Weekly clippings #9 - extreme weather, reefs, models, governance, ESG metrics

 This week once more my collection is growing much faster than one item per category per week, so my clippings are three in science and four in economics/investment. It’s starting to look like an actual newsletter and I included a graphic header each category. 

With the media fawning over reports of record temperatures, this is a perfect week to look at what the scientific data actually says and this week I’ve given one about temperature, one about how the Great Barrier Reef is in wonderful shape and a third about the non-scientific models used for justifying pending climate doom. Note that there are no actual measurements that lead us to conclude doom is coming, only models, and a proper understanding of the validity of such models is crucial to choosing any investment actions regarding climate change. Again and again the models are shown to be invalid and even ridiculous in their assumptions and their mathematics.

 

In the investment category this week I am focusing on the concept of stakeholders, another term that is used as an anti-concept to destroy our ability to think clearly about the people who are actually directly involved in business relationship and whose livelihood and assets are on the line. Unsurprisingly, avoiding reality is destructive not only to the interests of the parties involved, but all the other “stakeholders” too.

 

Finally, in the category of absurdities in the ESG field, we find that companies that were formerly shunned by so-called ethical investors are now atop the ESG ratings. What does this tell us about the validity and value of such ratings, I wonder? Are such absurdities something we want to attach our reputation and business values to? Not me.

What the IPCC Actually Says About Extreme Weather I promise, you'll be utterly shocked Clearly, with the exception perhaps of only extreme heat, the IPCC is badly out of step with today’s apocalyptic zeitgeist. Maybe that is why no one mentions what the IPCC actually says on extreme events.

 

Great Barrier Reef in record coral cover but 97% of Australians don’t know it

Half of all man-made emissions of CO2 ever emitted have been produced since these coral surveys were started, yet there is no measurable effect on coral cover.

Climate models behind Net Zero policies are ‘thoroughly flawed’ Pay them no attention. They are not ‘physics-based’ except in the Hollywood sense, and they are far from ready for prime time. Their main use is to add false legitimacy to the unrealistic fears of the programmers.

 

Does Adopting a Stakeholder Model Undermine Corporate Governance?   The interests of society are more likely to be promoted by the wealth created by efficient businesses operating under a shareholder governance model than by mandating or otherwise pressuring companies to pursue environmental and social goals within a stakeholder governance framework.

Stakeholder Value: A Convenient Excuse for Underperforming Managers?  Collectively, our findings suggest that the push for stakeholder-focused objectives provides managers with a convenient excuse that reduces accountability for poor firm performance.

The Illusory Promise of Stakeholder Governance acceptance of stakeholderism could well impose major costs. By making corporate leaders less accountable and more insulated from shareholder oversight, acceptance of stakeholderism would increase slack and hurt performance, reducing the economic pie available to shareholders and stakeholders.

ESG Mandates and Managerial Efficiency Mandatory ESG mandates distort managerial efficiency and exacerbate principal-agent problems between management and shareholders.

 

How Ridiculous are ESG Metrics? Check Out Which Industry Is 'Crushing' Them.  According to the most widely-accepted producer of ESG ratings on earth, the tobacco company whose products kill millions of human beings each and every year is somehow a more “ethical” investment than the world’s foremost maker of electric vehicles. Even more absurd, a British tobacco giant is rated a more “ethical” investment than all but two other companies in the entire rating system! In a just and sane society, this bit of lunacy would spell the death knell of ESG mania for good.