Filling space and wasting our time

So much incoming information to spin our heads and distract us from what’s really important! Here are a few items that would be flashing red if there were a reliable B*S* monitor: 1. The US federal debt ceiling 2. Companies that boast their greenness

3. Companies that boast their diversity and inclusion

News wires and talking heads are filling a great deal of time telling us about the gigantic catastrophe that awaits us if the United States Congress does not agree to increase the American debt ceiling. Congress has until early June to reach a deal on either raising or suspending the limit to avoid defaulting on the national debt. We can read or hear daily that a default would be “cataclysmic” and “devastating,” that U.S. GDP would decline by four per cent, that U.S. stock prices would decline precipitously, that six million will lose their jobs. “Whatever happens in the U.S. has huge consequences here,” says Kristen Hopewell, at the University of British Columbia’s School of Public Policy and Global Affairs.

Don’t waste time on this – the American Treasury Department has figured out a gimmicky workaround even if the churlish Republicans and Democrats can’t agree. The bypass is moderately complicated but Bloomberg Businessweek has graced it as a plausible solution. “The…treasury market might react badly to the gimmick, but not nearly as badly if the US defaulted on its debt…”

It’s fair to assume that most of us subscribe to a better world with more people who are “different” (as if we all aren’t different), not being discriminated against. And it’s probably safe to assume that given a choice, we would opt for a physical environment that was not being poisoned and polluted. It’s one thing to wish for these things and pressure the powers-that-be to change their behavior. It’s another to be taken in by the crass opportunism of marketing departments.

When you are investing your money, do you look for companies that champion diversity, equity and opportunity (DEO)? While the goal is noble, at this moment in time, there’s no evidence that corporate boards or executive offices have significantly more people of colour or people with disabilities. Significantly more women on boards has happened in the last decade or so, but even that metric is thin.

Across all Tsx-listed companies, 88 per cent of boards had women directors in 2022, compared to 53 per cent in 2015. That’s progress. However, women held only 26 percent of the total 5,112 board seats among Canadian companies that provided disclosure for 2022, says the latest Benefits Canada report. And just 10 per cent of board positions were held by directors who are members of visible minorities, Indigenous peoples or persons with a disability.

“Eight years is a long time to achieve the milestones that have been reached to date,” said the Benefits Canada report. “And it will take considerable, sustained effort to achieve gender parity and representation by other diverse groups that approximates the demographics of the population in Canada.” American researchers at Stanford and three other universities say there’s a lot of talk within American corporations but not enough real disclosure to show that American executive suites are populated much differently than they were years ago.

The same caution applies if you bias your investing decisions toward companies or mutual funds that highlight their environmental, social and governance goals (ESG) in their annual reports or their advertising. About a year ago, Statistics Canada embarked on an” Experimental ESG Dashboard” which presents a series of environmental, social and governance indicators to demonstrate the nonfinancial performance of a selection of industries. It shows minimal progress in terms of increased diversity or decreased emissions.

There’s not enough evidence to confirm that ESG metrics are truly measurable. According to a recent Mckinsey Report, “In all our research, it is really difficult to find any correlation between those companies that are the absolute best, the gold-star ESG performers, and shareholder returns.” Moreover, many companies have put ESG goals into executive compensation. The executives may make more money – it’s not clear that your investment will.

Add “diversity-washing” to your lexicon that already includes greenwashing. And think about whether you really want to dilute your shareholder returns by opting for a goal in which you believe but is being given little more than lip service by marketers selling the product.