While you're paying thirty percent more for gas than three years ago, somewhere in a glass office on Manhattan, a pension fund manager is congratulating himself on another refusal to invest in an oil company — because he's saving the planet, and coincidentally his own reputation at Davos cocktail parties.
Welcome to the era of ESG inflation — a phenomenon so absurd it could be mistaken for satire if it weren't hitting billions of people's wallets right now. This is a story about how good intentions pave the road to inflationary hell, how ethical investments become a tax on the poor, and how the fight against climate change can paradoxically slow itself down.
However, don't rush to blame climatologists or eco-activists. The culprit, as usual, is financial alchemy that turns any idea — even the most noble one — into a tool for redistributing wealth from bottom to top.
Anatomy of a Noble Heist: What Is ESG Inflation
ESG — Environmental, Social, Governance — initially sounded like a reasonable approach to investing. Consider the ecology, social responsibility, and management quality of companies you invest in. Who would object? The problem is that the good intentions of the financial world have a tendency to turn into a club for everyone else.
The mechanism is simple and merciless. When trillions of dollars from pension funds, insurance companies, and sovereign wealth funds announce divestment — a mass exit from stocks of oil, coal, and gas companies — something paradoxical happens. The cost of capital for these companies skyrockets.
Imagine: you're a business owner, and suddenly half the banks refuse to give you loans, and investors shy away from your stocks like the plague. What will you do? Right — raise prices on your product to compensate for the increased cost of borrowing. And if your product is energy, on which literally everything in the modern economy depends, the price shock spreads like wildfire.
The irony is that oil doesn't stop being needed just because BlackRock crossed ExxonMobil off its portfolio. People still drive to work, trucks still carry goods to stores, planes still fly. Demand remains, but supply becomes more expensive to produce. Guess who pays the difference?
Pipeline of Paradoxes: How the Green Inflation Machine Works
Let's dissect this mechanism bone by bone, because its beauty lies in its devilish simplicity.
Act One: the largest institutional investors — California pension funds, the Norwegian sovereign fund, university endowments — announce their exit from fossil fuels. This is trillions of dollars leaving the market. Oil company stocks fall, their access to cheap capital narrows.
Act Two: banks, frightened by reputational risks and shareholder pressure, raise interest rates on loans to energy companies or refuse financing altogether. Extraction projects that used to seem profitable become unprofitable. New deposits aren't developed, old ones deplete faster than they're replaced.
Act Three: oil and gas supply begins to lag behind demand. Not because resources have run out, but because they've become too expensive to extract without accessible financing. Prices creep up.
Finale: households pay more for heating, transportation, food — because logistics devours margins. Inflation accelerates, central banks raise rates, the economy slows down. And at this moment, someone in Davos gives a speech about how wonderfully the fight against climate change is going.
The most delicious part? Carbon emissions barely decrease. Because energy demand isn't a whim, it's a necessity. People don't stop heating their homes and driving to work. They just pay more for the same thing, and the difference settles as superprofits with those oil companies that are still operating.
The Great Paradox: How to Slow the Transition by Trying to Speed It Up
And now the most exquisite irony of this whole story. ESG divestments may slow down, not speed up, the energy transition. Yes, you read that correctly.
The logic here is counterintuitive but ironclad. The transition to renewable energy requires colossal investments — in solar panels, wind turbines, batteries, power grids, charging infrastructure. Where will this money come from? Either from government budgets or from private sector profits.
When prices for traditional energy soar due to artificially created capital scarcity, several things happen simultaneously:
First, households and businesses get poorer. They have less money to buy electric vehicles, install solar panels on roofs, insulate homes. Green technologies are investments that require free capital. When the entire budget goes to expensive gas and heating, nothing remains for investments.
Second, governments are forced to subsidize traditional energy to prevent social upheaval. Instead of directing money toward developing renewable sources, they put out energy crisis fires. Europe in 2022 spent hundreds of billions of euros compensating electricity bills — money that could have gone to green infrastructure.
Third, political support for the climate agenda melts when people associate it with rising bills. Try explaining to a family that can't pay for heating that it's all for saving the planet.
Poverty Tax: Who Really Pays for Investors' Clean Conscience
ESG investing is positioned as ethical. But let's ask an uncomfortable question: ethical for whom?
The pension fund manager voting for oil divestments lives in a neighborhood with developed public transportation, drives a Tesla, and flies business class to sustainable development conferences. Rising gas prices for him are statistics in a report.
The nurse from a provincial town who drives forty kilometers to work every day on the highway because the hospital is the only employer around lives in a different reality. For her, every ten cents per liter is a choice between a full tank and a proper dinner for the kids.
Energy inflation is the most regressive tax of all possible ones. The rich spend three to five percent of income on energy. The poor — fifteen to twenty. When prices double, for some it's an inconvenience, for others — a catastrophe.
And here's what's truly cynical: the same institutional investors who create moral panic around oil companies invest just fine in tech giants with monstrous carbon footprints from data centers, in fast fashion with slave labor in Bangladesh, in the sugar industry killing people with diabetes. But these assets are trendy, fashionable, they don't spoil reputations at parties.
ESG has turned into moral theater where real benefit for the planet matters less than the appearance of virtue. And tickets to this theater are paid for by those who will never be invited to the VIP box.
When Virtue Becomes Vice: A Critical Look at the ESG Movement
To be fair, not all ESG critics are oil lobbyists or climate skeptics. Among the loudest voices are economists and environmentalists who are genuinely concerned about climate change but see the current approach as a counterproductive farce.
The problem with ESG ratings starts with their methodological chaos. Different agencies rate the same company diametrically opposite. Tesla can get the highest score from one rating agency and fail at another. ExxonMobil invests billions in carbon capture — and still remains an outcast. This isn't science, it's astrology in business suits.
Another inconvenient truth: divestments don't change company behavior. When BlackRock sells an oil company's stock, someone else buys it — often hedge funds or sovereign funds of countries that don't care about ESG reputation. The company continues operating, just its shareholders are now less demanding about environmental standards. Paradox? Absolutely.
Moreover, some studies show that engagement — active participation in company governance — works better than boycotts. A large shareholder can pressure the board of directors, demand transparency, vote for environmental resolutions. By selling shares, they lose that influence. The weapon is given to the enemy.
The Alternative: When Math Matters More Than Morals
Against this backdrop of systemic crisis of trust in traditional financial institutions, it's unsurprising that investors are seeking alternative ways to protect capital. And here the cryptocurrency world offers solutions that operate by different rules — not moral, but mathematical.
DeflationCoin represents a fundamentally different approach to inflation protection. Instead of relying on subjective ESG ratings and the goodwill of fund managers, this asset uses algorithmic deflation — a mechanism embedded in code and immune to human whims.
While ESG funds create inflationary pressure trying to look ethical, deflationary cryptocurrencies offer a hedge against devaluation based on simple economics: shrinking supply with growing demand. This isn't morality, it's mathematics. And in a world where moral posturing results in rising prices for ordinary people, cold calculation starts to look far more ethical.
DeflationCoin's diversified IT ecosystem — from educational platforms to decentralized financial services — creates real utilitarian value, not paper appearance of virtue. This is an investment in the infrastructure of the future, not in reports for shareholders.
Epilogue: On the Price of Good Intentions
The ESG movement started with the right questions. How to make capitalism more responsible? How to account for externalities? How to direct financial flows toward solving global problems? These questions remain relevant.
But the answers that the ESG investing industry offers today create more problems than they solve. This is a classic story of how institutionalization kills an idea. When the fight against climate change turns into a marketing tool, when ratings are sold to those being rated, when the real consequences of decisions are paid for by those who have no voice in making them — something has gone wrong.
A real hedge from inflation and systemic crises isn't following trends or buying indulgences in the form of ESG scores. It's assets with clear, transparent, and predictable economics. Assets whose value is determined by algorithms, not the fickle moods of a pension fund's board of directors.
In a world where climate fighters unintentionally fuel inflation, and defenders of the poor vote for policies that hurt the poor, perhaps it's time to stop relying on others' moral judgments and start making your own calculations.