Best Of The Alchemical Lantern Broadcast! Episode #29 - ESG And "The Message"...

[00:01:02] Piercing through the darkness with the radiant light of truth, this is The Alchemical Lantern. Good evening everyone, this is your host Wayne McRoy, broadcasting live tonight from the Subterranean Alchemical Research Library in the heart of Pennsylvania's Back Mountain. Good evening, tonight we're going to explore ESG and The Message.

[00:01:28] What's ESG, you may ask? Well folks, this is at the heart of many of the things going on in the world today with all of these major corporations deciding to adopt stances on various of these different agendas that most people don't want anything to do with, let's be honest about it.

[00:01:51] Nobody cares, nobody wants to push this stuff in everybody's face 24-7, but yet these major corporations do so. So what is ESG? It has everything to do with this and with the messaging that we do get from not only Hollywood and the media, but from the major corporations themselves.

[00:02:11] So tonight we're going to explore that topic and we're going to be looking at various sources to get some information about this thing that is called ESG. Remember those three letters?

[00:02:28] ESG. What does ESG stand for? You might want to know. It stands for Environmental, Social, and Governance Performance. ESG. Environmental, Social, and Governance.

[00:02:49] So what actually has happened here is these corporate interests decided to formulate a type of scoring system for other major corporations around the world.

[00:03:09] They've built a scoring system to decide if they're having a positive influence on humanity and or the environment or not. So in order to do that, they came up with a system of scoring, a type of scorecard, if you will. This folks, ESG, essentially what this is, is this is a social credit score for businesses and corporations.

[00:03:33] And through this standard, it can be decided by the banks who very much back these ideas, who gets funding and who doesn't for their various projects and needs. So that being the case, they put this in place. And one of the major companies at the heart of this is called Sustainalytics. Sustainalytics.

[00:03:59] So we're going to find out a little bit about that, and we're going to read into one of their original white papers about this whole notion behind this ESG score and the system behind it. And we're going to reveal some things, and then we're going to go ahead and we're going to look at one of the major players in this whole ESG thing going on, which would be a company you're all familiar with, one called American Express, which finances an awful lot of things.

[00:04:28] And we're going to use that one just as an example of how many of these other monetary interests have adopted these same principles. And in doing so, they've leveraged some of the other companies and corporations that actually need to borrow money from them into applying these standards to themselves. So without further ado, let's get into it here.

[00:04:56] And first, we're going to look at this company called Sustainalytics. So Sustainalytics, what is it? Sustainalytics is a company that rates the sustainability of listed companies based on their environmental, social, and corporate governance performance, also known as ESG.

[00:05:16] The company was born of a merger between Toronto-based Jancy Research, which was founded in 1992 by Sustainalytics' current CEO, Michael Jancy, and its European counterpart. Following its acquisition of GES International on January 9, 2019, Sustainalytics had more than 600 employees with offices in 17 cities around the world and over 700 institutional investor clients.

[00:05:45] On April 21, 2020, Morningstar Incorporated acquired the remaining approximately 60% of Sustainalytics shares to become the sole owner. Going to pause for a moment here, folks. So I'm going to point out the obvious right now. This company is owned, lock, stock, and barrel, by a parent company called Morningstar Incorporated.

[00:06:14] In the occult, who is acknowledged as the Morningstar? Well, Lucifer, of course. You can't make this stuff up, and it never seems to end with these major corporate conglomerates that own everything in this world. They always, always, always seem to find their way into paying homage to those occultic principles that they revere so much.

[00:06:44] And most people would say, oh, don't be silly. It's just a coincidence. How many coincidences do you need? Morningstar. So now we're going to talk about the Morningstar acquisition here. In 2016, Morningstar Incorporated released the first sustainability rating for mutual funds and exchange-traded funds based on Sustainalytics company ESG Research.

[00:07:09] In 2017, Morningstar Incorporated became a 40% shareholder in the company alongside senior management, stitching, pension funds, Zorg & Walshian, Abin Amro Group, and Renewable Partners. On April 21st, 2020, Morningstar Incorporated completed the acquisition, purchasing the remaining 60% of the shares. Okay, so I'm going to pause for a moment again there. So now remember, this is back in 2016.

[00:07:39] Morningstar Incorporated was the first to release a sustainability rating for mutual funds and exchange-traded funds, and thus started this whole thing with this ESG rating for all these other businesses. And we've seen what's happened since 2016. And let's look to the Hollywood properties to see what happened.

[00:08:02] Well, beginning in 2016, I think that's when we heavily began to see the marketing campaign in Hollywood going on to hold up certain agendas and promote certain agendas at the expense of others and at the expense of these companies that produce such things as entertainment.

[00:08:24] And this can be demonstrated in spades, just going back and looking at a little movie called Ghostbusters 2016, which was a massive flop for obvious reasons and absolutely terrible and insane. And this was one of the first things that really set off this whole cascade of events that led up to the things that are occurring now, where you have companies like Bud Light,

[00:08:51] well, the company that owns Bud Light, I should say, losing upward of $30 billion. $30 billion on an ad campaign based upon these ESG ratings. So this is when it all began. And it began because this Morningstar Incorporated, you know, that one that pays homage to Lucifer,

[00:09:16] began to rate mutual funds and exchange-traded funds with a sustainability rating, and thus was born the ESG system. Now, it came to fruition over the course of about the past 20 years or so, but it really didn't get exercised in full until around 2016. And not really implemented much up until sometime past 2018.

[00:09:42] And we see, after the final takeover of the Sustainalytics company by Morningstar, that's when things really started to get heavy-handed, in the heart of the COVID pandemic as well. Nonetheless, Lucifer shines his light again in many ways. So we see here, let's read on a little bit and see what else we can find out about this.

[00:10:30] So we're going to pause for a moment here, folks. So, ostensibly, what this is, is this is supposed to allegedly protect investors from putting money towards companies that may, I don't know, promote something hardcore like, I don't know, like family values or gun ownership or things like this. All these really loony things, right? So this is what it's intended for.

[00:10:57] And, of course, it's all about diversity and inclusion, right? This is all part of it. And we'll get to that as we proceed here further. But essentially, what I had just read is what is publicly known and exchanged about Morningstar Incorporated and Sustainalytics, who's behind much of this ESG scoring system out there for these corporate interests.

[00:11:22] So, that being the case, now we have established, we have this ESG system, which is the equivalent of what you would call a social credit score for businesses and corporate interests. And this has now been applied. It's been in action in large part since 2018. So, for five years, this thing has been heavily underway,

[00:11:49] influencing many companies, over 2,000 major corporations and companies throughout the world at that point. And it's probably escalated from there today. And we've seen this happen and occur with many of the film industry companies involved in the Hollywood scene. And, of course, this is why we have such wonderful things going on in Hollywood as... The Message! Which we see all over the place, don't we?

[00:12:18] And you'll have to excuse me. I just get a kick out of the way that gentleman says The Message. So, I'm going to use that little sound blurb here probably a few more times. But it certainly is an interesting turn of events. But this actually comes from, well, the social engineers of this world who have infiltrated into banking and industry and big business long ago

[00:12:45] and are now trying to transform society into what they want through these very means. And, of course, they're going to start with big corporation, big business. And it trickles down from there. Because many people, let's face it, they like to have a job. They like to be able to pay their bills and buy food and be able to do things, don't they? So, they're going to have to listen to the corporate entity that they work for as far as what they do.

[00:13:13] Because if your boss tells you to do something and you don't do it, well, then you're out of a job. And somebody else will gladly step in and take your place there. Of course, we've seen a lot of that on the decline in recent years, too. And I don't think that was an intended consequence for what they rolled out here. But we're seeing that. I think they really got ham-fisted with a lot of things and wound up paying the price for it

[00:13:41] and having unintended consequences for the things that they've instituted. But at any rate, we're going to go ahead and we're going to read now from a paper, a white paper, from Sustainalytics itself, talking about the ESG risk ratings moving up the innovation curve. And it's a white paper, volume one, that we're reading from.

[00:14:05] And this was put together and compiled by Dr. Hendrick Garz and Claudia Volk, the executive director and the director of ESG rating products and thematic research. So, about Sustainalytics. We're going to read a little bit about the company. In their own words, what they are, who they are, what they do. And we'll see what this is about.

[00:14:34] And we'll lay down some groundwork. And then we're going to look at how some of the major financial players in industry picked up on these ideas and decided to utilize them wholesale and encourage other businesses that do business with them to do the same. Encourage by, you know, withholding funding for those that don't get on board and do what they want. So, that's what we mean by encourage. Wink, wink, nudge, nudge.

[00:15:03] All right. So, let's read here about Sustainalytics. And this is right in their own white paper. This was written in 2018. Sustainalytics is a leading independent ESG and corporate governance research, ratings and analytics firm that supports investors around the world with the development and implementation of responsible investment strategies. For over 25 years, the firm has been at the forefront of developing high-quality,

[00:15:33] innovative solutions to meet the evolving needs of global investors. Today, Sustainalytics works with hundreds of the world's leading asset managers and pension funds who incorporate ESG and corporate governance information and assessments into their investment processes. With 13 offices globally, Sustainalytics has more than 390 staff members,

[00:15:57] including over 180 analysts with varied multidisciplinary expertise across more than 40 sectors. Over the last three consecutive years, investors named Sustainalytics among the top three firms for both ESG and corporate governance research in the Independent Research and Responsible Investment Survey.

[00:16:20] And then it says, for more information, visit www.sustainalytics.com to find out more about that. So, what is it exactly we're talking about here? Well, we're going to get right into that. So, we see the notion here. This company's been at work here for the past quarter of a century now, putting together this whole framework for a type of social credit score for businesses.

[00:16:51] And this, of course, we also have in the Chinese model, personalized social credit scores and things of that nature, which I'm sure probably follow the same type of structurization as this. So, that's why it's important that we pay attention to this, because it's already affected business and industry in a major way in the Western world.

[00:17:17] And it's going to affect every human being here very soon at some point, if it hasn't already. It's affected many of us on many different levels already. And we need to pay attention, because if we don't put a stop to this now, it's going to morph into a personalized social credit score with penalties and punishments

[00:17:42] and occasional rewards for those who are good little citizens and do what they're told. We can't allow this to happen. That's why it's important that we look at this stuff and we rip it to shreds, because you'll see as we continue on how this is not just conjecture or conspiracy theory. This has really been done and implemented in our society.

[00:18:08] This pushing of certain specific agendas for certain reasons and leveraging these agendas against businesses, wholesale, businesses around the world. Those who want to stay solvent have to adopt this ESG score. And if they have a bad ESG score,

[00:18:35] well, they're not going to get investors to pump more money into their business, and they're not going to get banks to give them loans or any such thing, even if they are showing that they're profitable. You see, that's not what it's about anymore. This is about shifting business, the business model, how they view business, how the corporate structure, how the world, the world structure views businesses. It's all about social responsibility now,

[00:19:04] more so than actually making a profit or operating a business that's profitable. It's not about that anymore. It's not about quality of service or quality of product or anything of that nature and, you know, keeping competitive pricing and keeping the business afloat, making more money, bringing in more money than what you're paying out. It's not about that anymore.

[00:19:32] This ESG score bypasses all of that. It does not consider any of that stuff. That's not the important part here now. So now what we have is these companies that will go out of their way and they will actually actively begin to lose money, lose profitability, pushing some of these agendas that are inherent in this ESG score just so they get this good ESG score because if they don't, well, they're not going to be able to have investors.

[00:20:02] They're not going to be able to get bank loans. They're not going to be able to payroll themselves or bankroll their selves and they're going to get bad publicity because of that. And that's what this is about. This is giving bad publicity in places like Wall Street and in business magazines and such in the business sector, the professional sector. This is what this was established to do. So if you don't fall in line

[00:20:32] with what these ESG strategies are, you get penalized for it. That's the bottom line. But don't take my word for it. We're going to read here the foreword. We're just going to read the foreword to this white paper and then we're going to move on to one of the major players here. So this is the foreword. It says, Moving up the innovation curve, the responsible investment discipline finds itself on the brink of a new era. After many years of being considered

[00:21:01] an exotic niche by capital markets and investment professionals, it has now gone mainstream. The idea of taking environmental, social and governance or ESG factors into account in investment decision making is today a widely accepted practice. The new generation financial analyst no longer needs to be persuaded, for the most part, about the relevance of extra financial factors.

[00:21:30] Indeed, they are not extra anymore. They are a natural part of what investment professionals look at when deciding which assets to invest in. It took the capital markets a long time, but it now appears self-evident that ESG integration is creating value. Going to pause for a moment here, folks. What kind of value are they speaking of? What kind of value are they speaking of? So you see here, in their own words, this is directly from Sustainalytics,

[00:21:59] owned by Morningstar Incorporated, an homage to Lucifer, that it's not about making money anymore. That's not what they're interested in. It took them a long time to transform the whole financial industry, the professional investment industry, into accepting this ESG strategy. But now they very much have. This new generation of investors

[00:22:29] and investment firms, they're more concerned with these extra financial factors, those non-financial factors that businesses perform. Now, in the earlier days of this, going back about 25 years or so, 30 years, you begin to see companies adopting green-type ideologies. If you look at places like Starbucks,

[00:22:57] well, we only buy from certain growers Fair Trade, Fair Trade Coffee. If you're not familiar with Fair Trade Coffee, what this is is they would buy their coffee from small conglomerates of independent farmers who grew the coffee beans themselves and harvested them and stuff. And they would pay them a fair price for this. And this was called Fair Trade. This was a Fair Trade agreement. This was one of the early portions

[00:23:25] of this whole ESG thing. So then it was all about certified organic, certified Fair Trade. I'm just using this as an example because coffee is the second most traded commodity in the world, in case you were unaware of that. Just in case you were unaware of that, coffee is the second most traded commodity in the world. Second only to oil. So I use that as an example. So you have business interests like Starbucks who make sure to emphasize the point

[00:23:54] we only buy organic, fair trade coffee beans, whole beans from independent farmers in such and such a region, part of this cooperative, and we pay them a fair price and we make sure that the quality standard is there and that it benefits small farmers, not the big major corporations. So this is how this began. And this was kind of the attitude where people began to adopt maybe the mindset that there's other things that are important,

[00:24:23] other factors about how a business operates that are important to the sustainability of the world, right? Sustainability. That's what a lot of it's about. And this is where the first inklings of this came about. And then you had them start to use recyclable materials to make their cups and stuff like that for the coffee and all of this recycling. And then, of course, you know, plastic straws are right out now in California. So now they have a paper straw and a plastic wrapper

[00:24:53] because the future is stupid. But at any rate, this is the kind of thing that we see going on. And this is how it got its beginnings. This is how they got their foot in the door and began manipulating things. Okay? And like I said, that's probably about 25, 30 years ago we first began to see this stuff really creeping into mainline business. So now step ahead to where we are now. And we see how they've wholesale adopted this type of a thing based upon

[00:25:24] these different ideas. many of them relating, of course, to the whole green movement or the environmental factor. And that's why the E in ESG is so important. Environmental, social, and governance. Don't forget the G stands for governance. Probably the most important portion of this for these people who have manufactured this ESG score. Governance. But of course they place the

[00:25:53] emphasis on the environmental and social factors as we've seen so readily happening the past few years. In the mainstream business world as well as mainstream entertainment, mainstream news, all of this stuff has really come forward in this way. So let's go ahead and we're going to finish up this portion here of the foreword in this paper. And then we're going to move on

[00:26:23] to one of the big players here that has actually instituted some of these things. And we'll get to the specifics about what's actually in these ESG strategies written by these big companies. Excuse me. Let's continue. It says, It is encouraging to see that we have reached this point after so many years, especially for those of us who have been supporting the movement from its early days. The triumph, however, also comes with

[00:26:52] an enormous challenge. With the new and growing significance of ESG information, be it in valuation models, portfolio construction, or corporate engagement, the demand for ESG signals that truly make a difference has increased and will continue to increase. Investors want to know why, how, and when ESG factors, will have an impact on the returns and risks of their portfolios. Similar to the

[00:27:22] RI discipline and the industry as a whole, ESG ratings have also gone through a remarkable long-term learning process. Their historical development is truly amazing. More than 20 years ago, it started with very simple systems of indicators that were mostly driven by companies' self-reported information, which was very limited in depth, breadth, and quality. Today, the situation has completely changed. There is no shortage of data anymore.

[00:27:51] Going to pause for a moment here, folks. We do indeed live in the era of big data, and he's absolutely correct here. There is no shortage of data. And this is why they mine so much data on everybody. This is what they're using it for. to formulate ESG strategies for these companies. There is no shortage of data anymore, although data quality and how ESG information is reported by companies remain important issues.

[00:28:21] In general, one can say that investors today face an abundance of ESG information. The main question is what can be done with this big data to arrive at better investment decisions. Clearly, those who provide the underlying analysis and generate the signals that are used as inputs in valuation models or in structured investment approaches are expected to respond to the changes and provide answers that work

[00:28:50] and add value in practice. With the new ESG risk ratings, we are delivering on this expectation. It has been a long journey to get where we are today. The development of our new rating took three intensive years. At times, it drove those of us directly involved as well as many others from across our organization out of our comfort zone. The investment we made was high and it still is. And this is not only

[00:29:20] because a lot of time went into the conceptualization, testing, and validation, and implementation of the methodology as such. It is also because a change of this scope brings a need for our analyst teams to adopt the new thinking and philosophy that lie behind the algorithm that generates our new rating. Going to pause for a moment here, folks. A couple important points to be made right here. First of all,

[00:29:50] they need to adopt a new way of thinking and a new philosophy first and foremost for operations operations of businesses. Operating businesses. Nope, it's not the same old profit and loss sheet anymore. That's not what they care about. That's not what stirs investors on anymore. You see, they're transforming the way business is done. And honestly,

[00:30:20] it's kind of stupid because it's not going to be able to last. It's not built to last, this system. Because if you begin hemorrhaging money like a corporation like Disney is right now, they're in trouble. At some point, investors are going to say, what's going on? I put my good hard-earned money into this. I invested in this. And you're giving me loss after loss after loss. Even though you promised us that you'd have

[00:30:50] excellent returns on all of this on investment. And even though you're doing these things that seem, well, let's say, not necessarily to every person, but these things that you think are so very much important in the grand scheme of things when nobody really cares. But these things, these strategies are not working. So at some point, people are going to say, you know what, your whole ESG idea

[00:31:19] is crap. We need to drop it. But that's not come yet because we're only just now beginning to see large corporations losing substantial amounts of income, substantial amounts of money because of this. And it's not sustainable. Their sustainability methods here are not sustainable. Let's put it that way. Not in business terms. So you could clearly see many of these people, even though they claim to have, oh, I don't know,

[00:31:49] all kinds of different disciplines, business disciplines involved in these analytic teams and stuff like that. Obviously, they haven't actually been operationally working in any type of a business for a long time because, you know what, this crap doesn't work in reality. You may make it look good and like it might work on paper, but it doesn't work in reality. I can say the same thing about any company that has a human resources department. It's the most retarded thing ever. It's useless. It's useless. It's just more

[00:32:19] bureaucratic paperwork and it's a big time loss for most companies to have a human resources department. And this falls into that same type of a category, this ESG strategy thing. And this will be the thing that will drag down more than one large corporation. Let's be honest about it. And we're seeing that coming to fruition right now because it's about a change in thinking and philosophy. So you go into business wanting to make money. Well, I got news for you. If you're a large

[00:32:49] business that requires investment and investment strategies, you're going to do what the investors or the ones that lend you the money tell you to do or you're not going to get that money up front to even operate your business or start your business. And that is where the dichotomy is. And the thing is, they don't even care anymore about P&L reports, profit and loss reports. That's secondary. What it's about is pushing social

[00:33:18] agendas. And that's what this has been designed to do. But let's read on. I don't think I need to put words in their mouths. They'll tell you who they are and what they're about. Let's continue reading and then we're going to get to the real meat of the matter. In the end, it is not a set of equations that alone determines the quality of the rating. Okay, I'm going to pause for a moment. Apologies. I had a second point about that last sentence because it says not only is it

[00:33:48] a new thinking and new philosophy behind it, but that there's an algorithm that generates their rating. So there's an algorithm in charge of this, folks. An algorithm, a computer program that decides what's viable and what's not. What we need to promote and what we don't and what does it base, what's that algorithm based upon? Well, probably primarily the bilge and garbage pushed by media and social media pundits out there that push

[00:34:17] and promote all of these extremist, extreme left-wing ideologies and it probably collates all this data together and thinks this is actually what people care the most about and what is the biggest topic in the world right now and it probably pushes the algorithms to generate more of this type information thinking that it's profitable because this is what everybody cares so much about when in reality

[00:34:47] it's not. These kind of things are secondary to most people. I don't care what somebody's sexual identity is. I don't care what they do in their own bedroom. That doesn't bother me in the least. I don't care. I just don't want it pushed in my face or my kids' faces all day long. No reason for that. It's stupid and this is one of the major things that they push and promote all the time. All this LGBTQ stuff.

[00:35:17] Nobody cares. I mean, what happened? All of a sudden it's all come full circle here where everybody cares about everything and oh, you must use the right pronouns and all of this stupid, stupid, retarded nonsense. And that's exactly what it is, folks. It's retarded by definition. It retards the human mind to think in these ways. You don't even know how to address somebody anymore because you're afraid you're going to offend them by using the wrong pronoun. How retarded is that? It is retarded.

[00:35:47] But see, the problem is it's largely computer algorithms pushing this because they see more and more of it coming up in the data set all the time because this is largely what's pushed and promoted in the media, in the Hollywood circles, and it's a reinforcing feedback loop. So more of it keeps appearing so the computer algorithm thinks this is what's important and this is what counts and matters, and this is what needs to be fed to these business entities that they need to promote in order to keep maintaining

[00:36:17] and doing business and being profitable when in fact it's losing them money because people are sick of it and fed up with it and don't care. But this is what's been going on. So anyway, let's read on. I don't want to put any more words in their mouths. They'll tell you. They'll tell you. So it says, in the end, it is not a set of equations that alone determines the quality of the rating. The rating can only be as good as the analysis our sector

[00:36:47] experts provide and the judgment calls they make. Form and content need to come together. And this is why we have massively invested in capacity building and engaged in consultation with our analyst teams during the development of the new approach. The new approach, folks. With the release of Sustainalytics ESG risk ratings, we have moved into a new phase in the evolution of corporate ESG ratings. The rating is built on key

[00:37:17] features including financial materiality, granularity, and comparability, and we foresee numerous applications for our clients in the context of investment decision making. Based on our early testing, which yielded 41 strategies, with statistically significant alpha up to 13.2% per annum, we are confident that the ESG risk ratings can provide signals to the investors that will allow

[00:37:46] them to structurally improve the risk and return profiles of their portfolios. Going to pause for a moment here, folks. This is all very jargony language, basically saying, yeah, we ran a computer simulation and we figured that we came up with 41 different strategies that seemed to increase earnings by 13.2%. So the computer told them to do so. But they don't just use a, you know, mathematical formula or some such thing for this. They're analysts. Actually look at

[00:38:16] this and are involved. Well, who exactly are their analysts? Let's face it, they're probably a lot of left-wing lunatic fringe hires. You know, the social justice warrior crowd, the blue hairs, all of these types. They're probably the ones filling these analyst roles. Analysts and human resources officers and things like this. These types of positions where they really haven't had any

[00:38:46] actual experience working firsthand in any type of industry like this, but of course they know all there is to know about women's studies and about all these other different things that don't have any practical application in a business model. But at any rate, these are the ones that are probably the analysts that look at this stuff. Oh, look, the computer pumped out this number. That looks good. We're going to go with this strategy. So the computer comes up with 41 strategies.

[00:39:16] Their analysts say, yeah, those strategies look good. Let's implement them. Let's read on here and we'll finish this part up and then we'll move on to the next paper which will tell you a whole lot more about this. So through the publication of our three-part series of reports on Sustainalytics ESG risk ratings, we deliver on our promise to provide as much transparency as possible for our clients and other stakeholders.

[00:39:45] In this volume, volume one, we introduce the rating from different perspectives focusing on why we developed the new rating, how it works, and providing an empirical analysis of our ESG risk ratings coverage universe. I'm going to pause for a second. They have a coverage universe, folks. Their very own universe, isn't that nice? Volume two takes a deeper dive into a case study looking at a specific sub industry and company while volume three explores the

[00:40:14] ratings multifaceted use cases. I'd like to thank all of those and there are many who contributed to the products development and implementation including colleagues in the client facing teams, in the sector research teams, and in marketing. I'd also like to thank Bob Mann for his guidance and my team, Clark Barr, Juliet Goulet, Sophia Buris, and in particular my co-lead of the project, Claudia Volk, for all their hard work

[00:40:44] and excellent work which were needed to bring this project to life. I also don't want to forget former team members, in particular Tom Hasse, Madir Olivar, and Annalisa Werner, who contributed significantly to the final success of the undertaking. Finally, I'd like to thank the thematic research team at Sustainalytics for helping to put this comprehensive research report together and for taking on writing the introductory chapter. And this is signed

[00:41:13] by Sincerely, Sincerely, I can't make out his handwriting, but his name is Dr. Hendrik Gars. So he's very much impressed with the work the team has done here, and is impressed with the product, and he wanted to thank all of these people involved. So, that being the case, we have the rollout of this new ESG rating report,

[00:41:42] risk rating, ESG risk rating, they call it a risk rating, because if you don't fall into line with the ideology, with these various things that are being pushed and promoted, if you don't align with the message, well then you're just going to get a bad rating, and then you're a higher risk, and therefore, they won't invest in you. Now, let's take a look at some of the nuts and bolts of what's actually been

[00:42:11] done because of this ESG strategy, which was adopted, and rolled out in large part in 2018, and then poured it over and rolled out on a grand scale in 2020. And for that, we're going to look at a white paper here called The Powerful Backing of American Express, 2021 to 2022 Environmental

[00:42:40] Social and Governance Report, ESG, Environmental, Social, and Governance. That's what ESG is. So this is their strategy. Let's read. First, I'm going to read the first portion that says about this report to give you an indication as to what it's about, and it relates, of course, to this model, this ESG risk rating score, and the various

[00:43:12] various suggestions that are made by this ESG rating, things you can do to make your business more viable. So let's read this. So about this report, this is from American Express, folks, one of the major financial backers of this world that influences many other corporate interests out there. This report covers calendar year 2021 and provides qualitative and quantitative

[00:43:41] information on our approach to managing our environmental, social, and governance opportunities and risks. In some cases, we also share highlights from programs and initiatives that were launched in 2022 to provide more up-to-date information to our stakeholders. I'm going to pause for a moment, folks. The new word is stakeholders rather than shareholders. Because this is all part of the transformative process too. They want people to perceive business

[00:44:11] differently. And this is something that was largely introduced by the World Economic Forum as well, by the way, changing everything to stakeholders from shareholders. Because you see, it's not about money anymore with this ESG strategy. Let's go ahead and continue. So it says, when we use the terms American Express, company, we, us, or our, in this report, we mean the American Express company and its subsidiaries on a consolidated basis

[00:44:40] unless we state or the context implies otherwise. Reporting Guidelines and Content. This report follows the Global Reporting Initiative, Sustainability Accounting Standards Board and Task Force on Climate-Related Financial Disclosures Reporting Guidelines with respect to our Priority ESG issues. GRI, SASB, and TCFD indexes can be found in the Supporting Data section of the report. In this report,

[00:45:10] the use of the term materiality and other similar terms is intended to reflect our Priority ESG issues. We are not using such terms as they are used under the securities or other laws of the United States or any other jurisdiction or as these terms are used in the context of financial statements and financial reporting. We report on ESG issues that pertain to us through this ESG report and the American Express

[00:45:39] Corporate Sustainability website. Additional information about our company can be found through our Diversity, Equity, and Inclusion report. Submissions to the CDP, formerly the Carbon Disclosure Project. In our annual and quarterly reports and our proxy statements on file with the U.S. Securities and Exchange Commission and on the American Express Investor Relations website. Links and references included throughout the report provide direction on where to find additional information. So I'm going to make

[00:46:09] a pause here for a second, folks. Just to point out, a lot of this has to do with climate change-y nonsense, as you can see. And that's all part of it. And notice that they have a diversity, equity, and inclusion report that they publish. And they have an actual department that handles that at American Express. They have a diversion, or, yeah, diversion, diversity, equity, and inclusion team. So you see where some of this stuff comes from.

[00:46:40] Let's read on, and then we're going to move on to some of the important stuff here. This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. And it gives a more legal gobbledygook here. It says data in this report reflect estimates using methodologies and assumptions. I'm going to pause for a moment here, folks. So remember now, all of these things that they,

[00:47:11] these strategies they're implementing are based upon methodologies and assumptions, it says right here, which may change in the future as a result of new information or subsequent developments. Statements regarding the company's future direction and intent are subject to change or withdrawal without notice and represent goals and objectives only. So, let's move to the next portion here. And this will tell the

[00:47:39] tale in this portion here as to what's been done through this ESG risk rating strategy, this risk rating system, and the strategies put forward as recommendations from these think tank groups like Sustainalytics owned by Morningstar Corporation. Anyway, let's read on here. So first we have a message from our

[00:48:09] chairman and CEO. American Express is built on trust, integrity, and service excellence. Living up to this legacy means doing what is right for our colleagues, customers, and communities. Our strength comes from the impact we can make on people's lives or what we call the powerful backing of American Express and our ESG strategy as a natural extension of this. The myriad of challenges facing the world today, many unprecedented in our

[00:48:38] lifetime, underscore the importance of our powerful backing promise. We are now over two years into navigating the pandemic. The effects of climate change are more apparent than ever. Macroeconomic and geopolitical instability is on the rise. And just in the last few months we have witnessed the war in Ukraine unfold into a devastating humanitarian humanitarian crisis. Against this backdrop, we continue to back our colleagues, customers, and communities to drive

[00:49:07] positive impact. So what is he talking about here? Advancing our ESG priorities. Now this is where we get to the crux of the matter, folks. We announced our ESG framework in 2020, centered around three core priorities. promote diversity, equity, and inclusion, advance climate solutions, and build financial confidence. Since then, we have solidified our strategy

[00:49:36] by developing a clear roadmap to translate our objectives into action. And here it is. Here's their first priority. This is American Express, a major financial backer of many industries and many companies. companies. And this is also this same strategy and these same different frameworks have been adopted by many others. And the first one here is to promote diversity, equity, and inclusion. D-E-N-A-I.

[00:50:06] D-E-N-I, as they call it in the abbreviation here. So let's read what it says about that. It says, We are continuing to strengthen our culture of inclusion and belonging across the company and providing transparency into our efforts. In 2021, we published our inaugural D-E-N-I report, which included detailed disclosures on diversity representation among colleagues and our ongoing efforts to maintain a diverse and equitable

[00:50:36] workplace through inclusive hiring, career growth, retention, and equal pay practices. In addition to sharing our progress across these areas in 2021, in this report, we have included additional details related to representation of our ethnically and racially diverse colleagues in the U.S. We also exceeded $1 billion in spending toward our D-E-N-I action plan announced in October 2020.

[00:51:05] The plan supported our efforts to increase spending with underrepresented or owned suppliers, expanding access to capital and financial education, and partnering with non-profit organizations focused on promoting equality among other initiatives. To build on this momentum, I am pleased to announce an additional $3 billion, which means we now aim to spend $4 billion in total from late 2020 through 2025,

[00:51:34] toward our D-E-N-I action plan and initiatives globally. The majority of additional spending will continue to be allocated with suppliers. Diversity, equity, and inclusion $4 billion being spent by American Express to promote these ideas in conjunction with non-profit organizations pushing these messages as well.

[00:52:04] So we have all of this going on. And of course, the next one says advanced climate solutions, which essentially ties into the whole sustainability notion, the whole agenda here of the environmental factors, the second leg of their whole agenda. So we have the climate change agenda in conjunction with

[00:52:33] diversity, equity, and inclusion in their strategies, and they're putting all kinds of billions of dollars towards this. And this is just one major company, American Express, and of course, you see here, their partners, the suppliers, that's where they'll push these funds towards. Those ones that play the game with them and show, hey, we've hired underrepresented minorities.

[00:53:03] So they get the funding. And the same happens with the non-profit groups too. They'll push towards it as well. And then of course, always, these companies always show a keen interest in climate change science because they've got to do that. And I'm sure they get government kickbacks for that. But that's another story for another day. But let's go ahead and read here. I'm going to move to the next page because we're running short on time.

[00:53:32] So in May 2022, we issued our inaugural $1 billion ESG bond, which we will use to finance new and existing green and social projects. This is our first ever financing instrument dedicated to support our ESG strategy and will serve to advance our programs and promote ESG-related investments. Enhancing our ESG governance. In addition to progressing on our ESG goals,

[00:54:03] we have been focused on the governance and disclosures around our ESG strategy and programs. In 2022, we incorporated ESG risks, including climate-related risks, as an emerging risk for the company within our own enterprise risk management framework. To help manage our climate-related risks, in 2021, we became a formal supporter of the Task Force on Climate-Related Financial Disclosures and assessed physical and transition risks

[00:54:31] to our business in alignment with these recommendations. So the conclusion here is over the last two years, we have created more opportunities to collaborate and innovate across the enterprise, and we have done a significant amount of work to define our ESG priorities and objectives. We also established measurable goals and action plans to achieve them as we continue to execute across each of our three ESG pillars. All of this work has accelerated our progress

[00:55:01] and put us on a clear path to strengthen our global impact in the coming years. Our work has only just begun. As we look ahead, we will continue to build on our momentum, putting our ESG strategy into action to back our colleagues, customers, and communities and make a positive impact in people's lives and the world we live in. So, as you can see, folks, they've put a lot of time and effort into this. And let's look here before we sign off.

[00:55:31] our commitment to ESG, our ESG mission, our ESG pillars. They have a little graph here. So, their ESG mission statement is here. It says, to back people and businesses to thrive and create equitable, resilient, and sustainable communities globally. Their ESG pillars are first, promote diversity, equity, and inclusion, support a diverse, equitable, and inclusive workforce, marketplace, and society. And their second one

[00:56:00] is advanced climate solutions. Enhance our operations and capabilities to meet customer and community needs in the transition to a low-carbon future. Gonna pause for a moment here, folks. We're all made of carbon, aren't we? They want a low-carbon future. Remember that. And their third pillar is to build financial confidence, provide responsible, secure, and transparent products and services to help people and businesses build financial resilience. And you'll notice

[00:56:30] that this is the third pillar or the least important pillar of their strategy here. The one that you would think would be the most important. But no, that comes tertiary. It doesn't even come in second. So profitability and actually helping people and businesses to have financial resilience, as they call it here, or to, you know, maintain operational, that's not even really coming into play here, is it?

[00:56:59] So then they have their objectives and goals. They have a list of objectives and goals. So here's the objectives and goals for promoting diversity, equity, and inclusion. Number one, to enhance diverse representation, equal opportunity, and inclusive culture at all levels of the company. Maintain 100% pay equity across genders globally and across races and ethnicities in the U.S. Going to pause for a moment here, folks. So they're only worried about races and ethnicities

[00:57:29] in the U.S. having equal pay. Not anywhere else in the world. Keep that in mind. Next is to meet the needs of underrepresented businesses and consumers and develop more inclusive marketing initiatives. And this is where you get something like Bud Light losing $30 billion from some nonsense like this. So it says the goal under that, the sub-goal, is to double annual spending with underrepresented

[00:57:58] owned suppliers in the U.S. from a 2019 baseline to $750 million by the end of 2024, including increased spending with black-owned suppliers to at least $100 million annually. Does that sound inclusive to you? They're just going to give that to black-owned businesses. Provide access to capital and financial education to at least

[00:58:28] 250,000 underrepresented or owned small and medium-sized businesses in the U.S. from late 2020 through 2024. Develop more inclusive marketing initiatives as well as design and build product experiences and programs that better meet the needs of underrepresented consumer and business customers. And this one here is exactly the whole Bud Light debacle. More inclusive marketing initiatives.

[00:58:56] That's what they've done. It's not paying off for them, is it? And the last portion here, and then we're going to sign off because we're just about out of time. We won't touch on the climate action or anything like that, is to advance racial equality and social justice in our communities. They use the actual term social justice, folks. provide $50 million in grants from late 2020 through 2024 to non-profits focused on addressing inequality and promoting social justice,

[00:59:26] including those led by members of underrepresented groups. Increase the representation of American Express Leadership Academy participants in the U.S. who are from underrepresented groups from 50% in 2019 to 75% by the end of 2024. 2024. And there it is. So where's all this garbage come from? It's this ESG rating put out by Sustainalytics owned and operated by Morningstar Incorporated in homage

[00:59:56] to Lucifer. They developed the framework for this and large companies like American Express have adopted it and other companies that do business with them have adopted it too. And we have what we have today and this is why. This is what ESG is all about. It's all about the message. And it's been incorporated across the board by businesses by this social credit score of sorts implemented on businesses.

[01:00:26] And it will be rolling out to individual use sometime in the near future, folks. Rest assured. That's all the time we have for tonight though, folks. I want to thank you for tuning in. Catch you next time.