Unethical Investing

We support ESG! Now that reeks of hypocrisy.

By Darryl Weng

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Environmental. Social. Corporate Governance. Together, these pillars transcend the concept of responsible investing. In recent years, ESG has become widely accepted in the financial world. Yet, many investors appear to disregard the pillar of social responsibility. How can such individuals claim they uphold social justice when they continue to invest directly and indirectly with countries whose governments proactively seek to dismantle human rights and freedoms? Investors have thrown out the core themes of ESG in favor of their own unsavory desires.

In a Bloomberg report a week ago, Jamie Dimon, JPMorgan CEO, reaffirmed the bank’s position on its investment strategy in China - “remaining committed to doing business”. While Dimon has expressed caution about Mainland Chinese investments, he has pushed for the Biden Administration to “engage” with China in an effort to “derisk”. In simpler terms, Dimon is hopeful for US-China tensions to resolve in the name of peace. For years, US and China have been at odds over human rights, especially with the last decade seeing accelerated aggression by the Chinese Communist Party (CCP). From the violent takeover of Hong Kong to the extreme human rights violation of Uyghurs, the CCP has stretched its talons across Southeastern Asia. The US has responded with pledges in the defense of Taiwan against China, the development of military technology in an effort to bolster the nation’s national security, and sanctions regarding AI chips & other advanced consumer technology.

What Dimon is asking for is impossible. Any political analyst, no matter how optimistic, would not be able to provide a sound argument for a revival in trade relations between China and America. If Dimon understands the predicament he’s facing, then the primary issue JPMorgan must be facing is the sheer amount of endangered assets under the Chinese investment strategy. To protect his cash flow and assets, Dimon shared fake laughs and shook hands with communist leaders for the sake of the bank’s standings. What better way than to convince the public that Chinese markets will still maintain quite a bit of their growth in the future?

And yet, JPMorgan’s website proudly shares the bank’s commitment to ESG whilst actively collaborating with CCP leaders. This is no ignorance. This a completely informed decision in an effort to maintain public image and funds.

Meanwhile, in Venezuela, interest in oil and gas production has sparked increased funding from American corporations. Chevron, an energy corporation predominantly focused on oil and gas, decided to invest in the Venezuelan oil industry. Ali Moshiri, an executive at Chevron, created an investment fund in 2019 to “contribute to balancing oil supply and demand”. Naturally, given the state of the American economy with respect to inflation rates, an effort to reduce such costs to consumers is valiant. However, this does not stand true when any one of the pillars of ESG is struck down. Chevron clearly dismissed the political state of Venezuela when its website expressed the company’s dedication to human rights. Under Nicolas Maduro, Venezuela was completely transformed into a cruel, unlivable dictatorship. Despite opposition party efforts backed by the US, Maduro triumphed with lesser-known aid from Russia, China, and Turkey. Once elected, Maduro quickly made sure the nation lived up to his warped view of justice. Thousands of executions and arrests followed. The dictatorship also oversaw the distribution of illegal gold and narcotics. The violation of human rights and lack of social justice in Venezuela is so pervasive that any foreign relations with the country would be a sin.

For Chevron to defend its case for investments in Venezuela for the sake of Americans reeks of irony. While tapping oil investments in Venezuela may be of great profit and a large contribution to the decrease in gas prices, Chevron fails to understand the long-term impacts of the decision. The political consequences are far greater in magnitude than the benefits of a temporary relief in gas prices. Chevron not only managed to place itself in a position opposite of American national security concerns, but the company has also indirectly pitted itself against the UN Human Rights Council.

For any ambitious corporation, fund, or bank, the ultimate goal is the maximization of profits and assets. And, as seen in time over and over again, this desire conflicts with the ESG values they are so proud of.

Yet, corporate America fails to understand an additional underlying point of ESG. The purpose of ESG is to not only promote responsible investing but also promote a company’s growth - whether it be now or in ten years time. Can a company remain relevant in the near future through enough attention on environmental concerns? Is the company’s interest not conflicting with the common citizen to ensure stability? And is the company properly managed to maintain/spark growth? ESG is far from a limiting factor, and corporate America should understand this concept as a boon for both public image and monetary gains.

Ultimately, it is the greed of those such as JPMorgan and Chevron that turned a supposedly lucrative investment into a disaster. Despite pledging dedication to the themes of responsible investing, such companies smashed the ethical and moral pillars to chase greater profits. In the end, ESG proved to be triumphant over the many investors who attempted to cheat its system. A lesson well-learned.