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The 18th-century Enlightenment liberated mind, soul, and property. It established the world-changing principle that labor and capital are private property, unleashing unprecedented explosions in work, thrift, and innovation that lifted millions of people out of abject poverty.
But the modern-day phenomenon known as environmental, social, and governance (ESG) investing threatens that prosperity.
The implicit promise of ESG investing is that you can do well and do good at the same time. Investors presume they can make a market return while lowering carbon emissions or reducing income inequality. However, this seemingly noble pursuit does more harm than good.
In Ending ESG and Restoring the Economic Enlightenment, Sen. Phil Gramm and Terrence Keeley bring together a collection of insightful essays considering the many problems with ESG. The authors draw parallels between pre-Enlightenment practices and ESG’s mistaken attempt to enrich society by extracting rents from workers, consumers, and capital owners. They explain the inefficiencies of ESG investing, the flaws of ESG rating methodologies, and the conflict between ESG and fiduciary standards. They also show how impact investing is a viable alternative for those who genuinely want their capital to do well and do good.
Featuring the writing of Mike Edleson, Alex Edmans, Hester Peirce, Andy Puzder, and Mike Solon, this insightful volume illustrates why ESG is so ineffective and ultimately dangerous. ESG, at its root, is a return to the pre-Enlightenment world, where a self-chosen elite use nondemocratic means to extract the rewards that come from the sweat of the workers’ brows and the sacrifice of their thrift. We have seen this drama play out many times before. The sooner we end the ESG experiment, the sooner we can restore the principles that have always allowed humanity to flourish.
“Keeley and Gramm have done us all a great service with their persuasive work demonstrating that companies serve the public good most effectively by maintaining focus on the shareholders.”
—Robert Doar, president, American Enterprise Institute
“ESG’s rise and its distorting effects upon American capitalism are not isolated phenomena. In these essays assembled by Phil Gramm and Terrence Keeley, we discover that ESG is symptomatic of America’s departure from the revolutionary insights of the economic Enlightenment that began with Adam Smith. The good news is that this knowledge gives America a path back to dynamism and prosperity, if we have the will to make that choice.”
—Samuel Gregg, Friedrich Hayek Chair in Economics and Economic History, American Institute for Economic Research
“In this compact volume, Senator Phil Gramm and Terrence Keeley leave no doubt about the best path forward for human flourishing: free markets complemented by targeted philanthropy and thoughtful impact investment. They deserve to be heard.”
—Baroness Philippa Stroud
“Ending ESG—a collection of previously published articles prefaced by a measured, clearly reasoned introduction by the book’s editors, Senator Phil Gramm and Terrence Keeley—is a forensic and highly critical examination of ESG, a shoddily constructed, self-serving investment ‘discipline’ that has been all too effectively marketed as a way of doing well by doing good.
As the contributors—one of whom has long, and directly relevant experience in the financial sector (and is not unsympathetic to some of ESG’s stated goals)—demonstrate, it has achieved little of either. Moreover, Ending ESG shows how ESG and the related ideology of stakeholder capitalism operate as an attack on private property rights that have done so much to foster America’s remarkable economic success and how, not so coincidentally, they could also undermine our democracy.
So, what should be done in response? Look no further than the title of this well-argued and necessary book for the answer.”
—Andrew Stuttaford, editor, National Review’s Capital Matters
Phil Gramm is a former chairman of the Senate Banking Committee and a nonresident senior fellow at the American Enterprise Institute.
Terrence Keeley is the chairman and CEO of 1PointSix and the Impact Evaluation Lab and the author of Sustainable: Moving Beyond ESG to Impact Investing (2023).
Mike Edleson is a retired chief risk officer of the University of Chicago’s endowment and the former chief economist of Nasdaq and the National Association of Securities Dealers.
Alex Edmans is a professor of finance at London Business School and the author of Grow the Pie: How Great Companies Deliver Both Purpose and Profit (2020).
Hester Peirce is a Securities and Exchange Commission commissioner.
Andy Puzder is a former CEO of CKE Restaurants, a distinguished fellow at the Heritage Foundation, and a senior fellow at Pepperdine University. He is the author of The Capitalist Comeback: The Trump Boom and the Left’s Plot to Stop It (2018) and A Tyranny for the Good of Its Victims: The Ugly Truth About Stakeholder Capitalism (forthcoming).
Mike Solon is a partner of US Policy Metrics.
Introduction
Phil Gramm and Terrence Keeley
Keep Politics Out of the Boardroom
Phil Gramm and Mike Solon
Enemies of the Economic Enlightenment
Phil Gramm and Mike Solon
Warren’s Assault on Retiree Wealth
Phil Gramm and Mike Solon
ESG Does Neither Much Good nor Very Well
Terrence Keeley
Why ESG Funds Fail and How They Could Succeed
Terrence Keeley
The “Stakeholder Capitalism” War on the Enlightenment
Phil Gramm and Mike Solon
The Securities and Exchange Commission Seeks to Supplant the Market
Phil Gramm and Hester Peirce
How Conservatives Can Get ESG Right
Terrence Keeley
ESG Must Evolve into Something Less Politically Explosive Than ESG
Terrence Keeley
A Primer on What a Fiduciary Shouldn’t Do
Terrence Keeley
Is ESG Profitable? The Numbers Don’t Lie.
Mike Edleson and Andy Puzder
Columbia’s “Woke” Investing Plan Would Imperil the Globe, Not Save It
Terrence Keeley
The Progressive Case for Getting Rid of ESG
Alex Edmans
About the Authors