Global elites of all sorts are traveling to Davos, Switzerland, for the World Economic Forum’s annual meeting this week. The theme this year is “Rebuilding Trust.” Perhaps a good place to start is distinguishing capitalism from environmentalism. They could also stop trying to make business serve the environment rather than people.
Consider the irony of Sultan Al Jaber, a major oil baron and the CEO of Abu Dhabi National Oil Company, presiding over the global climate conference, COP28, in 2023. Yet the subversive strategy of enlisting a “capitalist” in the climate agenda paid dividends. The United Nations agreement reached at COP28 explicitly mentions phasing out fossil fuels.
While the chief executive of a major oil company supporting the phaseout of oil is ridiculous on its face, it is only the most recent example of many high-profile “capitalists” advancing environmental agendas. In a video earlier this year, for example, Apple CEO Tim Cook and his team appeased an angry mother nature by planting forests, reducing water usage, using higher amounts of renewable energy, and creating “net zero” products.
Cook’s fiduciary duties to the board and shareholders of his publicly traded company still require him to continue serving consumers. But if those duties are weakened or abolished, it will not take long for one of the world’s most valuable and profitable companies to go the way of the world’s largest universities and foundations, and now Abu Dhabi National Oil Company — pursuing policies antithetical to their original purpose.
While most Davos elites may laud that, many others suspect something more nefarious is happening — hence the need to “rebuild trust.”
After all, there are a lot of folks who stand to gain from the green agenda — those who collect paychecks or fees by providing guidance, oversight, verification, and other environmental, social, and corporate governance-related services when companies pursue environmental goals.
The CEOs of Persefoni & Position Green eagerly work toward the day when Apple and every other Fortune 500 company purchase their services to track, report, and reduce their carbon footprint. The leaders of Ceres, Principles for Responsible Investing, the Sustainable Accounting Standards Board, McKinsey & Company, and dozens of other environmental consulting firms are eager to have Cook and other CEOs come knocking on their doors for advice — with checks in hand.
The owners of green firms — those that plant trees, recycle water, create solar panels, wind farms, and batteries, bury biomass, or sequester carbon out of limestone — cheer the widespread adoption of their products. This includes Sultan Jaber, who runs the United Arab Emirates’s renewable energy company Masdar. They are good capitalists — I mean environmentalists — after all.
Their industries will experience billions of dollars of growth as government officials around the world push aggressive ESG criteria such as removing the legal shackles of fiduciary obligation, requiring companies to report their climate impact and commit to net zero goals, exempting green bonds and social bonds from ordinary taxation, and requiring investors to hold some fraction of their investment assets in ESG-related funds.
But ordinary citizens are rightly suspicious of claims by the Davos elite that all they need is a little more legal firepower to transition the world to a prosperous, green, low-carbon, net zero economic future.
Europe has already implemented some variations of these ideas, from the European Green Deal in 2020 to the European Climate Law in 2021 to the Sustainable Finance Disclosure Requirement to the German Due Diligence in Supply Chains Act that went into effect in 2023. These rules range from what kinds of vehicles Europeans can drive to mandating that all investors report sustainability analysis on their investments broken down by vague ESG criteria.
In Europe, companies also have legal stakeholder responsibilities that give management broad leeway to orient policy and direct resources to any groups they choose. They have created an ESG nexus involving tens of thousands of people and hundreds of billions of dollars that, remarkably, does not add a single thing to the ordinary citizen’s standard of living. In fact, most of what they do makes it more expensive and difficult for companies to create and provide goods and services.
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This affects people’s well-being. From 2010 to 2022, European economic output only grew 11%, while the U.S. economic output grew more than 66%.
If the organizers of the World Economic Forum’s annual meeting want to rebuild trust, they need to demonstrate that they care about people’s economic well-being and are not just transferring tremendous resources to themselves in the name of saving the planet.
Paul Mueller is a senior research fellow at the American Institute for Economic Research.
