Fuzzy Goals of ESG Firms Challenge Investors to Guess Their Future Success

(p. A13) Some movies not only entertain and inspire but convey broader lessons. “Air” is one of them. The film is about Nike’s efforts in 1984 to secure Michael Jordan’s endorsement of its basketball shoes, which soon after became the iconic Air Jordans. But it also tells anyone who will listen that ESG investing—environmental, social and governance—is a trap.

. . .

The Jordan family’s meeting with Adidas makes it apparent that the company has no clear leader or vision on how it would deal with Mr. Jordan in the future. This sense of confusion helps persuade the Jordans to sign with Nike, where leader Phil Knight is securely ensconced, ensuring against any radical change of direction in Nike’s relationship with Mr. Jordan.

. . .

Michael Jordan wasn’t willing to invest his personal brand in a fluctuating operation.

Investors should be even more wary when considering companies that pursue ESG. At the time of Mr. Jordan’s sponsorship decision, everyone at least agreed that the lone goal of a company was to maximize value for shareholders. Under ESG investing, by contrast, conflicts arise not only over how best to pursue company goals but over what the goals are.

For the full commentary, see:

Donald J. Boudreaux and David R. Henderson. “‘Air’ Is a Cautionary Tale About ESG.” The Wall Street Journal (Friday, April 14, 2023): A13.

[Note: ellipsis and bracketed year added.]

(Note: the online version of the commentary has the date April 13, 2023, and has the same title as the print version.)

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