This article first appeared in Forum, The Edge Malaysia Weekly on June 5, 2023 - June 11, 2023
The new buzzword in business nowadays is ESG — the environmental, social and governance theme. Corporate performance has now been tied to an ESG Index for supposedly responsible investing and even financial sector lending decisions. But make no mistake, it is ideology masquerading as social responsibility thrust upon economies and businesses across the board with no regard for real-world consequences. It is a hegemony of Western leftist ideals not rooted in practical economic principles.
Not all of it is of concern. For example, good governance is a norm that is universally valued. But most areas that form this ideology are based on what the wealthy First World can afford but are catastrophic to growing economies like ours. Our government leaders, policymakers in parliament, Bank Negara Malaysia, the Securities Commission Malaysia, Bursa Malaysia and even Petroliam Nasional Bhd (Petronas) must recognise this and pave our own way instead of swallowing this ideology whole, to our nation’s detriment.
In my opinion, all economic activities are reliant on good governance. That alone is sufficient to ensure the sustainability of businesses and economies that are the backbone of a nation’s well-being. All other aspects of this ESG ideology — let me repeat, it is an ideology — are not just controversial even in the West, but the result of which we shall see may not be as desired. As the saying goes, the road to hell is paved with good intentions.
We must not forget how the West treated our palm oil industry under the guise of “health” concerns. When the health concerns were later found to be not just unfounded but the reverse may be true, did they reverse their position? No. Instead, after that the issues morphed into the defence of “human rights” and then “environmental concerns”. They could have advocated for us to alleviate their concerns on such “human rights” and/or “environmental” issues but their go-to mode is to impose punitive measures due to our weak economic power to counter them.
In fact, the truth is, it is about protecting their economic interest and their substitute oils to our palm oil. If eating healthy and humanitarianism are truly their concern, why don’t they just ban their fast-food chains or genetically modified farming industries? It’s not convenient, is it? But palm oil is conveniently positioned within the narrative of their Western ideological left stakeholder-politics pushing their agenda.
We are seeing this repeated on a global scale through the BlackRocks and other so-called globalist investment and banking interests pushing stakeholder advocacy through ESG, the emphasis in fact being sustainable environmental advocacy and the imposition of leftist social justice ideology. Be aware that governance is included only as a bow to the package being pushed. Governance has always been the bedrock of any public company since the advent of the modern publicly traded stock exchanges. It is a redundant element in the ESG acronym.
At an investment presentation in 2021, Warren Buffett called ESG “asinine”, while his Berkshire Hathaway partner Charlie Munger openly questioned whether anyone knew what the right answer was on global warming. The world’s leading technology leader and electric vehicle entrepreneur, Elon Musk, wrote even more scathingly that “ESG is a scam. It has been weaponised by phony social justice warriors”. Are we all missing something here, that proven but maverick economic and technocratic entrepreneurs such as Buffett and Musk see that others do not? Or are we supposed to embrace every Western initiative such that our elites can be part of the in-crowd and rub shoulders in Davos?
Let us take the environmental area as the first aspect of the ideology. Its draconian emphasis on so-called green technology at the expense of the fossil fuel industry is foolhardy and, in fact, has been proved to already have the unintended consequences of affecting the environment more severely than the status quo. Green energy creates its own waste and pollutes the environment in producing non-perishable materials in much higher quantities than oil and gas production will ever do. Has anyone looked at the mining of rare earth materials used in “green” technology and how it affects the environment and human or non-human populations?
Wind turbines and solar panels need to be manufactured. What is the true net carbon footprint of manufacturing them compared to the production of oil and gas? How many and how big does one need them to be produced for the equivalent unit of energy compared to a gas-fired power plant? And they go through massive wear and tear that will need replacements. How much of this non-perishable waste is the environment going to accumulate before we come to our senses too late? There is hardly any debate on this in the mainstream media because the propaganda of the green ideology has become “religion”. It is heresy to even discuss it. At best, you are called a climate change denier or a conspiracy theorist.
And then there is sustainability. Looking at Europe, Malaysia must forge a smarter and wiser path, politically incorrect as it may sound. In their fervour to set draconian targets for carbon emissions, they have gutted their gas-driven power plants.
However, by mid-2022, some EU members, including France, had announced the reopening or extension of coal-fired power plants originally meant to close down due to climate-mandated green and CO targets. Germany announced the reactivation of 27 coal-fired plants. The downing of wind power for some time and a long dark winter is enough to put Europe in blackout mode. Add to that a Russian blockade of gas supply and it is maybe enough to seemingly put Europe back into the dark ages from what is left of its gas-fired plants that will not be able to deliver. And thus, the hypocrisy of the Western agenda is exposed. When their economic needs are threatened, the platitudes about saving the climate are left by the wayside and coal conveniently returns, with hugely significant multiples of carbon and methane emissions compared to gas-produced energy that would have been ready had the plants not been shuttered. A ready alternative resource of gas from Russia would have done the job, but that was not their key performance indicator.
As an aside, I need to mention that climate change activists often cite “the science” or so-called “consensus among scientists” when advocating their stand. I beg to differ, especially when the safest and most non-polluting green technology, which is nuclear, is not even considered polite conversation. The science is clear on the advancement of nuclear technology, including its waste handling, for producing energy as the best alternative. But social justice advocacy is not about science and logic. It is about feelings and emotions and running it through national politics and now corporate politics. It is not science, it is ideology. And there is big money behind this ESG-industrial complex — consulting, advocacy of its interests and, finally, the financial institutions and mega-funds that promote themselves with ESG as a branding tool.
My last point for now on ESG is on the social justice part. What of this are we adopting in Malaysia to be the darlings of Western leftist ideologues? We are a nation of multicultural and multireligious ethnicities. We have our own collective values. People can live their own lives under our constitution but are we now going to have our corporations such as Petronas embracing equity in gender and LGBTQ hiring practices, for the inclusivity part of social justice, in place of nurturing the best that are in their fields?
We are already struggling with how to balance affirmative action for the bumiputera economy. The corruption endemic in our multiethnic society has been the bane of our nation and a major factor in our economic malaise. The 1Malaysia Development Bhd scandal, as an example, perfectly encapsulates the nature of corruption in Malaysia — each of the major ethnicities played a role in our national shame and downfall. That is why even after more than 40 years of New Economic Policy and its successors, we kept falling short.
This should be our focus and only focus — implement our policies that will work with good governance, by all.
Malaysia must be a maverick. South Korea paved its own path. So must we. We never bowed to the orthodoxy of International Monetary Fund economics in 1998. And we won. We should never bow to Western neo-imperialism via its corporate activist ideology. As Buffett would put it, Berkshire is more inclined to respond to shareholder needs. So, for us, for the government, and bodies like Bank Negara, the Securities Commission and Petronas, the shareholders are the citizens, not activist-interests of the neo-colonial ESG industrial complex.
Our path is clear, and our economic vision must be clear. We have a God-given natural resource we should not squander at the altar of global capital advocacy stakeholder activism. We must exploit and efficiently invest and use the immense natural gas resources within our boundaries. The capital in our Treasury must stay in Malaysia to power our economy through this resource. Create the liquidity here and the inflow of foreign capital will come. There is nothing that attracts capital more than a growing economy.
Tengku Ngah Putra heads the oil and gas cluster of Majlis Tindakan Ekonomi Melayu Bersatu, an association representing more than 50 economic groups, non-governmental organisations and more than 500,000 Malay businesses
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