the idea of ESG in investing which
stands for environmental social and
governance has been around probably for
twenty years now it sort of followed the
s our eye movements socially responsible
investing and this was our attempt to
think beyond shareholder value and what
other values mattered to the health of a
corporation in the long long one so ESG
environmental the company's
environmental performance and behavior
its social its the way it treats its
employees the way it treats its
consumers weight behaves in its
community healthcare benefits that gives
that kind of things
ng governance is the company well
governed or not well governed and and
there's a sort of common sense
recognition that those attributes and
those values are also important it's not
just shareholder value it's it's a
broader set of values and there's been
you know probably billions of dollars
invested in measuring and disclosing ESG
factors by public corporations and of
course more disclosure about these
issues is is definitely good you know
the old saying light sunshine is the
best disinfectant so if companies are
required to report on these things
they're going to manage them and that'll
be a positive outcome what that whole
idea though failed to address is the
thing I talked about earlier which is
that public companies that operate in
public capital markets whether they
disclose everything perfectly or not are
sitting in a system where they've
they've been separated the relationship
between their true owners has been
separated by the capital markets or
disintermediated by the capital markets
and their engagement with their direct
owners baby you know once a year at the
board me at the annual meeting in a
proxy vote but in a in a private company
for example the owners of the company
are on the boards of directors their
wealth is tied up in the company and
they pay very close attention to the
company so I do argue that
we'll never solve the unsustainability
crisis in business simply through more
transparency ESG and otherwise we need
to use that data to manage businesses
but we also need to reconnect them
fundamentally with with the owners of
enterprise and the thing about their
principles of living systems is that
they're not kind of a menu you can pick
and choose from healthy living systems
operate in accordance with all of them
all at the same time or a system gets
sick and dies
you know you get cancer when at a
cellular level you're not communicating
effectively so ESG can be all well and
good but if we don't also deal with the
right relationship point it goes for
naught and I wouldn't it all suggests
that the work in the ESG movement over
the last 20 years has not been
beneficial but it certainly you know the
the even the most adamant champions of
it have acknowledged that it hasn't
achieved the outcomes that they'd hoped
and it's interesting that I now often
get invited to an ESG conference because
people in the ESG community recognize
that there must be something more to it
than than the work that they're working
on
and I used to say well you sure they're
ready for my message because it's it's
not consistent with their worldview and
and that's that's now no longer a
concern people are hungry for fresh ways
to think about things so that's progress
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