{"id":1530218,"date":"2022-06-28T07:49:28","date_gmt":"2022-06-28T11:49:28","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1530218"},"modified":"2022-06-28T07:49:36","modified_gmt":"2022-06-28T11:49:36","slug":"the-esg-scam-rates-slave-using-chinese-firms-higher-than-clean-american-energy-producers","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/the-esg-scam-rates-slave-using-chinese-firms-higher-than-clean-american-energy-producers\/","title":{"rendered":"The \u2018ESG\u2019 Scam Rates Slave-Using Chinese Firms Higher Than Clean American Energy Producers"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">26<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fthe-esg-scam-rates-slave-using-chinese-firms-higher-than-clean-american-energy-producers%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1530218&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/06\/plant-scaled-e1656080701189.jpg\" class=\"ff-og-image-inserted\" alt=\"image\" \/><\/div>\n<p>Expecting publicly traded companies to do more than simply return shareholder value \u2014 their fiduciary responsibility \u2014 is a fairly new development in Western capitalism. The idea that corporate leadership and shareholders should explicitly care about environmental, social, and corporate governance (known as ESG) issues beyond how they might affect the bottom line has been around for only about 30 years.<\/p>\n<p>But now, ESG investing has become a big driver in steering capital to corporations deemed to be good stewards of subjective principles. By 2025, financial management firms that claim to invest with ESG principles are projected to account for <a href=\"https:\/\/www.bloomberg.com\/company\/press\/esg-assets-rising-to-50-trillion-will-reshape-140-5-trillion-of-global-aum-by-2025-finds-bloomberg-intelligence\/\">$50 trillion of a total global value of $140.5 trillion<\/a> \u2014 more than a third of managed investments.<\/p>\n<p>But is ESG investing trustworthy? Does it really do what it claims to do?<\/p>\n<p><a href=\"https:\/\/www.msci.com\/who-we-are\/about-us\">MSCI<\/a> is one of the world\u2019s largest investment support services firms, with $2.1 billion in revenue. It offers an ESG rating service. I noticed that my Charles Schwab account recently started to display <a href=\"https:\/\/www.msci.com\/documents\/1296102\/21901542\/ESG-Ratings-Methodology-Exec-Summary.pdf\">MSCI\u2019s ESG ratings<\/a> alongside that of the more traditional ratings services \u2014 services focused on a company\u2019s profitability.<\/p>\n<h2>Comparing U.S. and Chinese Companies\u2019 Ratings<\/h2>\n<p>Curious, I looked into the rating of a firm I own some stock in: Texas-based Brigham Minerals (<a href=\"https:\/\/finance.yahoo.com\/quote\/MNRL?p=MNRL&#038;.tsrc=fin-srch\">NYSE: MNRL<\/a>). Brigham looks for land that could produce oil and gas, and owns mineral and royalty interests in 7,909 oil wells and 688 natural gas wells in West Texas, New Mexico, Oklahoma, Colorado, Wyoming, and North Dakota. MSCI rates Brigham Minerals as a B, the sixth lowest of seven ratings that range from AAA to CCC, labeling it a \u201claggard\u201d in the industry with an overall score of 2 out of 10.<\/p>\n<p>I previously wrote about ESG investing\u2019s blind spot for China three years ago in <a href=\"https:\/\/www.foxbusiness.com\/markets\/chuck-devore-americas-china-blindspot-what-responsible-investors-must-realize-before-too-late\">Fox Business<\/a>, pointing out that investment firms playing in the ESG space were also bullish on China \u2014 a nation with terrible air and water pollution (the \u201cE\u201d), horrendous human rights abuses (the \u201cS\u201d), rampant corruption, opaque accounting standards, and rule of law only at the forbearance of the Chinese Communist Party (the \u201cG\u201d).<\/p>\n<p>Not expecting the financial industry to have changed for the better, I looked up three China-based energy companies and compared them to Brigham Minerals. They were Xinyi Solar Holdings (<a href=\"https:\/\/finance.yahoo.com\/quote\/XISHY\/\">OTC: XISHY<\/a>), China Resources Gas Group (<a href=\"https:\/\/finance.yahoo.com\/quote\/CGASY\/\">OTC: CGASY<\/a>), and China Coal Energy Company (<a href=\"https:\/\/finance.yahoo.com\/quote\/CCOZF?p=CCOZF&#038;.tsrc=fin-srch\">OTC: CCOZF<\/a>). All three beat the American energy company in their overall rating.<\/p>\n<h2>Buying Into CCP-controlled Enterprises<\/h2>\n<p>Now, it\u2019s important for investors to understand that you really can\u2019t own shares in a Chinese corporation. When you buy shares in a corporation based in China, you\u2019re really buying American Depositary Receipts (ADRs) that represent shares issued by companies in the People\u2019s Republic of China. As such, your ownership rights are more theoretical than real and are subject to the whims of the Chinese Communist Party.<\/p>\n<p>Further, many Chinese firms that have ADRs traded in the United States are themselves subsidiaries of state-owned enterprises \u2014 meaning that if you buy these ADRs, you are directly investing in an entity fully controlled by the Chinese Communist Party.<\/p>\n<p>As an example, China Coal Energy is 58.36 percent owned by China National Coal Group, a state-owned enterprise. China Coal Energy owns 12 coal mines, 13 coal-processing plants, five coking plants, four coal mining equipment manufacturing plants, and two mine design institutes. They\u2019re really into coal. <\/p>\n<p>That makes sense, as coal is China\u2019s largest source of energy \u2014 with the PRC having on the order of five times the size of the U.S. coal powerplant fleet in operation or in construction. MSCI rates China Coal Energy as \u201cBB\u201d \u2014 one step better than Brigham Minerals, with an environmental rating of 4.7 of 10 compared to Brigham\u2019s 0.8, a social rating of 4.2 compared to Brigham\u2019s 3.5, and a governance rating of 2.2 compared to 6.4 for the American firm. Overall, China Coal rates 3.1 out of 10 compared to 2 for Brigham.<\/p>\n<p>China Resources Gas Group mostly invests in natural gas pipelines. It\u2019s a subsidiary of China Resources Holdings Company, a state-owned company. The company got its start in Hong Kong as Liow and Company in 1938. Its purpose was to raise funds and purchase supplies for the People\u2019s Liberation Army, then fighting the Nationalists in the Chinese Civil War \u2014 and, occasionally, the Japanese as they pressed their attacks into China. <\/p>\n<p>By the 1960s, due to grain shortages caused by Maoist policies, the firm was used to import vast amounts of \u201ccapitalist grain\u201d to stave off mass starvation. MSCI generously rates China Resources Gas as an \u201cA\u201d \u2014 the third-best of seven grades, with better grades than Brigham in both the environment, 7.7 to 0.8, and social, 7.6 to 3.5. Only in governance does China Resources Gas fall short, earning an \u201caverage\u201d rating of 4.6 to Brigham\u2019s 6.4. China Resources Gas nets an overall rating of 6.3 to Brigham\u2019s 2.<\/p>\n<p>Xinyi Solar Holdings should be <a href=\"https:\/\/www.scmp.com\/business\/markets\/article\/3138749\/bidens-ban-xinjiang-produced-solar-products-fuels-stock-rally\">problematic<\/a> for MSCI \u2014 after all, China\u2019s solar power industry, a global juggernaut, <a href=\"https:\/\/www.nytimes.com\/2021\/01\/08\/business\/economy\/china-solar-companies-forced-labor-xinjiang.html\">is a heavy user of materials produced by slave labor in Xinjiang<\/a>, a Muslim-majority region formerly known as Turkestan where the Chinese communist government has been engaged in a grinding genocide. MSCI even has a <a href=\"https:\/\/www.msci.com\/modern-slavery-statement\">corporate statement against \u201cmodern slavery\u201d<\/a> on its website, claiming that the firm \u201cis committed to protecting human rights globally\u2026 Specifically, the Firm strongly opposes slavery and human trafficking and will not knowingly support or conduct business with any organization involved in such activities.\u201d<\/p>\n<p>This is at odds with MSCI\u2019s ESG rating of Xinyi Solar \u2014 an \u201cA\u201d \u2014 with scores of 8.1 for environment (<a href=\"https:\/\/www.discovermagazine.com\/environment\/solar-panel-waste-the-dark-side-of-clean-energy\">heavy metal pollution aside<\/a>, apparently), 5.6 for social, and 2.6 for governance. Overall, Xinyi scores a 6.1 of 10 compared to 2 for the Texas firm.<\/p>\n<p>That a firm in China that relies on slave labor for key portions of its supply chain has a better social score than an American firm that pays landowners who freely sell them their mineral rights betrays an upside-down ethic where freedom is slavery and ignorance is strength. Of course, that hasn\u2019t stopped 174 institutional owners from investing in Xinyi Solar, among the largest being JP Morgan, Invesco, and Vanguard.<\/p>\n<h2>Counter to ESG Goals<\/h2>\n<p>This leads to one last, odd ESG story. Texas lawmakers, concerned about how banks and financial institutions aggressively implementing ESG investing rules were beginning to starve Texas\u2019s energy industry of capital, passed a law in 2021 to address the problem. <a href=\"https:\/\/capitol.texas.gov\/billlookup\/History.aspx?LegSess=87R&#038;Bill=SB13\">Senate Bill 13<\/a> prohibited Texas\u2019s pension and investment funds (worth about $300 billion) from investing in \u201cfinancial companies that boycott certain energy companies.\u201d <\/p>\n<p>But figuring out what companies those might be turned out to be a somewhat complicated process. So, the Texas state comptroller, <a href=\"https:\/\/comptroller.texas.gov\/about\/media-center\/news\/20220316-texas-comptroller-glenn-hegar-seeks-information-from-19-companies-that-may-be-boycotting-fossil-fuel-industry-1647296122533\">charged with implementing the new law<\/a>, turned to\u2026 MSCI. The problem was that MSCI is guilty of pushing ESG to the detriment of domestic energy produced in Texas, forcing Texas to <a href=\"https:\/\/www.npr.org\/2022\/04\/27\/1094970613\/texas-targets-financial-firms-that-practice-climate-conscious-investing\">modify its contract with MSCI<\/a> to avoid violating the new law.<\/p>\n<p>Ben M. \u201cBud\u201d Brigham, founder and executive chairman of Brigham Minerals and other energy companies, has been an ESG skeptic for years. He tells me that \u201ccompanies innovating in free markets strive to create value for their owners which benefit all the legitimate stakeholders. This is empirically validated in America, where we enjoy unprecedented levels of clean air and clean water compared to other major economies. In contrast, ESG investing \u2014 a relatively subjective exercise \u2014 often represents the influence of illegitimate stakeholders, and therefore ends up being irresponsible, destructive, and counter to its stated goals.\u201d<\/p>\n<p>So, here\u2019s the bottom line from the self-righteous global elites: Chinese-government-owned coal, fine; Chinese slave-provisioned solar power, good; Chinese state-owned natural gas, better; American domestic natural gas and oil, terrible.<\/p>\n<hr class=\"wp-block-separator\" \/>\n<p>\n  Chuck DeVore is vice president of national initiatives at the Texas Public Policy Foundation, a former California legislator, special assistant for foreign affairs in the Reagan-era Pentagon, and a lieutenant colonel in the U.S. Army (retired) Reserve. He&#8217;s the author of two books, &#8220;The Texas Model: Prosperity in the Lone Star State and Lessons for America,&#8221; and &#8220;China Attacks,&#8221; a novel.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Expecting publicly traded companies to do more than simply return shareholder value \u2014 their fiduciary responsibility \u2014 is a fairly new development in Western capitalism. The idea that corporate leadership<\/p>\n","protected":false},"author":563,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1530218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1530218","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/563"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1530218"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1530218\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1530218"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1530218"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1530218"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}