Many failures and mistakes contributed to the collapse of SVB, including ESG-based policies and decisions. How much harm did woke politics actually do to this bank?
From Breitbart. Oh so woke, oh so green, oh so diverse Silicon Valley Bank (SVB) just went bust. …
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What role did wokeness play in SVB’s failure?
Another term for wokeness, of course, is ESG, which stands for environmental, social, and governance. ESG is a pertinent question, as there’s a considerable body of economic literature showing that woke investments aren’t good investments. For instance, one study by professors at the London School of Economics and Columbia University finds that:
ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and to charge higher fees. Our findings suggest that socially responsible funds do not appear to follow through on proclamations of concerns for stakeholders.
Shorter version: ESG makes less, costs more, and is a fraud.
Of course, if ESG investing only soothed the conscience … it might be okay. But now, as a big ESG bank goes belly up, we see the danger of systemic risk to the whole economy. That’s what happened when bank failures domino-ed back in 1929. …
Yet in the meantime, if the evidence continues to pile up that woke/ESG is bad business, then it will be hard for financial officers across the spectrum—in banks, investment houses, pension funds, insurance companies, and university endowments—to argue that they can be woke while still upholding their fiduciary duty. That duty is a heavy legal concept, containing significant civil and even criminal penalties if it is violated.
To be sure, plenty have been warning about the dangers of ESG, including House Majority Leader Steve Scalise (R-LA) and also some of those directly tasked with growing and safeguarding pension funds, such as West Virginia State Treasurer Riley Moore. There’s even a new network of right-leaning investment overseers, the State Financial Officers Foundation.
So, now expect a scramble, as all the Emperors of ESG—including Al Gore, Larry Fink of BlackRock, and maybe even Bono—rush to tell us that this is fine. …
[Back] to SVB and its fiduciary duty, which is especially extensive when it comes to federally regulated banks. (Once again, nobody wants another Depression.) Let’s consider SVB’s fiduciary duty as we go through the bank’s own statements. …
For instance, here’s an SVB headline from January 10, 2022: “Silicon Valley Bank Commits to $5 Billion in Sustainable Finance and Carbon Neutral Operations to Support a Healthier Planet.” Sounds green! But was that the best use of funds? …
All that money might have seemed great for some people … and maybe the planet … but it doesn’t seem to have been great for SVB investors and depositors. …
Of course, SVB is also big into DEI (Diversity, Equity, and Inclusion), declaring, “We’re building a culture of belonging with a global workforce that celebrates greater dimensions of diversity.” … And to get an even better sense of SVB’s DEI footprint, we might consider this (now deleted) tweet from one Christina Qi, who identifies herself as a former hedge fund CEO:
The SVB collapse has been devastating in more ways than one: They supported women, minorities, & the LGBTQ community more than any other big bank. This includes not just diverse events, but actual funding. SVB helped us move one step forward; without them, we move two steps back.
One sharp tweeter responded, “Maybe other banks will take a look at this failure and realize they need to do actual banking instead of virtue signaling.” …
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(Excerpt from Breitbart. Photo Credit: Canva)