Welcome to another edition of The Mueller Report!
Updates
We continue to plod along in the Mueller household. Sometimes it feels like two steps forward, one step back - yet much of life is like that. We’re still early enough in December that one can be optimistic about getting Christmas shopping done early and sketch plans for 2024 before it is 2024.
We recently finished some renovations here: a new bathtub replacing a small closet shower; refinishing several counters; improving insulation in a few walls; and windows.
We already have to replace a new window that got cracked (the culprits will remain nameless…) Kathryn has designed and is building a new stained glass window to replace the single color pane. There’s a lot to be said for taking lemons and making lemonade with them…
Ski season begins soon, so we’ll be opening The Abbey back up to the public in a few weeks. One of my goals this season is that the whole family will be able to be on the slopes at the same time. The youngest will still need help with lifts and coming down from the top, but I hope the four and six year old will be able to navigate the hill (under supervision) without much need for help.
We’ll see if we get there.
News
The annual UN climate conference COP28 is underway in Dubai. I have an op-ed in the Washington Examiner today about the “Totalitarianism of Climate Alarmists.” The most recent column in my series on ESG came out yesterday. And I sent a letter to the local paper that was published last week about why two ballot propositions failed to pass. An incoming local school board member saw it and reached out to talk with me about ideas for moving forward.
Score one for local news and political engagement!
As far as national news goes, I don’t have much to comment on. There are some interesting dynamics at work in the electric vehicle and battery markets. Large car companies like Ford and GM (and others) are walking back their EV and battery plans quite rapidly. We are just beginning to see the distortions of massive government interventions in the economy through the Inflation Reduction Act and the 2022 Infrastructure laws.
Apparently, though billions were allocated to build EV charging stations in 2021 across the country, the bureaucratic process is so dysfunctional that not a single one has been built yet over two years later!
Reflection
As 2023 winds down, I’ve been spending some time thinking and planning for 2024 (and beyond). Starting a new job, and having moved to a new place in the past year and a half, have shaken things up a bit. When it comes to daily living, ministering and caring for those around me, not too much has changed. But in terms of goals and aspirations, life looks really different than it did three or four years ago.
My brother recommended a book, Vivid Vision, for thinking more expansively about planning, life goals, and aspiration. The book is short, and mostly geared towards leaders of organizations. But he does talk about individual and family visions and most of the lessons apply there as well.
The author argues that most vision or mission statements lack enough detail to communicate and drive significant change over time, in part because they often don’t connect well to daily activity. He suggests that you ought to imagine yourself three years from now and write a journal entry of sorts from that perspective.
Where are you? What are you doing? Who is around you? What does your day look like? I found answering these questions and describing how I think or hope life will look in three years to be a fascinating exercise. It was surreal, in a way, to see different things I wrote about in my life that I had never really thought about before or realized that I hoped would be a part of it. It reminds me of a line from Richard Foster that I was discussing with a few men earlier this week: “Goals are discovered rather than created.”
Another surprising thing about this exercise was how it began to create change overnight. While many of the things I hope for or imagine life being like three years from now will take a lot of time and effort to achieve, many other things I hoped for could be started anytime - patterns of waking up, playing music in the mornings, being more intentional about certain meals and interaction with the kids, starting the very early stages of bigger projects, etc.
I won’t share much of my vision now - I still have to go back and work through it again prayerfully to consider not only what I want, but whether these things honor the Lord and seem like something He is calling me to pursue or desire.
To be continued in the new year!
Writing
My letter to the Herald Democrat here in Leadville was edited in ways I wouldn’t have chosen, but the gist of it remained:
Here are a few excerpts from my next ESG piece exploring the various goals of the movement:
Environmental
While ESG advocates have a wide range of environmental goals, one goal dominates: combatting climate change. Well over half of the targets, disclosure requirements, regulations, and cost of the environmental piece of ESG comes from the goal of reducing greenhouse gas emissions. The problem of climate change dominates the environmental criteria because it is universal – everyone contributes, everyone is affected – and because it more easily lends itself to metrics.
Global warming has the clearest and most universal goal: reduce greenhouse gas emissions. The quantity of reduction varies some by organization and industry, but every target involves one of these key metrics:
2030 – The Paris Agreement in 2015 set a fifteen-year benchmark. Given IPCC models and predictions then, a variety of emissions reduction targets were set for 2030. The argument made by ESG advocates is twofold. First, it will be harder to slow or stop global warming the longer we wait to act. Second, the downside of global warming increases dramatically as the temperature rises. The 2023 Emissions Gap Report by the UN Environment Program, for example, claims that extreme weather events will happen more frequently the warmer the planet gets.
(pg. 32 of 2023 Emissions Gap Report)
2050 – This year has been set as a “realist” time frame for more aggressive targets for industries to reach net zero. It is a kind of compromise environmentalists have made with reality since it is blindingly obvious that net zero cannot be reached in most industries by 2030.
Net Neutral – As I mentioned in my piece about ESG Terms, net neutral refers to reducing or offsetting one’s greenhouse gas emissions entirely. Carbon offsets are critical for achieving this goal. Very few industries can reduce their emissions to zero or recapture the equivalent of their emissions output. The only way they will be able to achieve net zero is by funding (buying) carbon offsets from third party implementers. This has already created a thriving cottage industry of climate mitigation firms.
1.5O Celsius – In 2015, scientists at the IPCC deemed this amount of warming manageable and potentially achievable. The most recent U. N. report suggests that it is no longer a feasible goal. In 2015, global emissions were projected to be 16% higher today. Instead, they are only 3% higher.
“However, predicted greenhouse gas emissions must fall by 28 percent for the Paris Agreement 2O C pathway and 42% for the 1.5O C pathway.” (pg. XV) that’s a tall order for growing economies and a growing global population! Still, most organizations use 1.5O C or 2O C as reference points for their benchmarking.
The IPCC uses specific models and makes forecasts of how much the earth will warm at varying rates of emissions. Although specific targets are chosen (1.5O C or 2O C), the models predict ranges of temperature increase and probabilities. For example, continuing with current policies, the report predicts a 50% change of the world being 1.8O – 3.5 O warmer than pre-industrial times, a 66% chance of being 1.9 O – 3.8 O warmer, and a 90% chance of being 2.3 O – 4.5 O (pg. 31). They rate the probability of staying below 1.5 O warming at 0% except for the most optimistic case of massive reductions in greenhouse gas emissions and rapid movement towards net zero.
Social Goals
Internationally, social goals tend to revolve around equity – especially material (wealth) equity and equity between men and women. In more developed European and Anglo-American countries racial and gender “equality” also have great importance. While many of these values also influence the Governance category, we’ll see that the specific goals or outcomes aimed for differ between the S and the G of ESG.
I’ll do my best to cut through the jargon used to describe Social goals, but sometimes that’s really all there is to them. One set of Social goals relates to the supply chains of large corporations. Another set of social goals relates to Diversity, Equity, and Inclusion (DEI).
Worker Conditions
Certain worker conditions are considered acceptable and others unacceptable, although there is no universal or objective standard for making the distinction. A company could receive a lower score if workers in its supply chain are not paid enough (some version of a living wage), work too many hours, have overly difficult or dangerous working conditions, or do not have certain benefits like healthcare. The definitions of “too many,” “overly difficult or dangerous,” or “not paid enough” often varies dramatically by organization and individual.
ESG advocates push for significant redistribution of money, resources, power, and authority from groups who generally have more to groups who generally have less. In many ways this is simply an extension of international aid. Companies (and countries) are supposed to improve living standards around the world – from the laborers harvesting coffee in rural Columbia to the workers making textiles in Vietnam to farmers across Africa.
Companies are expected to provide access to healthcare and education, to improve working conditions, to police abuse and exploitation, and generally to “empower” the downtrodden of the world.
Diversity, Equity, and Inclusion (DEI)
Diversity, Equity, and Inclusion is a grab bag of ideas and values that manifest differently by company. In the University of Ohio system, for example, it appeared in weighting applicants for faculty positions in part by their race, gender, or “sympathy” to inclusion: “One role in medical anthropology had 67 applicants. The four finalists include the only two black applicants and the only Native American applicant. ‘All four scholars on our shortlist are women of color,’ the committee said.”
In the Rand Corporation, DEI figures prominently on their website and influences what issues they decide to research. Their “truth decay” initiative has been steered towards supporting “DEI and the same progressive view of disinformation the Biden administration used to justify a massive censorship enterprise.” For the Pentagon, it involves spending hundreds of millions of dollars on consulting and “education” programs “aimed at furthering DEIA [Diversity, Equity, Inclusion, and Accessibility], and incorporating DEIA values, objectives, and considerations in how we do business and execute our missions.”
And we are all too familiar with moves by Hollywood to bring “underrepresented” groups to the movie screen – primarily based on one’s skin color or sexual orientation; not one’s political views or religious beliefs.
DEI advocates claim they are reversing past racial and gender discrimination by hiring and advancing “disadvantaged” people. As with everything else, the ESG movement has created categories and definitions for “disadvantaged.” Intersectionality designates social, racial, and gender groups as oppressed or not oppressed. Some people might be part of one or two groups. Others might be part of four, five, or six.
The clout of intersectionality comes from the fact that you can simply designate whatever group you want as “oppressed” to increase their standing or worthiness of elevation. This means those who have the authority to designate groups as oppressed or not will wield a significant amount of influence in societies that advocate Social criteria.
Besides advancement, DEI initiatives include policing speech and “discrimination” within companies. Hence the rise of signs like “hate has no place here” and “LGBTQ+ Friendly.” Affirming and advocating for the “oppressed” becomes a sign of distinction for companies and managers in an ESG framework.
Governance
When it comes to moving the ball down the field, Governance is the most important player in ESG. Advocates work to change the composition of boards and the rules, guidelines, and expectations for board members. ESG advocates push for more ethnic, racial, and gender diversity on boards. They also want more interest groups like labor unions, climate activists, and others to have board seats. For example, the Institutional Shareholder Services (ISS) claims that there should be at least one woman and one member of a minority on a board. Otherwise, ISS recommends, shareholders vote against the recommendations of the current board.
ESG advocates have made significant inroads in the investment community from shareholder research organizations like: ISS, S&P Global, and MSCI to massive institutional investors like Blackrock, Vanguard, and State Street. These organizations have been making concerted efforts to influence the boards of the largest and most important companies in the world. One can attribute the rise of “Woke” capital in large part to their activism.
But governance extends beyond promoting DEI and Environmental issues within the firm. ESG advocates want companies to work towards these goals in the broader society. We saw this at work in 2016 when companies threatened to boycott states that implemented religious liberty laws that failed to grant sufficient “protections” to LGBTQ groups. From PayPal changing its plans to expand in North Carolina to the NFL and Disney saying they would take their business out of Georgia, dozens of large public companies used their economic clout to pressure politicians on social issues.
We can also see this approach to governance manifest itself into the corporate response to George Floyd’s murder and the Black Lives Matter (BLM) movement. Recall how many large corporations chose to make public statements about the incident. And recall the massive contributions made to BLM that year – over $90 million dollars in total from large companies including “Amazon, Microsoft, Nabisco, Gatorade, Airbnb,” etc. Commenting on social issues, boycotting states, and transferring significant financial resources to activist nonprofits, naturally follow ESG advocates’ desire to transform all of society.
ESG advocates want to see Governance change at the legal and regulatory level. They advocate changing the legal fiduciary duties of managers – managers of companies and managers of investment and retirement funds. In the U. S., maximizing returns has always been the north star of corporate governance. ESG advocates want to see that standard weakened or changed into a “stakeholder” model. They want boards and management to “represent” stakeholder groups and advance their interests.
Game Corner
Last week we played several rounds of Acquire. This game actually pre-dates the explosion of “Euro” games starting with Settlers of Catan. Acquire has been reissued with slightly different rules - I’ll be talking about the older edition.
You win by ending the game with the most money. There is a board with a letter assigned to each row and a number assigned to each column. There are corresponding tiles (A6, B3, F10, etc.) that you place on the board during the game. There are also seven hotel chains that get placed on the board whenever a group of two or more tiles is formed by the placement of a tile.
The value of the shares of that hotel, which you can buy on your turn, increase with the size of the hotel (number of tiles adjacent to each other). Some hotels have a higher starting value than others - two hotels begin trading for $200/share, three hotels begin trading at $300/share, and two hotels begin trading at $400/share.
As the game progresses, multiple hotels form on the board and players have to decide what shares to buy on their turn. You begin with a limited amount of money and you are not allowed to buy more than three shares on a single turn.
The most important dynamic of the game involves hotels being “acquired.” When a tile is placed connecting two different hotel chains, the smaller hotel will be acquired by the larger hotel. Several important dynamics occur at this point:
1st, the player with the most shares of that hotel receives a “majority shareholder” bonus of ten times the current price of the stock. The player with the second most shares receives a bonus of five times the current price of the stock. Other players holding the stock do not receive a bonus.
2nd, starting with the player who placed the tile merging the hotels, each player must decide what to do with their stock. They can trade two shares of the acquired hotel for one share of the now larger acquiring hotel. They can sell their shares at the price of the hotel when it was acquired. Or they can hold on to their shares hoping that the acquired hotel chain will make its way back onto the board later in the game.
Acquisitions are a critical part of the game because players can only receive additional cash for buying shares when acquisitions occur (either by receiving bonuses or by selling existing shares). Furthermore, when a hotel chain has acquired one or more other hotel chains, its value continues to grow and the importance of having a majority or minority stake in that larger hotel grows too.
At the end of the game, the largest hotel chains also pay out, in the same way as an acquisition, a bonus to the majority and minority shareholders. And everyone sells their shares. While these payouts are often double or triple the size of payouts when smaller hotels are acquired, you only receive it at the end - which means it doesn’t help you have more cash during the game to buy shares of hotels.
The entire DEI concept is insidious. Your research mentioned in your Report helps me realize just how insidious it is.
Shalom.