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The Lehman moment for the ESG movement

As the current banking crisis continues to roll through the global financial system, one common denominator among all the bank failures to date has been corporate ESG policies promoting climate action, diversity, equity, and inclusion, and other progressive initiatives.

The recent spate of bank failures may still spell the end for ESG on Wall Street since, in all of the above cases, a corporate focus on ESG was more than just a distraction and time-sink for executives and employees.

Investors would be well advised to charge more for the capital that they allocate to banks that publish glossy hundred-page sustainability reports and splash 17-color pinwheels across all their corporate presentations, which is ironic since this is the antithesis of what the ESG movement is trying to accomplish.

While the current problems centered in the bank market are likely to continue spreading, the more-seismic systemic shock this time around may be to the progressive ESG movement. Overlooked in all the Lehman post-mortems over the past 15 years has been the failed investment bank's own ESG policy proclivities toward the end.

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