Terrence Keeley

The 18th-century Enlightenment liberated mind, soul, andproperty. It established the world-changing principle that labor and capitalare private property, unleashing unprecedented explosions in work, thrift, and innovationthat lifted millions of people out of abject poverty. But the modern-day phenomenon known as environmental, social, and governance (ESG) investing threatens that prosperity. The implicit promise of ESG investing is that you can dowell and do good at the same time. Investors presume they can make a marketreturn while lowering carbon emissions or reducing income inequality. However, this seemingly noble pursuit does more harm than good. In Ending ESG andRestoring the Economic Enlightenment, Sen. Phil Gramm and Terrence Keeleybring together a collection of insightful essays considering the many problemswith ESG. The authors draw parallels between pre-Enlightenment practices andESG's mistaken attempt to enrich society by extracting rents from workers, consumers, and capital owners. They explain the inefficiencies of ESGinvesting, the flaws of ESG rating methodologies, and the conflict between ESGand fiduciary standards. They also show how impact investing is a viablealternative for those who genuinely want their capital to do well and do good. Featuring the writing of Mike Edleson, Alex Edmans, HesterPeirce, Andy Puzder, and Mike Solon, this insightful volume illustrates why ESGis so ineffective and ultimately dangerous. ESG, at its root, is a return tothe pre-Enlightenment world, where a self-chosen elite use nondemocratic meansto extract the rewards that come from the sweat of the workers' brows and thesacrifice of their thrift. We have seen this drama play out many times before. Thesooner we end the ESG experiment, the sooner we can restore the principles thathave always allowed humanity to flourish.

Should business and finance play larger roles in resolving the great social and environmental challenges of our time? Proponents of environmental, social, and governance (ESG) investing say yes. They argue that ESG financial strategies can help reverse runaway carbon emissions and fix income and gender inequalities, among other ills. ESG-integrated investments already encompass more than $120 trillion in financial assets. Are they working as promised? If not, how can they be improved? In Sustainable, a finance-industry veteran offers an insider’s look at the promises, prospects, and perils of ESG investing. Terrence Keeley argues that many ESG advocates have been overly optimistic about what it can accomplish. Divestment threats are ineffective tools for altering corporate behavior, and verifiably “good” companies do not systematically generate great returns. Most importantly, business and finance cannot cure social ills on their own: regulators, public policies, civil society, and individuals must all play specific, complementary roles to shape the future we want. Keeley provides comprehensive solutions that would promote more inclusive, sustainable growth. In particular, he recommends reallocating capital from some indexed products toward an emerging class of strategies with more verifiable social and environmental benefits. Keeley identifies dozens of alternative “impact investing” strategies that could generate true double bottom lines. He also highlights promising civic organizations with proven methodologies for achieving widely shared benefits at scale. Proposing practical, actionable, and in many cases profitable solutions to social and environmental problems, Sustainable offers an incisive vision of the roles business and finance can and should play in building a flourishing society.