaker 1: you want. So, for example, you also know that I'm
Speaker 1: a huge bitcoin proponent. I believe that bitcoin is the
Speaker 1: only tool that we see right now today that can
Speaker 1: change the world, that can free us, and that can
Speaker 1: change the world for better. If not bitcoin, then what
Speaker 1: I don't see anything else now. Maybe something else comes
Speaker 1: in the future, but as of now, that's the only one.
Speaker 1: So I believe that you don't have to that's okay,
Speaker 1: and so I want to see that flourish. So I
Speaker 1: want to put my money into bitcoin. I also want
Speaker 1: to support the ecosystem, so I invest through the entire
Speaker 1: bitcoin ecosystem, including I'm an advisor to a bitcoin venture
Speaker 1: capital fund, Trammel Venture Partners, and I also started my
Speaker 1: own bitcoin fund called the Bitcoin Opportunity Fund, and we're
Speaker 1: investing through the entire bitcoin ecosystem because I want to
Speaker 1: put my money to build the world that I want.
Speaker 2: Now.
Speaker 1: If you'd like to learn more about the Bigcoin Opportunity Fund,
Speaker 1: check it out Bitcoin Opportunity dot Fund. It's go onto
Speaker 1: your website Bitcoin Opportunity Dot Fund. You do need to
Speaker 1: be a credit investor for that, but it's a good
Speaker 1: way to get access to this entire industry that way.
Speaker 1: So anyway, I am a big proponent. I recommend everybody
Speaker 1: invest into building the world that they that we want.
Speaker 1: And so that's how ESG got started, right. It started
Speaker 1: in the nineteen sixties as socially responsible investing, which sounds
Speaker 1: pretty good. Nineteen seventy one, the packs World Fund was
Speaker 1: established by two United Methodist ministers who opposed the Vietnam War,
Speaker 1: so they didn't want to invest any money that would
Speaker 1: go towards the war. Great we saw Amy Dominie, who
Speaker 1: managed KLD Research and Analytics. She created a Domini four
Speaker 1: hundred index in nineteen ninety.
Speaker 2: You know, we can kind of go through this.
Speaker 1: ESG largely came from a combination of national and international standards.
Speaker 1: One of the significant milestones was the United Nation Framework
Speaker 1: Convention on Climate Change in nineteen ninety two. And this
Speaker 1: is where things really started to go a different direction.
Speaker 1: So the UN pushing them in nineteen ninet two, and
Speaker 1: this is where I start to divert from their idea
Speaker 1: of investing socially and my idea of investing socially. I'm
Speaker 1: going to talk about that in a second. If you're
Speaker 1: just tuning in right now, you're listening to the Markmas Show.
Speaker 1: Of course we're always talking about this decentralized revolution. I'm
Speaker 1: going to break this down, so you know where we're going.
Speaker 2: I got to take a quick break.
Speaker 1: But when I come back, we're go and continue talking
Speaker 1: about the origins of ESG.
Speaker 2: You don't want to miss it. We'll be right back.
Speaker 2: All right, Welcome back.
Speaker 1: If you're just tune in, you're listening to the Markmas
Speaker 1: Show and we're breaking down the history of ESG. We're
Speaker 1: talking about the energy crisis and how the transition is
Speaker 1: actually causing the crisis, causing the failure.
Speaker 2: So we're running through ESG.
Speaker 1: We were talking about some of the origins before and
Speaker 1: really where things I said that we should be investing socially,
Speaker 1: We should be investing along with our ideas, our values
Speaker 1: to build the world that we want. That's what we
Speaker 1: want to do, and so I'm okay with it in
Speaker 1: theory we should all be doing that.
Speaker 2: But where it goes wrong is where it got hijacked.
Speaker 1: And so I talked about how really in nineteen ninety two,
Speaker 1: the United Nations created this framework for climate change, and
Speaker 1: this is where things, like I said, really really went
Speaker 1: off the rails. Now we can go back and we
Speaker 1: can see all types of examples through history where people
Speaker 1: formed groups. So like there was one the Women's Christian
Speaker 1: Temperance Union WCTU founded in eighteen seventy four, and they
Speaker 1: promoted investing into things that they shared ideologies. So, for example,
Speaker 1: they didn't invest in the companies that produced alcohol or tobacco. Great,
Speaker 1: if you don't like alcohol, tobacco, you don't want people
Speaker 1: to have it, then don't invest into it. That's fine.
Speaker 1: The company didn't want to invest into any companies that
Speaker 1: would exploit its workers or engage in unethical business practices, Great,
Speaker 1: don't do that if you don't want to.
Speaker 2: I think that that is a good thing.
Speaker 1: But these were like a really like OG, you know,
Speaker 1: old school in socially responsible investing group. And that's okay.
Speaker 1: But going back to ESG for a second, Like I said,
Speaker 1: it was introduced by the UN and we saw it
Speaker 1: really become officially introduced in two thousand SI again by
Speaker 1: the UND in their Principles for Responsible Investment Report pr I,
Speaker 1: and basically the ESG criteria were required to be incorporated
Speaker 1: in the financial evaluations of companies. And so what that
Speaker 1: means is that they now had a set of metrics
Speaker 1: that they could regulate companies by. So we could say, hey,
Speaker 1: we're going to look at you company by all these metrics,
Speaker 1: and if you don't fit into them, then maybe there's
Speaker 1: no money for you. So we're gonna talk about this
Speaker 1: is it's really turned from cooperation and from preference to
Speaker 1: now coercion, and that's where things.
Speaker 2: Fall off the rails.
Speaker 1: Now I want to talk about again. I think this
Speaker 1: is a good thing. We should be investing into things
Speaker 1: that we believe. Milton Friedman a famous economist. If you
Speaker 1: haven't read his stuff, I highly recommend it. He wrote
Speaker 1: a paper on the socially responsibility. The social responsibility of
Speaker 1: business is to increase its profits, because that's sort of
Speaker 1: what a business is for. Now, if you want to
Speaker 1: go be you know, Mother Teresa or Gandhi, then you
Speaker 1: should certainly do that. If you're a church, then you
Speaker 1: should certainly be feeding the poor. But business is in
Speaker 1: the business of business, which is to make profit, and
Speaker 1: it's the socially responsible thing to do. And what he says,
Speaker 1: and I'm going to paraphrase this, and I highly recommend
Speaker 1: you to go read it, but he basically says that
Speaker 1: through the pursuit of profit, you chase the most socially
Speaker 1: responsible goals. So let me give you an example there's
Speaker 1: a local high school here by my studio. I drive
Speaker 1: by it every morning i'm away to the gym, And
Speaker 1: on those fences of the of like the baseball field,
Speaker 1: are like signs, and the whole school are signs of
Speaker 1: all the local businesses, local real estate agents, local dentists, orthodontics, whatever. Right,
Speaker 1: Why do they give money to the school to have
Speaker 1: their sign there? Why do they want to have their
Speaker 1: sign there. Well, they hope it brings them business. So
Speaker 1: through the pursuit of profit it they're acting socially right.
Speaker 1: They're giving money to a good cause in returns of
Speaker 1: hopefully getting a profit back. Now, let me just say
Speaker 1: I also believe that we should all be giving money charitably.
Speaker 1: This is a really big problem that I want to
Speaker 1: dive into just for a second. I was recently on
Speaker 1: an airplane, sitting in first class, sitting next to another
Speaker 1: guy who looked like he I kind of glanced over
Speaker 1: at his work and I could tell he was working
Speaker 1: on some like high level management stuff, and so I
Speaker 1: kind of struck up a conversation with him, which I
Speaker 1: don't always do, and we start then we start getting
Speaker 1: into like business stuff, and then we start getting into
Speaker 1: like investing, and then we start get into like social
Speaker 1: political things. And you know, he really thought that, you know,
Speaker 1: the government needs to continue to tax us so much
Speaker 1: so that they the government, they after they tax us,
Speaker 1: can go do all these welfare programs and things like this.
Speaker 1: And I just said, hey, let let me ask you
Speaker 1: a personal question. I'm sorry if it's too personal, but
Speaker 1: how much of your income do you give to charity?
Speaker 1: Do you donate? Do you do you go on mission
Speaker 1: trips with your kids and help poor people? And they said, no,
Speaker 1: we don't do any of that, and I said, yeah,
Speaker 1: I figured and the reason why is because because you
Speaker 1: don't give, then you feel that nobody else will give.
Speaker 1: And so the only way that those poor people get
Speaker 1: anything is if the government steals it from us and
Speaker 1: then redistributes it. But you see, I give a big
Speaker 1: chunk of what I earn, and so I don't see
Speaker 1: it that way. I see people all around me giving.
Speaker 1: As a matter of fact, I just got back from
Speaker 1: my fifteenth annual dirt bike trip we do called the
Speaker 1: Baja Beach Bash dot com check it out, where we
Speaker 1: raised money for an orphanage down in Mexico this year.
Speaker 1: In twenty twenty three. In July, we raised about four
Speaker 1: hundred thousand dollars me and my buddies for this orphanage.
Speaker 1: We've raised over two point two million dollars for them
Speaker 1: since we've done that. This is just one thing, and
Speaker 1: I'm not here to brag. What I'm saying is that
Speaker 1: we should all be doing this. That's the socially responsible
Speaker 1: thing to.
Speaker 2: Do, all right.
Speaker 1: Now, going back to this, So, this ESG thing, it
Speaker 1: really went off the rails because of the UN, and
Speaker 1: the UN tried to co opt this and then use
Speaker 1: it for coercion. So how did they do that? Well,
Speaker 1: they established these.
Speaker 2: Principles, these ESG principles.
Speaker 1: And they basically got sixty three investment companies with about
Speaker 1: six and a half trillion dollars in assets under management
Speaker 1: to come on board with them. And these these companies
Speaker 1: that controlled six and a half trillion dollars, they got
Speaker 1: them to basically agree that if these companies don't adhere
Speaker 1: to these arbitrary things that we've put together, then they
Speaker 1: get no money. As Mark Carney says, they'll be economic roadkill.
Speaker 1: So who are they? Well, Amy Dominie, we mentioned her
Speaker 1: name before. Brian moynihan, he's the CEO of Bank America.
Speaker 1: Now what's important to understand is that, of course Bank
Speaker 1: of America Brian Monihan the CEO, alongside the Big four
Speaker 1: accounting firms. So you always hear reference to the Big
Speaker 1: four Deloitte, PwC, KPMG, and Ernst and Young. So if
Speaker 1: you're a public traded company or your big forty five
Speaker 1: hundred company, you need use a Big four accounting firm.
Speaker 1: So with Bank of America and the Big Four, they
Speaker 1: accelerated this ESG transformation through the establishment of a set
Speaker 1: of standardized measurements of twenty two specific metrics to create
Speaker 1: a framework for companies to report their results. And if
Speaker 1: the results are favorable, they get funding. If the reports
Speaker 1: are unfavorable, then they get no funding. No money for
Speaker 1: you like the Soup Nazi, all right, So that's sort
Speaker 1: of how this happened. Then we saw other institutions, institutional investors.
Speaker 2: Grab onto this.
Speaker 1: Of course, we talk about Black Rock doing this all time,
Speaker 1: State Street Global Advisors of course as well, and on
Speaker 1: and on and on and so this is a really
Speaker 1: big thing. This is how they've been they've been tackling this.
Speaker 1: Now we can see that a twenty twenty two report
Speaker 1: by the Global Sustainable Investment Alliance found that global ESG
Speaker 1: assets under management reached thirty five point three trillion in
Speaker 1: twenty twenty one, up from twenty two point nine trillion
Speaker 1: in twenty twenty sixteen. So we can see that these
Speaker 1: investment groups are moving into this and putting money into
Speaker 1: anything that could be deemed ESG. But does that change
Speaker 1: the incentive structure just because they say they're ESG, are
Speaker 1: they really how are they reporting this? Well, we're going
Speaker 1: to dig into that. We're going to dig into that.
Speaker 1: We're going to talk about the problems that this has created,
Speaker 1: the crisis that we're literally in because of this, and
Speaker 1: where this goes. If you're just tuning in and you're
Speaker 1: listening to the Mark Mass Show, of course we're aways
Speaker 1: talking about the decentralized revolution, and this is a good
Speaker 1: example of how, you know, good intentions have turned bad
Speaker 1: have now caused a massive crisis that we're dealing with.
Speaker 1: So I'm going to continue to break this down. I'm
Speaker 1: going to show you exactly what ESG is. I'm going
Speaker 1: to show you how these investments are turning sour and
Speaker 1: actually how through mismatched incentives it's causing the crisis that
Speaker 1: we're in. We'll go through some specific examples, especially what's
Speaker 1: happening right now in Saudi Arabia, what's happening in South Africa,
Speaker 1: what's happening in Germany, and yes even here in the
Speaker 1: United States.
Speaker 2: Back of that and more in a minute. Don't go away,
Speaker 2: I'll bear back.
Speaker 1: All right, welcome back if you're just tune in here
Speaker 1: listening to the Mark Moss Show. We're talking today about,
Speaker 1: of course, like always, the decentralized revolution, how the world's changing,
Speaker 1: but specifically today we're talking about the energy crisis and
Speaker 1: how the transition is causing the failure.
Speaker 2: Yeah, that's what's happening now.
Speaker 1: We're talking about these esg these twenty two specific goals
Speaker 1: that companies have to meet if they want to get money,
Speaker 1: if they want investment, and of course if you're a business,
Speaker 1: then you don't have any capital, you don't have a business,
Speaker 1: so of course they have to do that. But what's
Speaker 1: happened is, you know, these create perverted incentives. Remember we
Speaker 1: talked about Freedman talking about really the socially responsible thing
Speaker 1: for businesses to pursue profit. That should be the incentive
Speaker 1: and through that incentive, then they'll have good, you know,
Speaker 1: good things that they do, like giving money to the
Speaker 1: local high school. But when you start to change the incentives,
Speaker 1: then people start optimizing for other incentives.
Speaker 2: So for example, like ESG.
Speaker 1: So if you have to meet all the factors of
Speaker 1: a ESG, you get a lot of money. So what
Speaker 1: do you think happens, Well, companies start trying to optimize
Speaker 1: for ESG, so they get a lot of money.
Speaker 2: And how do they do that?
Speaker 1: Well, they do that through lying and stealing, because of
Speaker 1: course there is really no way to hit all those
Speaker 1: goals without that, so they do what we call green washing,
Speaker 1: so they pretend like they're green even though they're not really.
Speaker 1: How do they do that well? So, for example, one
Speaker 1: of the things is to reduce emissions, that's only part
Speaker 1: of it. So the environmental E, environmental S social G
Speaker 1: is governance. So the E environmental is like how much
Speaker 1: carbon is are you outputting? For example?
Speaker 2: Right?
Speaker 1: Then there's the social so then that's like what are
Speaker 1: you doing socially? And then there's the governance. Do you
Speaker 1: have a diversified board of people on your government board?
Speaker 1: But on the environmental side, you need to not produce
Speaker 1: as much carbon, because supposedly carbon is somehow like thermometer
Speaker 1: of the world.
Speaker 2: That's pretty strange if you think about it.
Speaker 1: But anyway, they're raided by how much carbon they produce
Speaker 1: or don't produce. So one of the things that they
Speaker 1: do is they buy offsets carbon credits. So for some reason,
Speaker 1: there's certain things that you can do that create carbon credits. So,
Speaker 1: for example, Tesla by making electric vehicles somehow creates carbon
Speaker 1: credits that can then be sold. And then these companies
Speaker 1: that produce lots of carbon just buy these carbon credits
Speaker 1: and then somehow that gives them a net zero net
Speaker 1: being you take the total amount they emit minus what
Speaker 1: they bought the credits give them a net zero score. Right,
Speaker 1: that's what they're aiming for, the net they're trying to
Speaker 1: bring down. The problem is is that this is all
Speaker 1: sort of like a big scam. So where are these
Speaker 1: credits being created from, how are they being traded, and
Speaker 1: what is that even doing for the economy or I'm
Speaker 1: sorry for the environment at all. As a matter of fact,
Speaker 1: emissions have not gone down at all. Businesses now just
Speaker 1: spend more money to buy offsets, so they haven't changed
Speaker 1: the amount of carbon going into the world. They've just
Speaker 1: now created a side market. Now, what's wrong with that? Well,
Speaker 1: the side market means that for no other reason than
Speaker 1: to have some arbitrary goal of bringing down carbon, which
Speaker 1: hasn't done any of that. But now they created this
Speaker 1: market which now companies have to buy into, which makes
Speaker 1: their expenses go up, which means they have to bring
Speaker 1: their prices up, which means that you get to pay
Speaker 1: more for your products and services, which means that your
Speaker 1: quality of life went down. It means you have to
Speaker 1: work more hours now to have just the same quality
Speaker 1: of life that you had before because costs have gone
Speaker 1: up so much.
Speaker 2: That's one example.
Speaker 1: We can see report after report after report how it's
Speaker 1: plagued by fraud. At twenty twenty one report by the
Speaker 1: Carbon market Watch found that the carbon credit market is
Speaker 1: plagued by all kinds of fraud. There's double counting, there's
Speaker 1: wash trading, there's green washing. As I said, green washing
Speaker 1: is when a company makes false or misleading claims, but
Speaker 1: it's environmental credentials in order to sell carbon credits. We
Speaker 1: see large corporations exploiting ESG principles. For instance, some might
Speaker 1: use shell companies to make your operations appear more ESG
Speaker 1: compliant than they are. And this isn't just like some theory.
Speaker 1: We see this over and over and over and over.
Speaker 2: As a matter of fact.
Speaker 1: A twenty twenty one report by the Environmental Investigation Agency
Speaker 1: found that several large corporations were using shell companies to
Speaker 1: avoid environmental regulations. Saudi Aramco, one of the largest companies
Speaker 1: in the entire world, has done this with a twenty
Speaker 1: eight billion dollars worth of funds.
Speaker 2: So this is what's happening.
Speaker 1: When you create a perverse set of incentives, then you
Speaker 1: get perverse actions. Now to take advantage of this, of course,
Speaker 1: the big Evil Empire, the largest asset manager of the world,
Speaker 1: black Rock, has jumped into the mix and they started
Speaker 1: creating ESG funds. So now we're going to create these
Speaker 1: ees ETFs that have all these ESG companies in there,
Speaker 1: so we can raise investment capital directly into this ESG fund.
Speaker 1: But turns out when you invest money, you're trying to
Speaker 1: get money back. So if I'm investing money, I wanted
Speaker 1: to go to the companies that have the best chance
Speaker 1: of returning my capital, unless it's a donation. Like I said,
Speaker 1: invest in things that you want. So I give my
Speaker 1: money to things that maybe I don't expect the best
Speaker 1: return from just because that's where I want my money going.
Speaker 1: But for the most part, if you're investing your money,
Speaker 1: you're trying to get the best return possible. It turns
Speaker 1: out when you run a business based off of their
Speaker 1: ESG scores and they're not optimizing for profit, well it
Speaker 1: turns out they don't have the best profit. So it
Speaker 1: turns out they don't do very well. And as a
Speaker 1: matter of fact, es I'm sorry, Blackrock had to close
Speaker 1: their ESG fund because of a lack of interest. Why
Speaker 1: because it had poor performance. So you look at all
Speaker 1: the funds that Blackrock has and the ones that have
Speaker 1: the worst performance, you don't want to invest into them.
Speaker 1: And of course that's the ESG because they weren't optimizing
Speaker 1: for profits, and so you know, there's other parts of it.
Speaker 1: So then there's the social side, which then kind of
Speaker 1: led to this DEI diversity, equity and inclusion. So it's
Speaker 1: sort of like virtue signaling. This is what's led to
Speaker 1: a lot of the Dylan Mrvany Moving, you know, Budweiser controversy,
Speaker 1: things like that because they're trying to now optimize for that,
Speaker 1: for this DEI diversity, equity and inclusion. We can see
Speaker 1: that a Just Capital report around that twenty percent of
Speaker 1: companies with dedicated DEI roles have eliminated or disregarded those
Speaker 1: roles altogether. So they're adopting it, and they're trying to
Speaker 1: do it, but then they realize it doesn't really work
Speaker 1: and it's actually hurting their business of being in business,
Speaker 1: of being in business of making profits, and they end
Speaker 1: up abandoning them. So what they're doing is they're they're
Speaker 1: doing some sort of virtue signaling, but really they're not
Speaker 1: doing anything at all, which is part of the reason
Speaker 1: why you see Nike running Colin Kaepernick or you know,
Speaker 1: like I said, Budweiser with Dylan Morvany. They're trying to
Speaker 1: appease these DEI you know gods, these DEI regulators, if
Speaker 1: you will. But it's a bigger problem than that. So
Speaker 1: ESG is actually causing, as we started out, talking about,
Speaker 1: an actual crisis. So what do I mean by that, Well,
Speaker 1: the biggest thing the E in ESG is environmental, and
Speaker 1: supposedly the goal is to bring carbon down and the
Speaker 1: number one enemy according to them is now energy, specifically
Speaker 1: fossil fuel energy, which is oil and gas, oil and
Speaker 1: natural gas. Now it's funny because do you know what
Speaker 1: fossil fuel is fossil It comes from fossils, So it
Speaker 1: makes you think, like some bad connotations, Well fossil fuel,
Speaker 1: And I'm not a geologist, so if you are, go
Speaker 1: ahead and leave me comments and tell me if I
Speaker 1: get this wrong. But fossil fuel come from fossils, which
Speaker 1: are actually old plants that are in layers of the
Speaker 1: earth that have been carbonized and have turned into oil
Speaker 1: and gas, and so we harvest those out, so sort
Speaker 1: of like environmental, sort of like renewable. But what they've
Speaker 1: done is they've now labeled those to be bad, and
Speaker 1: so now we have to go to wind and solar
Speaker 1: what they call renewable, which is pretty weird because solar
Speaker 1: panels and windmills last about twenty years.
Speaker 2: They're not renewable at all, they're consumable. But anyway, they
Speaker 2: want to go to these renewables.
Speaker 1: So like in Germany, for example, well because of these
Speaker 1: est metrics, they want to transition their energy into green,
Speaker 1: so they want to have wind and solar, and so
Speaker 1: they've started to shut down their energy, including their nuclear reactors.
Speaker 1: Now just recently nuclear actors are now coming back as
Speaker 1: being green, but skipping that what.
Speaker 2: We can see has happened.
Speaker 1: So we saw energy, the energy prices going through the
Speaker 1: roof because they shut down their energy their nuclear reactors.
Speaker 1: Turns out, supply and demand still matters. So when they
Speaker 1: got rid of their nuclear power, their energy prices went
Speaker 1: through the roof. But then the final straw was the
Speaker 1: Russia Ukraine War. They lost the North Stream pipelines and
Speaker 1: they don't have gas.
Speaker 2: Now.
Speaker 1: The reason why this is very very very important to
Speaker 1: understand is because in Europe you have the southern nations
Speaker 1: that we call the pigs Portugal, Italy, Greece, Spain, right,
Speaker 1: the pigs, and they don't really have any industry, they
Speaker 1: don't have any really economic output exports. They have tourism
Speaker 1: mostly and so they're part of the EU European Union.
Speaker 1: But it's Germany that's the manufacturing hub, it's the engine
Speaker 1: of Europe. They're the ones that produce all the exports,
Speaker 1: produce all the money and help support everybody else. But
Speaker 1: because of what Germany has done by chasing ESG, they've
Speaker 1: basically shot themselves in the foot or really shot themselves
Speaker 1: in the head. And so now because of energy prices
Speaker 1: going sky high, it's caused a massive, massive problem. I'm
Speaker 1: gonna break that down for you in a second. If
Speaker 1: you just tune in, you're listening to the markmas Show.
Speaker 1: We're talking about ESG right now, and we're talking about
Speaker 1: the problems that it's created. I'm gonna come back and
Speaker 1: tell you the rest of this in a second. Don't
Speaker 1: go away, I'll bear back, all right, Welcome back. If
Speaker 1: you're just tune in, you're listening to the Mark Maas
Speaker 1: Show when we are talking today about the energy crisis
Speaker 1: and how the transition is causing the failure. Really, we're
Speaker 1: breaking down what ESG is, Environmental social governance, what that means,
Speaker 1: and we're looking at the problem that it's created.
Speaker 2: If you missed any of this, don't worry. Check me
Speaker 2: out on the podcast.
Speaker 1: Just search the Mark mah Show in your favorite podcast player,
Speaker 1: or you can watch me and listen to me at
Speaker 1: the same time on YouTube. Just go to the Market
Speaker 1: Disruptors YouTube channel then you can check me out there.
Speaker 1: But back to who we were talking about. I was
Speaker 1: setting up that Germany has put themselves into a danger situation,
Speaker 1: and not just for Germany, but for the entire European Union,
Speaker 1: because Germany, being the economic engine of the European Union,
Speaker 1: really kind of dragging or or polling the entire European
Speaker 1: Union along together. They embarked on some crazy radical ESG
Speaker 1: policies and that led to them shutting down their own
Speaker 1: energy because who needs it, right, Well, it turns out
Speaker 1: we need it. Turns out it turns out if you
Speaker 1: want to produce goods and services, you need energy. And
Speaker 1: so with energy prices spiking so high, it became very
Speaker 1: problematic for the manufacturers that were usually energy to make
Speaker 1: goods and services. So they had to raise their prices,
Speaker 1: which made it very tough for people living in Germany
Speaker 1: because now all the prices went up on goods and services.
Speaker 1: But the real problem came during the Rush of Ukraine
Speaker 1: situation where they lost access to their natural gas. And
Speaker 1: what we're witnessing now over the last year is that
Speaker 1: Germany is in a process of d industrializing estualizing through
Speaker 1: when we went from no machines to machines, we went
Speaker 1: from the farms into factories. But now they're de industrializing,
Speaker 1: meaning the factories are disappearing. Well that doesn't sound very good.
Speaker 2: Well it's not so.
Speaker 1: Because of the cost of energy are so high and unreliable.
Speaker 1: They're being ration they can't run all the time. Manufacturing
Speaker 1: companies have had to leave Germany. One of their largest companies, BASF,
Speaker 1: has left and they went to China. And when these
Speaker 1: companies leave, they don't just come back, so they're in
Speaker 1: the process of de industrializing.
Speaker 2: Now that's bad for Germany, but it's bad for all
Speaker 2: of Europe.
Speaker 1: As a matter of fact, the IMF International Monetary Fund
Speaker 1: expects the German economy to shrink by zero point three
Speaker 1: percent this year, which doesn't sound like a lot. But
Speaker 1: that's a bad deal. Economies should always be growing. We
Speaker 1: should always be producing more goods and.
Speaker 2: Services, not less. It's a big deal.
Speaker 1: Now that sounds bad. I want to jump to another
Speaker 1: story about South Africa. South Africa is in a world
Speaker 1: of and you won't even believe it. They've been struggling
Speaker 1: with power shortages for years because again, yes, they need
Speaker 1: to be more environmentally conscious, and they need to shut
Speaker 1: down their cheap, reliable, abundant energy sources and transition to
Speaker 1: very expensive, costly and unreliable energy sources for.
Speaker 2: The e you know, the EESG. We got to do
Speaker 2: it right.
Speaker 1: So in South Africa, they have been deteriorating for a
Speaker 1: long time. There's massive economic turmoil and social unrest that's
Speaker 1: happening right now. It's looming ahead of the elections that
Speaker 1: are coming next year, and it's getting really bad. Not
Speaker 1: only is it bad because of the transition, it's also
Speaker 1: hampered by massive amounts of debt, corruption, and yes, of course, sabotage.
Speaker 1: So they're trying to figure this out. They want to
Speaker 1: escape their dependence on coal, cheap, abundant energy and move
Speaker 1: to as I said, unreliable you know, renewables, unreliables. So
Speaker 1: now they've been rash. Since two thousand and seven, s Com,
Speaker 1: which is their power company, has been forced to ration
Speaker 1: power through intentional blackouts known as something called load shedding,
Speaker 1: and we have the same thing in southern California for
Speaker 1: the exact same reasons. California has to also do load
Speaker 1: shedding because we can't produce enough energy for everybody.
Speaker 2: But in South Africa it's way worse.
Speaker 1: As a matter of fact, they've been shutting off the
Speaker 1: power for up to twelve hours per day, and now
Speaker 1: they're predicting that they're going to take the power outages
Speaker 1: up to sixteen hours per day no energy. Now what
Speaker 1: would happen if you shut the power off for sixteen
Speaker 1: hours a day, Well, it turns out you don't have
Speaker 1: a lot of economic activity. The power instability is so
Speaker 1: widespread that they don't They have very very very limited
Speaker 1: hospital services. Turns out, if you go in the hospital,
Speaker 1: you probably need machines suck to electricity and it probably
Speaker 1: needs to be twenty four to seven sixteen hours a
Speaker 1: day of blackouse pride doesn't work, so very limited hospital services.
Speaker 1: Your kid was born premature, needs to go an incubator, Sorry,
Speaker 1: no electricity for you. Oh you had heart attacking, need
Speaker 1: to be on a heart monitor?
Speaker 2: Up, Sorry, no electricity for you. You get the idea.
Speaker 1: We have increasing food and water scarcity, rising bankruptcies, worsening
Speaker 1: crime rates, unemployment exceeding thirty percent, and South Africa's Central
Speaker 1: Bank warns that load shedding is going to cost the
Speaker 1: economy nearly thirteen billion this year.
Speaker 2: So that's what ESG gets you. Good job.
Speaker 1: The coal sector, which is what they're trying to get
Speaker 1: rid of, employees indirectly up to two point three million people.
Speaker 1: So aut a time when they already have unemployment exceeding
Speaker 1: thirty percent, they want to go ahead and just shed
Speaker 1: jobs for another two point three million people.
Speaker 2: Sounds really good.
Speaker 1: South Africa is on a course to see its most
Speaker 1: blackout days in history this year.
Speaker 2: Wow.
Speaker 1: So again, this is the same thing that's happened in California.
Speaker 1: It's not a big it's not it's nothing new.
Speaker 2: So this is where ESG gets you.
Speaker 1: You invest into companies who are not trying their best
Speaker 1: to produce profits. So they've gotten away with this because Blackrock,
Speaker 1: State Street, Vanguard they don't care about profits. Why don't
Speaker 1: they care about profits because it's not their money? Well,
Speaker 1: whose money is it? Well, it's your money, when your pension,
Speaker 1: when you're four oh one k, when your mutual fund
Speaker 1: goes into their management. Blackrock State Street of Vanguard manages
Speaker 1: almost you know, the majority of that. They are investing
Speaker 1: your money and it's not their money. And they make
Speaker 1: money regardless, So what do they care if the companies
Speaker 1: underperform other companies? They would rather push an ideology. That's
Speaker 1: why when people say bud Light, you know they screwed up.
Speaker 1: Hittumar hurts, go woke, go broke. We're gonna, we're gonna,
Speaker 1: we're gonna boycott them. Well, they don't really care. And
Speaker 1: the reason why they don't really care is because they've
Speaker 1: been taken over by these big institutional investors who don't
Speaker 1: invest their own money.
Speaker 2: They invest your.
Speaker 1: Money, and they're more and what they care about more
Speaker 1: is their ideology over profit. And again that's not a
Speaker 1: bad thing. We should be investing our money where we
Speaker 1: see fit. The problem is when you have corporations like
Speaker 1: black Rock, Wall Street, Vanguarden, State Street doing it with
Speaker 1: other people's money.
Speaker 2: That's the problem. That's the way I have a problem.
Speaker 2: You should certainly.
Speaker 1: Invest your money where you see fit, and if you
Speaker 1: lose your money, that's on you. But when you have
Speaker 1: these institutions taking your money and investing in a way
Speaker 1: that doesn't align with your visions. And on top of them,
Speaker 1: not only are they investing against your vision, your ideologies
Speaker 1: in the world that you want, they're not only going
Speaker 1: against that, they're also losing you money at the same time.
Speaker 2: That's the problem. That's a big problem.
Speaker 1: Now, this is a big deal for a lot of reasons. Obviously,
Speaker 1: one we know it doesn't work. Going back to what
Speaker 1: Friedman said, really the social responsible thing is to chase profits,
Speaker 1: because if you think about it, that drives everything. So
Speaker 1: for example, Patagonia is a massive, you know, clothing manufacturer,
Speaker 1: make really really high end jackets and things like that.
Speaker 2: I'm sure you've heard of them.
Speaker 1: Their whole mission is that they make you know, sustainable products.
Speaker 1: They give money back to the environment and things like that.
Speaker 1: So if I care about that and they want to
Speaker 1: make profit, then they do those things and we support them.
Speaker 1: So through their pursuit of profit, they are then doing
Speaker 1: the social responsible thing. If there's two companies, one company
Speaker 1: wants to dump you know, hazardous waste into the desert
Speaker 1: and the other company wants to recycle and make sure
Speaker 1: that the hazards waste doesn't go into the environment, well
Speaker 1: then we would as consumers most likely we would support
Speaker 1: the company that's not turning my hometown into a hazardous wasteland.
Speaker 1: So I would support the one that doesn't, And so
Speaker 1: through their pursuit of profit, hoping that I give them business,
Speaker 1: they do the socially responsible thing. The problem is when
Speaker 1: the incentives get perverted, when the government steps in, they
Speaker 1: and then they bring in the bankers and they bring
Speaker 1: in the investment companies and then they start giving money
Speaker 1: for things insane, things like this that don't work, and
Speaker 1: then people start to change their incentives. Perverse incentives lead
Speaker 1: to perverse outcomes. It all goes back to the money.
Speaker 1: We can talk about every problem in the world, and
Speaker 1: it always comes back down to the money. When the
Speaker 1: money supply is broken, it changes the incentives of everything.
Speaker 1: And we know this.
Speaker 2: It was told one hundred years ago.
Speaker 1: Vladimir Lenin said that the best way to destroy capitalism
Speaker 1: is to debouch the currency through massive inflation. We can
Speaker 1: steal arbitrarily, so when they inflate money, they steal from you,
Speaker 1: and it can be done so far that all relation
Speaker 1: to money is lost and the best way to get
Speaker 1: rich is through gambling and theft. Very prophetic words from
Speaker 1: the leader of the revolution and communist Russia. Anyway, if
Speaker 1: you're just tuning in you're listening to the Mark Mas Show,
Speaker 1: we just run through what esg is and the dangers
Speaker 1: to causes.
Speaker 2: Hopefully that's helpful.
Speaker 1: Share this episode with somebody that you thinks could benefit
Speaker 1: from it, and that's what I got.
Speaker 2: Thanks so much for listening today.