Here’s the big lie about ESG funds
The analysis by Mario Giaccio, former full professor of "Technology and innovation" and "Technology and Economics of Energy Sources" of the Department of Science of the "G. d'Annunzio” of Chieti-Pescara, taken from the new book by Nicola Porro, “ The big green lie. Scientists dismantle, with real data, the dogmas of climate alarmism ” (Liberilibri)
The instrument through which the financial system intends to pursue the epochal replacement of energy sources and change the current social structure are ESG funds.
Investments in ESG stocks have been boosted since the 2008 financial crisis. The main justification for such investments is that companies that believe in climate change can generate higher returns for investors: this thesis has been much criticized. Although marketed as a climate risk analysis tool, ESG is not one (Edmans, 2023). Those who invest in ESG funds support the decarbonization of Western societies and disadvantage fossil fuel companies. If investments in oil and gas by Western producers are limited, ESG increases the market power of non-Western producers (Russia, China), allowing a revaluation of the latter's energy sources with serious damage to their economies and security. 'West.
It seems that the dual purpose of ESG – increasing shareholder returns and making the world a better place – is unattainable. Although the failure of ESG as an investment strategy has become unequivocal, the political doctrine underpinning it will continue until there is a new, neutral, political approach. As did, for example, German Finance Minister Christian Lindner in September 2023, who criticized politicians in Brussels for trying to pass stricter rules on the energy efficiency of buildings, warning that such plans could trigger a dangerous backlash and put social peace at risk.
Already in 2022, the first ESG crisis occurred. Many financial observers have asserted that ESG investing has returned to the real world (Darwall, 2022): BlackRock's ESG fund has lost 22.2% of its value, while the S&P 500 Energy Sector index (which deals with energy sources traditional) rose by 54%. BlackRock's ESG policies have set many investors back billions of dollars. The Vanguard group, the world's second largest fund manager ($7.2 trillion), has withdrawn from GFANZ.
A particular, but nevertheless interesting aspect came to the fore following the approval of a law by the Texas Senate in May 2023: bill no. 833, which tends to prevent insurers from considering ESG criteria when determining premiums for almost all forms of insurance. The bill states that ESG factors are not based on “sound actuarial principles.” The prediction of the increase in extreme events, and therefore the increase in premiums to be paid to insurance companies, is the topic that insurance companies are most fond of. The interest dates back to the Hurricane Katrina episode. Hurricane Katrina in 2005 cost the home insurance industry $40 billion. The insurance companies immediately tried to recover the figure, updating the premiums, simply by appealing to the scientific "consensus" on climate change, which is increasingly invoked for any negative event that happens to human society. A month after the New Orleans disaster, real estate specialist RMS Insurance hired four hurricane “experts”: a tropical cyclone forecaster; a supporter of the link between global warming and the dangers of these events; a physicist, founder of an insurance consultancy company on risks from atmospheric events; a physicist who linked global warming to the increase in damage and therefore costs caused by it.
RMS modelers estimated the chance of hurricanes in the southern United States from 2006 to 2010 at 30 percent above average. In this way the RMS, and other insurance companies, were able to adjust the premiums, not to what happened but to what could have happened, for the modest sum of 82 billion dollars (more than double the cost of the hurricane Katrina). There was a hurricane, but of dollars (Guidi, 2010). This is why any scientific work that questions the increase in extreme events is rejected or boycotted (Alimonti et al., 2022).
If this excuse is removed, a significant part of the climate economy falls: that of insurance. Works, such as that of Patrick Brown, which attribute disasters to anthropogenic climate change, are instead published in prestigious journals. Furthermore, no one has managed to reliably demonstrate that it is possible to make forecasts that exceed the climatological average (Pielke, 2009). Another multinational insurance company, Munich Re, together with the United Nations, conducted an analysis on the same problem. The result is a graph that shows the global trend (from 1990 to 2012) of a clear decrease in damage caused by extreme atmospheric events in relation to global GDP (Pielke, 2013). Events haven't increased, but revenue has. An analysis that delves into this topic is that of Neumayer and Barthel (2011), who conclude: «So far there is no evidence that climate change has increased the normalized economic loss resulting from natural disasters». Furthermore, if you go to the EM-DAT website, The International Disaster Database, you will find that annual deaths due to severe climatic events (floods, droughts, storms, extreme temperatures, etc.) have progressively decreased from around 490,000 per year in 1920 to 15,000 in 2020. These data are ignored by climate priests.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/nicola-porro-la-grande-bugia-verde/ on Sat, 08 Jun 2024 05:25:55 +0000.