Some readers may disagree, but I get the sense that corporations, especially large bureaucratic ones, foster leaders who do not possess strong opinions about anything. The leaders that do emerge seem to be pliant creatures who practice a repugnant form of leadership through consensus, continually testing the waters to determine the least offensive position that they might take for the moment. Granted, there are exceptions to this rule like Chris Wright, the CEO of Liberty Energy, who Trump tapped for Energy Secretary, and even Elon Musk, who despite his dumb-headed notion of an E.V. future for all has strong opinions about where things should head. Why are there so many servile nullities pervading our corporate leadership class?

The most prominent case in point, are the CEOs of the oil majors. They spend half their time walking around with their head down and the other half apologizing for the perceived ills their product may have inflicted upon society.  I was recently struck by the following passage from an article in The Economist:

That includes the oil-and-gas industry, which is struggling to find a way to decarbonise profitably. Murray Auchincloss, bp’s boss, announced a shift away from renewable energy and back to fossil fuels in a ‘fundamental reset’ earlier this year. On July 22nd news broke that Shell, Enbridge and Aker bp, three oil companies, had quit the SBTi’s advisory group set up to define what ‘net zero’ means for oil companies. They are said to have left because they were told achieving it would mean not developing new oil- and gas-fields.

For those that have not read The Economist, this is standard fare from a magazine that whole-heartedly embraces the platform of the World Economic Forum. However, my point is that the passage unwittingly reflects poorly on the forward-thinking ability of the CEOs of the three oil companies. They join an advisory group set up to define what “net zero” means for oil companies, only to be told later that achieving it would mean not developing new oil and gas fields. In the words of Homer Simpson, “D’oh!” What explains such cluelessness?

One explanation might be the degree to which they are beholden to institutional investors. CEOs cravenly seek the approval of institutional investors who have the power to sink their stock price by selling a large number of shares if they don’t like what they see or hear coming from a CEO. As a class, institutional investors are even worse than CEOs. They are conditioned to rationalize anything. They embrace new (corporate) fashions as enthusiastically as any New York City socialite shopping at Bergdorf Goodman.

In the same article referenced earlier, another passage gives one a feel for the mindset of institutional investors:

Financial institutions are also backsliding. Along with hsbc, big American banks including Goldman Sachs and Morgan Stanley have dropped out of the nzba [Net-Zero Banking Alliance], as have some from Japan and Canada. The Institute for Energy Economics and Financial Analysis, a think-tank, estimates that the leavers account for two-fifths of the group’s total assets. The same problems are afflicting similar organisations, such as the Net Zero Asset Managers initiative. This year Wells Fargo, another American bank, scrapped some of its emissions-reduction plans and in March Switzerland’s ubs pushed back its climate targets after acquiring Credit Suisse.

Part of the problem for financial institutions is politics, which was shifting even before Donald Trump returned to the White House. In America Republican senators have suggested that joining a green alliance could breach antitrust rules. Since Mr. Trump’s re-election the pressure has been cranked up. In January ten state attorneys-general wrote to America’s biggest financial firms, including BlackRock and Goldman Sachs, threatening legal action if the companies did not change their climate and diversity policies.

What can we infer from the passage about institutional investors? It is not a flattering picture. After years of burdening corporate leaders with having to reach arbitrary net zero metrics, institutional investors are scrapping it as they sense that the public is not buying into the woke agenda. It is a sad indictment of corporate America that CEOs are so cringingly servile and institutional investors so vacuous.

Image generated by AI.