Canada Must Wake Up to the Devastating Impacts of DEI and ESG

Few Canadians are aware of the serious negative economic and social consequences ESG and DEI policies bring, writes Hubert Grubel. (Deemerwha studio/Shutterstock)

Commentary

Most Canadians are unaware of new policies that seriously endanger Canada’s prosperity and way of life.

These policies recommend that all private businesses, educational institutions, and government organizations (including the military) change their hiring, promotion, compensation, and student admission policies to increase diversity, equity, and inclusion (DEI) in their workforces and student bodies. The owners of businesses are expected to change their policies to include in their activities the effect they have on the environmental, social, and governance (ESG) conditions in Canada and the world.

In recent years, DEI and ESG policies have been implemented widely by many universities and employers. Many Canadians welcome these policies for the benefits they are believed to bring to members of identity groups and the environment. Few, however, are aware of the serious negative unintended economic and social consequences these policies bring.

First, there are the costs, which reduce the resources available to traditional activities of universities. For example, typical of developments in many other universities during the last decade, Simon Fraser University hired 32 new workers in the Office of the Vice President for DEI, which represents a 140 percent increase of non-academic staff when undergraduate student enrolment was unchanged. Faculty and staff were burdened with requests to provide information about the DEI policies they administered. As a result, the capacity of SFU and other universities to carry out their historic task of passing on and producing knowledge is diminished to the detriment of the formation of human and knowledge capital essential for economic prosperity and the design of social policies.

Second, and ironically, DEI policies do not end discrimination in society, which is so much lamented by the advocates these policies, but instead increase it because the identity group of students and workers with proven high talents, skills, and achievements are discriminated against as members of other identity groups with lesser qualifications are hired and promoted in their place. The U.S. Supreme Court has decided that this state-created new type of discrimination violates constitutional rights and is morally wrong.

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Another negative effect of DEI policies is that they increase the opportunity for politicians and non-elected bureaucrats to dole out benefits, which encourages potential beneficiaries to lobby and bribe them.

Most important is that the policies discourage the use of merit in the selection of workers and students, which reduces their incentives to acquire education, skills, and work experience. These incentives have been a key feature of Canada’s economic and social system, which has brought us the high living standards we now enjoy.

The use of the ESG mandate to get private business to consider the impact of their investment on the environment also has profound unintended negative consequences.

Business executives have always been required to meet all existing federal, state, and local regulations affecting the environment. These regulations are the result of deliberations by democratically elected politicians who have drawn on public consultations and expert advice on their benefits and costs. Under ESG rules, business executives are required to modify their business decisions in the light of what they decide to be environmental effects that are inadequately covered by existing government regulations. The problem is that they make these decisions without being able to draw on public opinion and experts at levels needed to know whether they bring benefits greater than costs. Shifting responsibility for environmental policies from democratically elected politicians to unelected business elites does not serve the interest of Canadians.

A final, but possibly most serious problem created by bureaucracies administering DEI and ESG policies is that they can punish critics of their policies by causing them to lose employment, or suffer reduced compensation and tarnished professional reputations. Such punishment has been so frequent and successful that it is now described as “cancelling.”

The loss of freedom of speech and thought caused by these policies threatens the existence of one of the most important features of democratic societies: the ability to deal with the consequences of changes in technology and the public’s economic and social preferences while preserving domestic peace and harmony.

Little evidence exists that the proponents of DEI and ESG policies are aware of the existence of the negative effects just discussed or of the fact that these effects involve longer-run costs which are greater than the benefits.

However, there is an increasing awareness among intellectuals of the existence of these effects, which is found and described in published studies. For example, a recent Canadian study reveals that subjecting workers to mandated instruction of the purpose and merit of DEI policies increases rather than decreases prejudice in society. Other studies conclude that DEI and ESG policies, together with other woke policies of the political left, are leading to the suicidal demise of Western democracies.

They suggest that this demise will be slow and little noticed, but inexorable. It is expected to repeat the experience of countries that in human history dominated the world economically and militarily. These highly successful countries adopted policies that were popular and benefited the ruling politicians, but by modifying the economic and social systems that made them successful, they slowly lost their vitality until other countries replaced them as world leaders in sudden cataclysmic events.

Canada urgently needs public discussions of the problems and risks brought by DEI and ESG mandates and other woke policies. The discussions will be heated and divisive, but worth having as it involves the future prosperity and possibly the very existence of Canada.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.