The Bottom Line

Paul Tudor Jones, hedge fund billionaire, wants to do away with 'ESG'

Key Points
  • The "E" in ESG, for environmentally focused efforts, including climate disclosure, has become one of the most polarizing topics across the financial and legislative landscape.
  • Paul Tudor Jones, billionaire hedge fund manager and the co-founder of nonprofit Just Capital, says workers should be the focus of ESG discussions, not the environment.
  • "Certainly, by what the American public tells us, it should be SGE," Tudor Jones said on "Squawk Box" on Tuesday about the acronym.

In this article

Paul Tudor Jones: Your company's stock performance will be rewarded if you do what Americans want
Paul Tudor Jones: Your company's stock performance will be rewarded if you do what Americans want

ESG has become one of the most polarizing topics for companies and across Wall Street. But billionaire hedge fund manager Paul Tudor Jones says that a lot of the pushback simply comes down to how it is framed by critics.

"ESG is incorrectly characterized," Tudor Jones said on "Squawk Box" on Tuesday. "Certainly, by what the American public tells us, it should be SGE."

The specific component of "S" that Tudor Jones says should be the focus is workers and job creation.

He was made a recent example of the importance of the 'G,' or governance, when it was revealed this week that he was among the investors in bankrupt crypto firm FTX, which has been described as a "complete failure of corporate controls."

Tudor Jones is the co-founder and chair of nonprofit Just Capital, which released its annual Just 100 list on Tuesday. Its ranking of the top large-cap companies is based on polling of the American public and the issues they say matter most to them when it comes to corporate leadership.

This year's list was ranked based on a fair, living wage as the top-most prioritized issue, comprising 21% of companies' scores in 2023, and it has more than doubled from 9% over the past three years.

ESG-branded funds from companies including Blackrock, Vanguard, and Fidelity have drawn record inflows, and held up better last year than many critics expected. Nevertheless, many investors and politicians have criticized ESG proponents, with BlackRock CEO Larry Fink the biggest target. ESG and "woke capitalism" have also become a major talking point for many red-state campaigns, and in particular, the Securities and Exchange Commission's ESG disclosure rules. While companies have looked to outwardly embrace ESG efforts, there is some pushback among the executive ranks, as well.

Tudor Jones said that in the nonprofit's rankings, environmental issues "comes way down the list."

He noted that 44% of the rankings "are all centered around worker issues."

"Americans are becoming hyper-focused, as they should be, on worker treatment and welfare," he said. "Who remotely could be against that?"

Tudor Jones said that he thinks that "so much of ESG is politicized because the environmental part of the bucket seems to drive, or they would like to believe that the environmental part of it drives it, when in actuality the most important thing by a wide margin is how we pay and treat our workforce."

When companies get pushback on social activism

Companies have not been immune to criticism when weighing in on issues that impact the workforce and employees, when they can also be viewed as political issues. That was evident in the fallout around Disney's fraught stance over the "Don't Say Gay" law in Florida.

But Disney took one of the biggest falls on this year's Just 100 list and it had nothing to do with the political battle in Florida. It came down to the company's job cuts and weak performance in the job creation category, No. 2 on the list of issues prioritized by the American public.

Tudor Jones said that Just's polling shows that two-thirds of the American public wants CEOs to "lead with integrity and to be highly ethical."

He disagrees with the public when it comes to seeing companies involved "in a variety of social issues," but does agree with the view that companies should stay away from political campaigns and political contributions.

T-Mobile CEO Mike Sievert said on "Squawk Box" that while both his company and its employee PAC make political donations, "it's not really about social issues or broader national political issues, it's about making sure that our people have a chance to educate lawmakers on issues that affect our industry."

Sievert said that "a big part of the world" wants to know that his company, which ranked No. 20 on the 2023 Just 100 list, is "doing well by doing good; that we're growing our business in the right way, that we have our eye on sustainability, and that we're leaders in DEI."

"I think it's okay to be cynical," Sievert said of ESG critics. "I think it's okay to make sure that companies aren't out there do-gooding and wasting shareholder money, but when you invest your capital in such a way that it comports with what your customers are looking for, well that's good business."

Tudor Jones pointed out that companies on the Just 100 list outperformed the Russell 1000 and the Nasdaq last year.

The Just 100 Index has outperformed the Russell 1000 (the index from which Just 100 companies are chosen) since inception in March 2019, and according to Just Capital, companies that make the Just 100 list create more jobs, pay higher wages, provide more career development opportunities and workforce benefits, emit less carbon dioxide, and have higher profit margins and return on equity than their Russell 1000 peers.

"It's really clear if you do what the vast majority of Americans want, your company is going to be rewarded in its stock performance," he said.