JP Morgan CEO Jamie Dimon said in an interview at a June 1 conference that his push toward “stakeholder capitalism” was being misconstrued as being “woke” and that he remained “a red-blooded free-market capitalist.”
Stakeholder capitalism goes beyond traditional shareholder capitalism, which focuses on actions that are favorable to its stock appreciation, to encompass “socially responsible investing” and “environmentally sustainable” methodology with a responsibility toward its “stakeholders,” such as workers, community, and other factors.
Republican politicians have been raising the issue of whether banks, including JP Morgan, were showing discrimination toward certain sectors of the economy—such as gun manufacturers and fossil-fuel-based energy companies—to appease a progressive agenda.
Dimon said JP Morgan was “quite serious about climate,” saying that the United States wasn’t “getting climate right,” according to Financial Times.
“I don’t think people should get involved in some of these issues where it’s far more detailed than you think and people [are] just getting jazzed up about, you got to do this,“ he said. ”No, you don’t.”
Earlier this year, BlackRock CEO Larry Fink wrote in the firm’s annual letter that companies were expected to play a role in “decarbonizing the economy” and that included everyone from shareholders to customers and regulators.
Businesses that fail to cut back their carbon footprint will miss out on billions of dollars of investments, Fink wrote.
“Because that is not capitalism, that is abusing the market,” Cruz said.
Cruz said Fink and other progressive CEOs have shifted focus from increasing profits for their companies to taking stances on issues such as climate change and other causes promoted by the political left. The senator also pointed to investment screening that involved controversial ESG criteria.
ESG stands for the environmental, social, and governance risk theoretically embedded in a business that isn’t accounted for monetarily.
Different agencies use varying methods and criteria to calculate ESG. Generally, the environment score is calculated based on the company’s performance in treating greenhouse emissions and its role in climate change. The social score evaluates the company’s relationship with its stakeholders, including employees, suppliers, and shareholders, while the governance factor considers compliance with municipal, state, and federal laws, board diversity, and other related performance indicators.
Greenwashing refers to processes by which companies falsely present themselves as more pro-environment than they really are.
In a June 1 Twitter post responding to the news, Musk wrote, “I have yet to see an ESG list that *isn’t* fraudulent.”
He had earlier called ESG a “scam” following the removal of electric car company Tesla from the ESG Index while Exxon Mobil Corp. remained on the list.
