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I think ESG will actually shift the balance of power towards CEO's and away from shareholders. If the CEO only has one job and that is to make profits for shar

I think ESG will actually shift the balance of power towards CEO's and away from shareholders. If the CEO only has one job and that is to make profits for shareholders that is a single measurable benchmark the shareholders can hold him accountable to. But now the CEO can make whatever decision he would like and use nebulous and hard to track ESG goals to justify it.

rootusrootus 3y ago
> If the CEO only has one job and that is to make profits for shareholders that is a single measurable benchmark That's never been true, though, and arguably for good reason. The CEO is supposed to act in the best interests of the company, which may not be ideal for short term profit. Trying to simplify to that metric is likely to make the bad behavior even worse.
- nordsieck 3y ago
  > The CEO is supposed to act in the best interests of the company, which may not be ideal for short term profit. You're the one who added "short term" to profit. The CEO is supposed to maximize the discounted future earnings of the company.
  - rootusrootus 3y ago
    True, I did add those words. Because "long term profit" is not a hard metric that can be defined, it's identical to "best interest of the company."
    - dragontamer 3y ago
      The goal of a company is to listen to its shareholders. And shareholders _usually_ care about long term profits. But a group of investors, calling themselves ESG, are now caring about ESG issues. If ESG investors grab hold of your company's shares and become the owner of the company, it becomes the company's responsibility to listen to the (now ESG-aligned) shareholders. Its mutually beneficial. ESG has enough money that its worth pursuing their money. And ESG is a vague enough political concept that the pool of investors is rather large in practice. Yeah, people like to make fun of how stupid the metrics are and all that, but... vagueness is kinda the point. They're trying to be as large as possible so that ESG issues can even come up in board meetings.
  - mgfist 3y ago
    Sure but under the guise of "long-term profits" you can justify almost anything. For example, you could say "we need to beat climate change, otherwise there won't be any profits on a dead earth".
    - nordsieck 3y ago
      > Sure but under the guise of "long-term profits" you can justify almost anything. That's why the metric is discounted future earnings. So that you can't "justify almost anything".
dragontamer 3y ago
> use nebulous and hard to track ESG goals Well, that's where ESG is going by the wayside. But that's the nature of working as a block, there's so many constituents here our voices get watered down. But "as a block", our money is much larger together. ESG has proven that it is possible to create these pools of money that tries to think about these issues. Moving forward, ESG investors (and ESG managers) need to be more clear on what those goals are and who to reward, and how to balance profits vs social good.
- deleted 3y ago
  [deleted]

rootusrootus 3y ago

> If the CEO only has one job and that is to make profits for shareholders that is a single measurable benchmark That's never been true, though, and arguably for good reason. The CEO is supposed to act in the best interests of the company, which may not be ideal for short term profit. Trying to simplify to that metric is likely to make the bad behavior even worse.

nordsieck 3y ago
> The CEO is supposed to act in the best interests of the company, which may not be ideal for short term profit. You're the one who added "short term" to profit. The CEO is supposed to maximize the discounted future earnings of the company.
- rootusrootus 3y ago
  True, I did add those words. Because "long term profit" is not a hard metric that can be defined, it's identical to "best interest of the company."
  - dragontamer 3y ago
    The goal of a company is to listen to its shareholders. And shareholders _usually_ care about long term profits. But a group of investors, calling themselves ESG, are now caring about ESG issues. If ESG investors grab hold of your company's shares and become the owner of the company, it becomes the company's responsibility to listen to the (now ESG-aligned) shareholders. Its mutually beneficial. ESG has enough money that its worth pursuing their money. And ESG is a vague enough political concept that the pool of investors is rather large in practice. Yeah, people like to make fun of how stupid the metrics are and all that, but... vagueness is kinda the point. They're trying to be as large as possible so that ESG issues can even come up in board meetings.
- mgfist 3y ago
  Sure but under the guise of "long-term profits" you can justify almost anything. For example, you could say "we need to beat climate change, otherwise there won't be any profits on a dead earth".
  - nordsieck 3y ago
    > Sure but under the guise of "long-term profits" you can justify almost anything. That's why the metric is discounted future earnings. So that you can't "justify almost anything".

dragontamer 3y ago

> use nebulous and hard to track ESG goals Well, that's where ESG is going by the wayside. But that's the nature of working as a block, there's so many constituents here our voices get watered down. But "as a block", our money is much larger together. ESG has proven that it is possible to create these pools of money that tries to think about these issues. Moving forward, ESG investors (and ESG managers) need to be more clear on what those goals are and who to reward, and how to balance profits vs social good.

deleted 3y ago
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