DAVID BLACKMON: The ESG Crisis and the Dwindling Promise of Net Zero

By David Blackmon |

In recent years, the ESG (Environmental, Social, and Governance) movement gained traction among banks and investors, particularly as global governments pushed for what they believed to be a crucial energy transition. Major players like BlackRock, State Street, J.P. Morgan, and Goldman Sachs wielded their financial power to cut off funds to fossil fuel projects, all while presenting renewable energy solutions as the future.

However, reality has challenged this narrative. The promised solutions, including wind, solar, and electric vehicles, have proven more complex and less effective than anticipated. Additionally, new technologies and the rise of cryptocurrency mining have spiked demand for electricity, leading to a greater reliance on fossil fuels to maintain energy stability.

The clash between ambitious green goals and practical energy needs has shaken the foundations of the ESG movement. Laws of physics and the realities of economics remain unyielding, and several states, including Texas, enacted legislation against firms applying ESG principles to exclude investment in the oil, gas, and coal sectors. As a result, BlackRock faced sanctions from Texas in 2023, with multiple states subsequently pursuing legal action against the firm for alleged antitrust violations.

Amidst the downfall of ESG, institutions such as the United Nations’ “Net Zero Asset Managers Initiative” are also faltering. Participants of this initiative pledged to achieve net-zero emissions by 2050, but a growing consensus indicates that this forced transition is not only ineffective but virtually impossible. The focus among energy companies is gradually shifting toward energy security rather than arbitrary emissions targets, prompting industry giants like ExxonMobil and Chevron to reallocate funds back into traditional oil and gas operations.

This shift has triggered a significant withdrawal from the UN-led net-zero alliance by prominent U.S. financial institutions. Names like Goldman Sachs, Morgan Stanley, and Citigroup have recently distanced themselves from the initiative, with additional indications that BlackRock and State Street may soon follow suit. The New York Post reported that both firms, which collectively manage trillions in investor capital, are reconsidering their association with this contentious agenda.

Earlier this year, BlackRock’s CEO Larry Fink expressed regret regarding his involvement in the ESG dialogue, a statement that he later attempted to clarify. Notably, this week’s developments suggest a more serious pivot among major financial entities. The energy landscape has shifted dramatically in the past 18 months, challenging the viability of a smooth transition to renewable sources. It appears that many in the financial sector are beginning to recognize that addressing the pressing issues within the energy system will require more than mere rhetoric.

Originally published by the Daily Caller News Foundation.

David Blackmon is an experienced energy writer and consultant based in Texas, with four decades in the oil and gas industry, focusing on public policy and communications.