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From New Yorker

From Vox

Minow, from ValueEdge Advisors, said that the easiest way to try to move your money toward doing good (or at least not something terrible) is to take a look at your 401(k). If there’s an index fund with an ESG component in there and the potential social benefits outweigh the potential costs, consider choosing it. A next step, if you’re up for it, is to look at how funds vote their proxies, meaning ballots shareholders get to vote annually on various corporate issues.

In the case of many funds, the firms behind them vote on behalf of their individual investors, and because they have so many shares, they have quite a bit of sway. Are they voting for or against outrageous CEO pay packages? Climate proposals? Diversity requirements? Big investment managers like BlackRock say they’re paying attention, but are they?

“Either they put their money where their mouth is or they don’t,” Minow said. “If a company says we’re making a commitment to be carbon-neutral by 2050 but they don’t make that part of the CEO’s pay plan, don’t listen to them, because they’re not serious about it.”

There are ways to dive in a little more, if you’re willing to put in the energy. For people who have an investment adviser, you can talk to them about your priorities, where your money is being invested, and why. To be sure, that requires thinking about what matters to you.

“What’s the issue you care about or want to have an impact on? How are you measuring that issue and your impact? And who are you working with to do that?” said Rachel Robasciotti, founder and CEO of Adasina Social Capital. Adasina works directly with social justice groups to craft its investment strategies and offers a suite of products for investors. “What social movements say to us very often is: ‘What future are you investing in?’” Robasciotti said.

If you’re up for it and you remember, you can also vote your proxy on shares of the companies you’re invested in during their annual meetings. (You should get a ballot and information from the company ahead of time, and you can find a company’s proxy statement on the Securities and Exchange Commission’s website.) It’s a little tricky, impact-wise, because big institutions have much more voting power than individuals do, but it’s something. And some votes are non-binding, meaning management doesn’t have to do what shareholders say.

There’s also been a lot of attention and emphasis placed on divestment over the years, with activists pushing universities and pensions to just get out of investments in fossil fuels or other arenas. There’s disagreement among experts about how well divestment works.

Proponents of divestment point out that even if it doesn’t necessarily hurt companies or affect their stock price in the short term, it can make a difference in the long term in creating negative attention. “Social movements make visible that an asset is not a good investment when they mobilize investors to leave that asset. Over time, it can become a toxic asset,” Robasciotti said. This is true even if it doesn’t necessarily hurt companies or affect their stock price in the short term.

In the short term, though, selling shares doesn’t hurt the company or really ding its stock price — someone else just comes along and picks up those shares. The shares being divested are already trading among secondary shareholders, so instead of Harvard holding shares of Exxon or Chevron, it’s just some hedge fund or other investor — often an investor that doesn’t care.

“The people who have the least social interest are the ones who end up holding the stock,” said Alex Thaler, the co-founder and CEO of Ikonik, a soon-to-be-launched trading platform that lets individual investors band together for shareholder campaigns. Proponents of divestment often point to campaigns around South Africa in an effort to bring apartheid to an end decades ago, but evidence on just how much of a role divestment played there compared to other factors is mixed.

“The only thing that it does is allow people to cover their asses, because they can basically say, ‘I’ve washed my hands of it.’ Oil companies still exist,” Fancy said.

A small, climate-conscious activist investment firm secured three seats on Exxon’s board of directors in a shareholder push earlier this year, which activists say could have big implications for its climate-related activities. They wouldn’t have been able to do that had they given up their seat at the table (and, probably, if Exxon hadn’t been losing money in recent years).

You can’t save the planet with your Robinhood account

As good as it feels to believe we’re doing something about the issues we care about, it’s also true that as individuals, we can only do so much. Thinking about a problem as enormous as climate change can make you want to act, including through your 401(k). Indeed, some fossil fuel companies would much rather you think about it through the lens of what you’re doing rather than what they are. But saving the planet — including trying to help with your stocks and retirement fund — requires more than your own action and attention. The government also needs to step in.

One place to start, experts say: The SEC is working to define what ESG is, and it needs to do more. There are many inconsistencies among ESG products, and the firms offering those products are allowed to get away with a lot. The SEC and federal prosecutors are reportedly looking into Deutsche Bank’s sustainability claims, but the German bank is hardly the only one stretching the limits.

The Department of Labor is also taking a look at its guidance for ESG criteria in retirement investment plans. This can be a little wonky, but managers of retirement plans have a fiduciary duty that’s essentially to protect the investment and make money with it. And it’s not clear where issues such as sustainability and social responsibility fit into that.

Experts, such as Lenore Palladino, an economist at the University of Massachusetts Amherst, say that asset managers should be able to look at a bigger picture as part of their fiduciary duty. “There is this whole world of ESG funds and sustainable investing, but they all stay within the framework of essentially the only thing you can do with your money is put it into a fund, and the only thing the person managing that money should care about is increasing the value of money,” Palladino said. “They can’t also care about the status of the planet if that will contradict their ability to make money.”

People with a pension fund to live off during retirement also, presumably, want a planet to live on. Regulators need to open the door more for managers to take that into account. Palladino also said it should come with a bigger shift in how we think about investing.

“If you think the whole purpose of buying and selling shares in corporations is to raise the value of those corporations, but then you realize we as shareholders also live on the planet and deal with the negative externalities created, if you don’t allow for or even push money managers to take into account the fact that we are whole humans and we live in a society, then it’s not ethical investing in my view,” she said.

To be sure, there are significant limits in how much change can be accomplished through investing or shareholder advocacy. The federal government needs to act directly on climate change, and corporations do too.

Fancy, the former BlackRock chief investment officer who now runs an education nonprofit called Rumie, takes a pretty nihilistic view of the entire ecosystem of socially minded and ESG investing. His argument is that ESG products are useless — a fund just shuffles some shares around between ETFs and mutual funds, slaps a label (and likely a higher fee) on top, and keeps churning. He worries it’s a “placebo” that makes people think they’re accomplishing something when they’re really not.

“If you really care about social changes, invest your portfolio as you’ve always done, which is to get the best returns and preserve your savings, and then turn to the government and push political action around solving climate change, because that’s the only level where it can actually be solved,” Fancy said.

Many of the other experts I spoke to for this story disputed that view and held that ESG investing can work — but it requires some effort on the part of investors, and it can’t be the only thing they do.

“We’re kind of ignorantly complicit in the world that we see around us because we’re supporting the companies that are in an extractive and destructive business,” Behar said. “The core of it is to know what you want and then align it with your values.”

That temporary stay is just the latest development in a September lawsuit filed by the Biden Justice Department against the state of Texas, which argues that SB 8 is unconstitutional.

The suit has resulted in a whiplash- inducing back-and-forth by the courts this week, with the status of reproductive health care in Texas hanging in the balance. For now, Friday’s stay has blocked the district court injunction — but it’s still undecided whether it will remain in place in the long term.

According to Friday’s court order, the Biden Justice Department has until Tuesday to respond to Texas’s emergency motion to stay the district court’s injunction. The Fifth Circuit panel could then decide to extend the stay.

As Vox’s Anna North explained last month, SB 8 has dramatically affected the lives of pregnant people in Texas since it was enacted on September 1, forcing them to carry unwanted pregnancies or leave the state to receive care while potentially incurring significant costs for travel, lodging, and childcare, in addition to lost wages from missed work.

Already, according to a PBS NewsHour report, at least 300 Texans seeking abortions have sought care in Oklahoma, putting a strain not only on them but on the resources of the Oklahoma providers and patients, too.

On Wednesday, Judge Robert Pitman’s pointed, 113-page ruling temporarily brought a halt to SB 8, granting a two-day reprieve to patients seeking abortions and facilities performing them.

Pitman’s decision, which describes SB 8 as an “unprecedented and transparent statutory scheme,” offered a clear-cut defense of abortion rights, and for a brief period following Wednesday’s injunction, some abortion providers resumed performing abortions past the six-week mark — albeit with a sense of trepidation, according to the Texas Tribune.

Texas abortion opponents wasted no time in requesting a stay to the Pitman ruling. Texas Attorney General Ken Paxton filed the state’s request as part of its appeal of the ruling on Friday, on the grounds that the DOJ can’t sue the state in this case, since SB 8 depends on citizens — not law enforcement officials — to carry it out.

The Fifth Circuit panel that granted the administrative stay includes conservative, anti-abortion Judge James Ho, a Trump appointee who has previously called abortion “a moral tragedy.”

SB 8 is deliberately difficult for courts to engage with

As lawsuits against SB 8 go forward, the law’s unique enforcement mechanism continues to complicate those challenges.

Specifically, the measure is designed so that state officials don’t enforce the law — citizens do, by bringing civil suits against those they accuse of “aiding or abetting” the obtaining of an abortion after medical professionals detect cardiac activity in the embryo. This makes it incredibly complicated to mount a judicial challenge to the law.

As Vox’s Ian Millhiser explains, that’s not by accident:

The law appears to have been drafted to intentionally frustrate lawsuits challenging its constitutionality. And Texas, with an assist from a right-wing appellate court, has thus far manipulated the litigation process to prevent any judge from considering whether SB 8 is lawful.

Ordinarily, if abortion rights advocates wanted to challenge to the constitutionality of a law, they would bring a case against an officer of the state enforcing the law.

But since no state officer is allowed to enforce SB 8, opponents of the law can’t, for example, sue a police officer or a state health authority. Instead, according to Millhiser, challenges to SB 8 will come from abortion providers, who will “be able to argue in court that they should not be required to pay this bounty because it is unconstitutional.”

Specifically, under SB 8, abortion providers and anyone who assists a patient in obtaining abortion care are now potentially liable for a minimum of $10,000 in damages — which, as Millhiser points out, could range far higher if the bounty is decided by “a judge with particularly strong anti-abortion views.”

And the law could have a long-term chilling effect on abortion access in Texas too, even if the injunction is once again allowed to take effect pending appeal. The statute of limitations for bringing such a civil suit under SB 8 extends for four years, and many providers chose not to offer later-term care during the brief period this week that SB 8 wasn’t in effect out of fear that they could be sued retroactively

The success of Texas’s law in blocking abortion access has also inspired at least one copycat bill: In Florida, Republican state Rep. Webster Barnaby has introduced anti-abortion legislation using a similar framework to SB 8 that would make the proposed law difficult to challenge in court.

The Fifth Circuit is likely to side with Texas

The Fifth Circuit’s decision to grant an administrative stay of Pitman’s injunction is only temporary, but it could be a sign of what’s to come as the court considers Texas’s appeal.

As the New York Times reported on Friday, some legal experts believe that this temporary order is just a prelude to a full stay, allowing SB 8 to remain in effect, and that the conservative Fifth Circuit is likely to side with Texas.

Texas’s appeal itself hinges on three arguments: The Justice Department doesn’t have the right to sue the state of Texas, due to the way SB 8 is written and enforced; the government’s suit won’t succeed on the merits of the case; and the federal district court violated precedent by blocking the state of Texas itself from enforcing the law, when according to the text of the law, the state doesn’t enforce it — private citizens do.

Texas has asked for an expedited review of the appeal, and depending on the outcome, the case could end with the Fifth Circuit’s decision. Specifically, according to the New York Times, “there is no guarantee that the Justice Department’s civil suit against Texas will make its way to the Supreme Court” if the Fifth Circuit sides with Texas. Instead, it’s possible that the Court’s conservative majority would decline to hear the appeal, allowing the Fifth Circuit’s decision to stand.

The DOJ lawsuit isn’t the the only avenue currently testing SB 8’s constitutionality, however. Two lawsuits are also pending against Dr. Alan Braid, who admitted in a Washington Post op-ed last month that he had provided abortion care after Texas’ legal timeframe. Anti- abortion groups aren’t among the plaintiffs, but two disbarred lawyers, neither of whom are Texas residents, have filed suit against Braid. One of the plaintiffs, Felipe Gomez, isn’t seeking damages, according to the San Antonio-area ABC affiliate KSAT — instead, Gomez’s suit calls for SB 8 to be declared unconstitutional.

Then there’s international politics. The US, the UK, and four other countries are doing military exercises in the East Philippine Sea. So it’s partly as a demonstration of, “Stay out, we have a dog in this fight as well, we have the ability to strike too.”

Jen Kirby

As you said, the Chinese military has increased the number of flyovers in the past couple of years, and it is using different types of aircraft. Broadly, is there a sense of why the Chinese government is escalating this show in recent months?

Raymond Kuo

There has been a recent push this year, but also last year. I think, in part, that’s a response to US foreign policy. Just talking about 2020. Last year, the Donald Trump administration took kind of a much harder turn against China, whereas even up until late 2019, there was hope that you could have strategic dialogue, and we’ve worked with China on, say, opioids. Instead, you start seeing a nosedive in US-China cooperation, so part of this is also a signal to say, “Look, when our relationship goes bad, we will start not working with you on a variety of things. And also we’re going to be more interested in asserting our interests over Taiwan, in the South China Sea, and other areas.”

I think recently — not just this October, but the previous few months — has been a response to the broader tightening of US alliances in the region. The Joe Biden administration has, kind of surprisingly to me, quickly coalesced a coalition against China and tightened those alliance relationships that have been atrophying a bit under the Trump administration.

A lot of the countries in the region — Japan, South Korea, Philippines probably — they look at Taiwan as a litmus test for US commitment and Chinese assertiveness, which just puts China’s back up.

Jen Kirby

Oh, that’s interesting about Biden’s alliances. I was curious if the recent AUKUS deal among the US, the UK, and Australia to build nuclear-powered submarines might have played into what is happening over Taiwan right now?

Raymond Kuo

I’m not sure it’s directly related. It’s all part and parcel of this larger coalition building. But I don’t necessarily think that these overflights, or these incursions, are a tit-for-tat response.

Jen Kirby

How do you assess the level of fear or concern within Taiwan that the Chinese military may attempt a real incursion by force?

Raymond Kuo

It’s really hard to tell, unfortunately. Part of the issue is public opinion polling in Taiwan can be fairly partisan. Unlike in the United States, where we have the independent polling firms, and we have a lot of them, we have far fewer polling firms in Taiwan, and they tend to be associated with one of the main political parties. So for big, complex issues, it’s really difficult to determine that kind of thing.

Obviously, the incursions have made front pages of the newspapers. But it’s not like you see those old World War II newspapers, where they take up the entire banner and everything below it.

Jen Kirby

Why does the Chinese Communist Party still seem to care so much about Taiwan?

Raymond Kuo

A lot of people talk about the ideational stuff, “the century of humiliation” [the time from the mid-19th century to mid-20th century during which China lost control over portions of its territory to foreigners] and redressing those kind of wrongs.

There’s also the sense of, “You should be part of us, we represent China, you guys are Chinese, you need to get on board with this project of national unification.” It’s difficult to tell in China how much that’s true of the public broadly, because of controls. You can very easily say that the CCP tends to view it this way. But it’s also impossible to say how much the Chinese public actually views it this way, or cares.

There’s also the economic side of it. Taiwan is close to the 20th-largest economy in the world, with a major concentration of semiconductors and other high-tech enterprises. Getting that, especially if it did it without a fight, would be fantastic for China. It would give an immediate boost to its economy and give China industries that complement very much their specialization in manufacturing and production.

There’s the domestic political consequences for President Xi Jinping. Since 2013, he has been consolidating his power more and more. You get the sort of personalization of politics, and also the volatility of politics that happens as well. The more he can tie himself to successfully reuniting China, getting Taiwan to come back into the fold, the better it is for him in terms of his domestic politics.

I said econ, domestic politics, the ideational stuff, and then there’s the legacy of the civil war. This is taught in the history books in China, and it’s emphasized. So through the educational system, you’ll get the “this is why they care.”

Jen Kirby

If China wants to bring Taiwan into its orbit, these military provocations maybe don’t seem like the most productive way to do it?

Raymond Kuo

My response to this is there’s two things. China thinks that the coercive approach to get Taiwan to capitulate — capitulation through demoralization — is the most effective approach they have. A carrot won’t work, so they have to use a stick.

The Chinese government is not stupid. They understand there’s going to be backlash in Taiwan. I’m not sure, which makes me more concerned. It could be that this is the best option they have, and so they’re just going to use it. It could be that they just really don’t care, so they’re signaling — if you’re dividing it into domestic politics, Taiwanese politics, international politics — they either don’t care about the Taiwanese politics, it’s just for the domestic and international side.

There’s also, of course, the military benefits. You’re probing Taiwanese defenses, you’re exhausting the Taiwanese air force.

Jen Kirby

Can you talk a little bit about that? What kind of strain does this put on Taiwanese defenses?

Raymond Kuo

This is a bit of a pattern with China and, say, Japan. Japan has more capabilities and defenses than Taiwan. In 2012, Chinese planes entered around the Senkaku Islands. [Both Japan and China claimed these disputed islands in the East China Sea.] After a month, Japanese officials told the United States, “We are really stretched thin, and we’re not going to be able to keep this pace, so we really need you guys to step in and get involved.”

It’s the same sort of thing. If China can stretch Japan’s defenses in a place that’s further away, they can absolutely do that to Taiwan too. I’ve seen reports Taiwan is considering using unmanned drones as a way to monitor. The problem, of course, is those drones tend to be less effective. If it does come to a shooting war, then you have the wrong assets up in the air.

Jen Kirby

So the strain for Taiwan is basically that they must prepare for the possibility of a real invasion or incursion, even if it’s just a flyover right now.

Raymond Kuo

Exactly, the worst-case scenario response reaction.

Jen Kirby

If Taiwan’s defenses are strained, what does that mean for Taiwan in terms of how allies and partners can respond?

Raymond Kuo

A lot of what we’re seeing is not just US and Taiwanese dialogue. Earlier this year, Biden’s first two White House summits were with the Japanese prime minister [Suga Yoshihide] and the Korean president [Moon Jae-in] for a reason. In both of those summits, they mentioned Taiwan. That was the first time in 52 years that [Japan and the US] mentioned Taiwan [in a joint statement]. It might have been the first time for Korea.

I think you’re seeing a little bit of the Taiwanese strategy of saying, “Hey, look, it’s not just us, we are a part of a broader Asia Pacific area. If we’re the first domino, imagine what’s going to happen.”

Taiwan is the focus of more security cooperation in the United States. Whether or not allies could defend Taiwan successfully is one thing, but I think politically, you are seeing a coalition come together. And for Taiwan, that gives it a bit more space to maneuver, and I think it tends to offset some of the fear generated by this incursion.

Jen Kirby

The US has reframed its relationship with China — I think the new term is “strategic competition” — and is more directly challenging its authoritarianism and economic practices. I wonder if Taiwan has risen in importance to the US because it is a convenient foil to some of the US’s other geopolitical aims?

Raymond Kuo

It’s hard for me to not think that would be the case, in part because when you think about economics or security, Taiwan is not necessarily the lynchpin of the region, but it is heavily involved in the region, whether it’s supply chains and semiconductors that are necessary in both South Korea and Japan, or if it’s access, past the first island chain for the US Navy. Even more than just an indication of US political commitment to the region, Taiwan is pretty focal.

At least in my mind, the US turn toward Asia was always going to happen, and there would always be multiple economic, strategic, political factors that would force the United States to grapple with how to deal with this issue.

The debate that we’re having right now in the United States is between (for lack of a better term) restrainers and people who may be more of the traditional sort of national security establishment, as to whether or not Taiwan is worth the military or domestic cost for the United States. That cost, of course, being imposed by China.

I think even on the restrainers’ side, there is this recognition that no matter what happens, if the US decides not to defend Taiwan, it would lose something of value. The question is, what would it gain in response to that from, say, China? I think everyone recognizes that there are legitimate national security interests involved, as to whether or not they’re worth the cost that China would impose upon the United States.

Jen Kirby

So if you’re a Taiwan official right now, what do you want to hear from the United States at this particular moment in time? Biden had a kind of confusing statement about how he and Xi agreed to abide by the “Taiwan agreement.”

Raymond Kuo

I tend to look at institutional signals, as opposed to just off-the-cuff statements. On the institutional side, Taiwan is getting a lot of cooperation, not just with the United States but also, I believe, with other countries of the region, deepening cooperation. From an institutional perspective, it’s like, the trend is all going in one direction.

Jen Kirby

What are you watching for next when it comes to Taiwan?

Raymond Kuo

Certainly something that’s quite important is whether or not China is developing the capabilities that it thinks it can take over Taiwan without a fight, versus the United States and its allies and Taiwan working together to present a credible deterrent force against that invasion scenario.

It’s really hard to determine what the Chinese see regarding how fast is the window of opportunity closing. Hal Brands and Michael Beckley have made the case for thinking about China as a declining power, not a rising one. In those sorts of cases, when you’re on the decline, you sense closing windows of opportunity and you tend to lash out. If you sense time is on your side, then you’ll just be patient. These incursions tend to suggest that China does view this as kind of a closing window of opportunity, which is kind of interesting. I don’t know if that’s true. And the only person who would know would be Xi Jinping. If I could get access to him, I’d be paid a lot more.

But I think the US has a really tricky job here. It has to reassure Taiwan and take the lead in solidifying this coalition, but it has to do so in such a way that China doesn’t think “better strike now, or else we’re going to lose this thing forever.” And then the US has to kind of moderate its own policies toward China so it doesn’t jumpstart a war on its own for some other issue area, like the South China Sea. It’s a really tricky balancing act.

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