Money talks

On June 30, the Supreme Court’s majority opinion on West Virginia v. EPA (2022) delivered a blow to the U.S. Environmental Protection Agency’s ability to regulate the production practices and carbon emissions of large corporations. On Aug. 8, the Senate passed the Inflation Reduction Act of 2022, marking the single largest legislative commitment to combat climate change in American history. The bill intends to make a $370 billion investment in clean energy to decrease U.S. carbon emissions 40% by 2030 and place the country on track to reach President Joe Biden’s goal of cutting current U.S. carbon emissions in half by 2030. “Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit, while making the wealthiest corporations finally pay their fair share,” Biden said. 

Any large corporation in America would be confused by these juxtaposing actions implemented in the United States government just 39 days apart. They should not be morally confused though. In his essay “The Uninhabitable Earth,” Journalist David Wallace-Wells cites one speculative paper that tabulates a staggering additional 22,000 murders, 180,000 rapes, 3.5 million assaults and 3.76 million robberies due to climate change's impacts predicted by the turn of the century. Nor should corporations be confused regarding the best course of action for long term financial gains. Recent studies demonstrate that an increase in average global temperatures of 0.04 degrees Celsius (a still modest prediction assuming higher emissions in absence of climate change policies) will reduce global real GDP per capita 7.22% by 2100. Rather, businesses are likely confused about the United States government’s expectations of corporate sustainability practices. 

Unfortunately, our climate is running out of time for confusion. The U.S. government is far from united on various matters, but on the front of combating climate change, lack of direct and immediate action is only causing more sporadic weather patterns, higher global temperatures, increased global health outbreaks and an increased rate of infrastructure collapsing under conditions it was not built to sustain. Given the urgency of the situation apace with government inaction, perhaps we should instead place our faith in investors. Seeing as 63% of investors report they are likely to purchase stocks or funds associated with companies that align with their values, and 70% would include sustainable investing funds as part of their 401k plan, there are immense payoffs to be had in fighting a profit-oriented system with profit-oriented solutions. 

Now, let me introduce you to the booming field of ESG, or environmental, social and governance. ESG is a ranking on a set of environmental and societal health standards communicated to investors before they make their investment decisions. Since coining its name in 2005, ESG has grown into an over $20 trillion field. “E” factors prioritize low carbon emissions, waste production and energy resource usage of large corporations. “S” factors prioritize diversity and inclusion in the workplace, leading to increased corporate efficiency as diverse firms are 1.32 times more productive than firms lacking diversity. Lastly, the “G” is the “g”lue holding ESG together by ensuring companies comply with set environmental and social standards to meet the needs of external stakeholders. Not only does this motivate firms to attain high ratings on sustainable measures to retain maximum funding from investors, but it also allows individual investors to increase their funds in a socially responsible way. ESG is a means for investments to be made in the preservation of humankind for generations to come. 

Unfortunately, one cannot expect a majority of investors to prioritize the environment out of the good of their hearts. Yet, ESG assets are predicted to reach $53 trillion, equivalent to one third of global assets under management by 2025. Thus, one can expect many investors to recognize the immense potential profits they might miss out on if they do not familiarize themselves with ESG. Many have gotten rich off of the expansion of the fossil fuel industry, but the time has now come for a new wave to monetize the transition into a sustainably fueled economy. 

ESG substantially increases the ability individuals have to “vote with their dollar” beyond deciding whether or not to purchase grass-fed beef in the grocery store aisle. Consumers eager to see a change in climate action can be motivated to invest in and spend their everyday dollars at firms with high ESG ratings such as Microsoft, often commended for blazing the trail in ESG. Money, or lack thereof, will always be at the heart of politics. Thus, in a more politically divided atmosphere than ever, the necessary source to combat climate change is consumers —guiding the prioritization of sustainable and ethical corporate practices. After all, money talks.

Emma Schoenauer is a sophomore living in Johnson Family Hall studying economics and minoring in sustainability and the Hesburgh program in public service. Emma is Design Chief of BridgeND and heavily involved in sustainability efforts on campus. She is passionate about utilizing economics to establish efficient and sustainable practices for financial firms and government institutions in her future.

BridgeND is a multi-partisan political club committed to bridging the partisan divide through respectful and productive discourse. It meets on Tuesdays at 5 p.m. in Duncan Student Center W246 to learn about and discuss current political issues, and can be reached at bridgend@nd.edu or on Twitter @bridge_ND.

The views expressed in this column are those of the author and not necessarily those of The Observer.