The Jordan B. Peterson Podcast #344 – Derek Kreifels & Jordan Peterson
Derek Kreifels is the co-founder and Chief Executive Officer of the State Financial Officers Foundation (SFOF), the only nonprofit in the U.S. that combines ground-breaking free-market research with a strong network of states’ treasurers, auditors, and other financial officers, to actively sustain the health of each state’s economic outlook. Before co-founding SFOF in 2012, Kreifels spent five years as Assistant State Treasurer of Kansas, where he oversaw the state’s college savings plan, ABLE plan, debt and bond management, and pension investments. During his tenure, his office processed over $21B annually, and he managed 42 employees with an annual budget of over $3.5M.
Books Mentioned in #344 - Derek Kreifels & Jordan Peterson:
Summary of The Jordan B Peterson Podcast #344 - Derek Kreifels & Jordan Peterson
Derek Kreifels discusses the recent decision by three state treasurers to reject ESG (Environmental, Social, and Governance) investing principles, and why individual investors should consider doing the same. Kreifels explores the potential negative implications of ESG investing and offers alternative strategies for responsible investing.
ESG Investing and State Treasurers
ESG investing has gained significant popularity in recent years, as many investors are seeking ways to make a positive impact on the environment and society through their investments. However, not everyone is on board with this trend. Three state treasurers – from West Virginia, Kentucky, and Alabama – have recently announced their rejection of ESG investing principles, citing concerns over fiduciary responsibility and potential negative impacts on investment returns.
ESG Investing: The Good, the Bad, and the Controversial
ESG investing can lead to positive outcomes for both society and the environment. Companies that focus on sustainability, fair labor practices, and good corporate governance can contribute to a better world while also potentially experiencing long-term financial
Despite its positive intentions, ESG investing has its downsides. One major concern is that ESG criteria can be subjective, leading to inconsistent definitions and standards. Additionally, ESG investing can sometimes prioritize social and environmental factors over financial performance, potentially jeopardizing returns for investors.
Another point of contention is the potential for ESG investing to promote a political agenda, which may not align with the values or priorities of all investors. Critics argue that ESG investing can be a tool for pushing certain ideologies, rather than focusing on genuine improvements in environmental, social, and governance aspects.
The State Treasurers' Rejection of ESG Investing
The state treasurers from West Virginia, Kentucky, and Alabama have rejected ESG investing due to concerns over their fiduciary responsibility to their constituents. As treasurers, they are responsible for managing public funds and maximizing returns for the benefit of the state and its citizens. By prioritizing ESG factors over financial performance, they argue that they would be failing in this responsibility.
Impact on Investment Returns
Another concern raised by these state treasurers is the potential negative impact of ESG investing on investment returns. Research has shown mixed results on whether ESG investing leads to better or worse returns compared to traditional investing. The treasurers argue that the potential risk of underperformance is not worth taking for the sake of ESG principles.
Alternative Strategies for Responsible Investing
For those who still want to invest responsibly without relying on ESG principles, there are alternative strategies available:
Ethical investing focuses on aligning investment decisions with an investor’s personal values and beliefs. This approach allows investors to choose companies and industries that match their ethical preferences, without relying on the potentially subjective ESG criteria.
Impact investing specifically targets investments in companies, organizations, or funds that have a measurable positive impact on social or environmental issues. By focusing on tangible outcomes, impact investing can help investors contribute to meaningful change without sacrificing their fiduciary responsibility.
Thematic investing involves selecting investments based on specific themes or trends, such as clean energy or gender equality. This approach enables investors to concentrate on sectors and industries that align with their values while still focusing on financial performance.
Conclusion: Weighing the Risks and Benefits of ESG Investing
As ESG investing continues to gain popularity, it is important for investors to critically assess the potential risks and benefits associated with this approach. While ESG investing can lead to positive social and environmental outcomes, it also comes with potential pitfalls, including subjective criteria and the possibility of lower investment returns.
The rejection of ESG investing by the state treasurers of West Virginia, Kentucky, and Alabama serves as a reminder that not everyone is on board with this trend, and that there are valid concerns about its implications. Investors should carefully consider their own values, priorities, and risk tolerance when deciding whether to adopt ESG investing principles or explore alternative strategies for responsible investing.