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No reliable evidence that ESG investing produces above-average returns

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3 minute read

From the Fraser Institute

By Steven Globerman

Despite growing skepticism among investors, as evidenced by their withdrawal of billions of dollars from ESG equity funds so far in 2024, many finance industry leaders continue to claim that ESG-focused investing produces above-average returns.

But is that true?

Environmental, social and governance (ESG) is a movement designed to pressure businesses and investors to pursue larger social goals. According to ESG theory, firms that receive poor ratings from ESG rating agencies should lose investment dollars. Yet the claim that ESG-focused investing can help investors do well by doing good has received surprisingly little empirical support from academic studies.

However, according to a new study published by the Fraser Institute, which tracked 310 companies listed on the Toronto Stock Exchange from 2013 to 2020, neither ESG rating upgrades nor downgrades were related in a statistically significant way to the stock market performance of companies.

Moreover, because the study finds that ESG ratings changes—which, when released, are effectively new information for investors—are not consistently related to financial returns, ESG ratings are likely not relevant to the expected future profitability of publicly listed companies in Canada.

This of course raises the question—if new information (i.e. ratings changes) about a company’s ESG-related practises is not statistically related to equity returns from investing in that company, why do money managers pay for the services of ESG rating companies?

One possible reason is that managers pass a substantial share of the costs along to customers who are willing to sacrifice financial returns (due to higher management fees) to express their commitment to environmental sustainability and other social causes. Another possible reason is that promoting ESG-focused investment alternatives appears to have been, at least until recently, an effective marketing tool.

But again, the empirical evidence suggests there’s no reliable statistical relationship between ESG-focused investing and the risk-adjusted returns earned by investors. And since asset managers typically charge higher fees for ESG-focused mutual funds, ESG investment strategies are more likely to underperform than overperform conventional investment strategies.

Certainly, if some percentage of investors choose to pursue ESG-related investment strategies, even at the cost of lower risk-adjusted investment returns, there should be no legal or regulatory restrictions on doing so. However, securities regulators should closely monitor the investment industry to ensure it provides reliable and up-to-date information about the financial performance of ESG-focused investment products that portfolio managers market to the public.

At the same time, when ESG advocates push for more government-mandated ESG disclosures from companies in Canada, policymakers should be wary of any claims that greater disclosure mandates will improve the financial performance of companies.

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Rand Paul Releases Report Detailing $1,000,000,000,000 In Gov’t Waste. Here Are The Worst Offenders

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From the Daily Caller News Foundation

By Ireland Owens

Kentucky Sen. Rand Paul released a report on Monday outlining more than $1 trillion in government waste from the past year.

The 2024 “Festivus” report highlighted various instances of wasteful government spending from the federal government, including a pickleball complex in Las Vegas and a cabaret show on ice. This year marks Paul’s 10th annual report.

“This year, I am highlighting a whopping $1,008,313,329,626.12,” Paul wrote in the report. “That’s over $1 trillion in government waste, including things like ice-skating drag queens, a $12 Million Las Vegas pickleball complex, $4,840,082 on Ukrainian influencers, and more! No matter how much money the government has wasted, politicians keep demanding even more.”

The Department of the Interior (DOI) spent $12 million on a Las Vegas Pickleball Complex, according to the report. The DOI also spent $720,479 on wetland conservation projects for ducks in Mexico.

“I have a lot of problems with federal spending, and now it’s time to hear all about them,” Paul wrote in the report.

The National Endowment for the Arts (NEA) awarded the Bearded Ladies Cabaret a $10,000 grant to support a cabaret show on ice skates focused on climate change, according to the report. The NEA also spent $365,000 to promote circuses in city parks, the report states.

The State Department spent $500,000 to expand the U.S. Embassy in Ethiopia’s #USInvestsInEthiopians social media campaign to a larger national public relations campaign, according to the report. The State Department also sent $253,653 to Bosnia to fight “misinformation,” spent $2.1 million for Paraguayan Border Security, and spent $3 million for ‘Girl-Centered Climate Action’ in Brazil, according to the report.

The Department of Health and Human Services spent $419,470 to determine if lonely rats seek cocaine more than happy rats, the report states.

The National Science Foundation spent $288,563 to ensure bird watching groups have safe spaces, also known as “Affinity Groups,” according to the report.

President-elect Donald Trump announced on Nov. 12 that he had picked Vivek Ramaswamy and Elon Musk to co-chair a new Department of Government Efficiency (DOGE), aimed at cutting down on wasteful government spending.

“As always, taking the path to fiscal responsibility is often a lonely journey, but I’ve been fighting government waste like DOGE before DOGE was cool, Paul wrote in the report. “And I will continue my fight against government waste this holiday season.”

Many Americans have faced steep costs amid high inflation throughout President Joe Biden’s term, with inflation hitting a peak of 9.1% in June 2022. While inflation rates have eased some since June 2022, prices still remain high, with the consumer price index (CPI), a measure of the price of everyday goods, experiencing a year-over-year increase of 2.7% in November, according to a Dec. 11 report from the Bureau of Labor Statistics.

Some experts have attributed massive government spending under the Biden-Harris administration to fueling inflation rates. The national debt was at $36.16 trillion as of Tuesday, according to U.S. Treasury Fiscal Data.

A spokesperson for Rand Paul did not immediately respond to a request for comment from the Daily Caller News Foundation.

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Canadian military deployed ‘gender advisors’ to Ukraine, Haiti  at taxpayers’ expense

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From LifeSiteNews

By Anthony Murdoch

The Canadian Armed Forces has been pushing a radical LGBT agenda under Prime Minister Justin Trudeau, with the latest example being ‘Task Force Gender Advisors’ deployed in war-hit nations, such as Haiti and Ukraine.

Canada’s military has been actively pushing a woke pro-LGBT agenda on the world stage, with the latest example being its deployment of “task force gender advisors” internationally in war-hit nations, such as Haiti and Ukraine.

The “gender advisors” initiative is noted in the 2024 Departmental Report of the Canadian Armed Forces (CAF). This has resulted in it drawing a sharp rebuke from veterans who wonder why the military is spending money on pushing the LGBT agenda abroad.

The CAF report notes how in Poland, for instance, the “Task Force Gender Advisor was involved in all aspects of this training mission and supported the local Defence Attaché in connecting with local and Ukraine-based non-governmental organizations and interested parties.”

The report noted how the “gender advisor” as well as “gender focal points” were sent to military missions in Eastern Europe, including Ukraine, Poland, and Latvia throughout 2023.

In war-torn Haiti, “intersectional factors (were) being applied towards stabilization and humanitarian efforts,” via an “Operations HORIZON and PROJECTION” initiative.

This initiative is part of the third “National Action Plan on Women, Peace, and Security for 2023-2029.” This is a program that looks to advance pro-LGBT ideology, such as concepts of different “genders,” in all military operations.

Under Prime Minister Justin Trudeau, the CAF, as well as all government departments, have pushed an ever-increasing woke agenda, as well as a host of so-called diversity, equity, and inclusion (DEI) policies in place.

The military’s action plan notes how there are no less than three full-time “gender advisors” who are in the CAF at all levels.

The president of Veterans for Freedom, Andrew MacGillivray, blasted the woke DEI policies, saying the program has morphed into a “useless overbearing policy that has infiltrated every aspect of the Canadian Armed Forces.”

He noted that war-torn nations most likely don’t care “about gender nonsense being pushed by Canada when they are struggling to keep people alive.”

Since Trudeau became PM, the CAF has become increasingly woke and has been forcing LGBT ideology on many of its personnel. It has also seen recruitment plummet to all-time lows.

As reported by LifeSiteNews, earlier this year, Canada’s first “transgender” military chaplain was suspended for alleged sexual harassment, after he reportedly sought to grope a male soldier at the Royal Military College while drunk.

Canada’s military has spent millions of taxpayer dollars on pro-DEI polls, along with guest speakers, presentations, and workshops, as well as LGBT flags. The workshops covered topics including “the gendered nature of security,” while one talk discussed “integrating gender and diversity perspectives.”

In 2021, the defence department revealed that it has two separate committees and eight programs that worked to appoint homosexual advisors to “innovate” religious instruction and gender-neutral uniforms.

In June of 2023, the Canadian military was criticized for “raising the pride flag” in honor of the so-called “2SLGBTQI+ communities.”

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