Pub. 10 2022 Issue 4

Many people today have become so invested in political narratives that the reality right in front of them can become blurred. In some cases, the inability to focus on what is real is driven by innocent confusion. In others, it is the result of a conscious intent to deceive. Either way, when our policies are driven by narrative instead of reality, we inevitably experience pain.

Eventually, reality always prevails, and whatever distance we have put between ourselves and reality must be reconciled, at a cost.

I have a front-row seat at the intersection where the extreme ESG narrative and the markets collide, a collision I have seen coming for a while now. Even though people attribute different meanings to the letters ESG, most agree that a commitment to the environment, fair treatment of all people, and good governance are essential in a free society. However, some political advocates have used these principles to attempt to unilaterally impose their extreme agenda.

The narrative used to promote the extreme ESG agenda is complex, passionate, and powerful. Like all narratives, it contains just enough facts to drive its loyalists to demand a full and unqualified surrender from any and all opposition. For them, any dispute or denial is unacceptable.

As we enter the winter months, we all appreciate the fossil fuels that heat our homes. In Utah, this is mostly natural gas, and there is no cleaner alternative today for keeping our homes warm. Financing the exploration, recovery and transmission of natural gas today is essential and does not preclude better energy alternatives in the future. But apparently, those committed to the extreme ESG narrative disagree. Their commitment to their narrative would separate us from reality and lead to pain, or in this case, even death.

As with all political narratives, pushback, debate, and discovery are essential. The key here is to focus the debate on reality, and from various points of view. However, the debate becomes more dangerous when opponents fight the extreme ESG narrative by constructing their own passionate narrative. Combating a narrative with an opposing narrative instead of focusing the debate on the facts leads everyone further from reality and exacerbates societal pain.

Fortunately, many public officials and leaders of community and business remain committed to making decisions based on reality. Bankers are an important part of this group. Our job is to allocate our community’s precious, limited capital to the best and highest good. Of course, there can be a healthy discussion about what is “best” and “highest,” but that is ultimately determined by the realities of the market, not political narratives.

During a recent Congressional hearing, a promoter of the extreme ESG narrative confronted the leader of the largest bank in America, demanding his bank stop making loans to the oil and gas industry. His response was perfect: “That would be the road to Hell in America.”

He was right! We live in a Democratic Republic, and if a member of Congress wants to starve the oil and gas industry of capital, she needs to draft legislation and get the votes to make it law. That’s her job. Subverting that process by unilaterally pressuring banks to stop lending to legal businesses essential to our health and safety would indeed be the road to Hell for America.

As we fashion our responses to some of today’s most dangerous political narratives, policymakers should de-escalate by focusing their efforts on facts, not fears, to ensure their remedies remain connected to reality and avoid unintended and unnecessary pain in the long run.