Corporate Social Responsibility, ESG Scores, and China’s latest foray into totalitarianism via its recently introduced Social Credit System share significant commonality. Each system engenders the same erosion of individual liberty via the propagation of a singular “morality” unilaterally determined by an authoritarian overseer. That the governance structure surrounding the former is made up of economic elites operating from a relatively free society, while the latter is made up of high-ranking governmental officials in a significantly less free society, is immaterial.
Corporate Social Responsibility (CSR) is defined by Investopedia as “a self-regulating business model that helps a company be socially accountable -- to itself, its stakeholders, and the public… to engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment.”
Environmental, Social, and Governance Scores (ESG) are defined as “a set of standards for a company’s operations that socially conscious investors use to screen potential investments.” ESG scores are most commonly used to assess investment risk; a high ESG score is theoretically supposed to indicate a low risk level. However, the score consists of a set of metrics that are highly subjective, and arbitrarily determined by a small group of elites rather than any sort of democratic process.
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