Expedia Chairman Calls Companies With ESG Goals “Virtue Signaling”

United Airlines has gone woke. Airlines are fighting over who can be the most environmentally-friendly. Delta even claimed to be carbon neutral before the pandemic, even though they literally own an oil refinery and most of it was dubious carbon offsets.

Expedia’s Chairman Barry Diller is bucking the trend dismissing ESG as virtue signaling at the Skift Global forum this week.

Expedia Group Inc. Chairman Barry Diller largely dismissed the inclusion of environmental, social and governance principles in corporate decision making, saying many such programs just produce “glossy reports.”

“Most of ESG is virtue signaling, I’m afraid,” Diller said Tuesday at the Skift Global Forum travel conference in New York. BlackRock Inc. Chief Executive Officer Larry Fink’s push for companies to become more sustainable was “above criticism” for several years, Diller said. But, while some ESG programs make sense, most of them are “truly empty calories.”

Ironically Expedia produces its own ‘global impact report’ and promotes booking sustainable tourism. Diller virtue signals! At the same time, Diller isn’t wrong about how many companies – and investors – behave.

Let’s look at this from the side of the investor looking to drive social causes with their dollars. The usual mechanism by which this works (and is more than virtue signaling!) is by lowering the cost of capital for ‘good’ companies (more investment, more money available and competition to make those funds available) by raising the cost of capital for ‘bad’ companies (with marginally fewer dollars available to them). However,

  • ESG investing necessarily means giving up returns. If you exclude high return investments from your portfolio that are inconsistent with your guidelines, you will have lower returns. It’s easy to confuse environmental companies delivering good returns – and even the sector outperforming others – with environmental investing not incurring tradeoffs. Non-ESG funds can invest in ESG projects because they are likely to yield strong returns! The only investments that ESG funds can invest in and non-ESG funds won’t are the ones with lower expected returns.

  • ESG investing leads to higher returns for non-ESG investors. That’s by definition, since it leaves profitable opportunities on the table for other rather than competing down those returns. It’s the mathematical flip side of raising the cost of capital for companies you deem bad actors! You should be fine with that, but recognize both that you’re giving up returns and helping raise the returns for other investors who don’t share your philosophy.

  • How many ESG funds actually short non-ESG companies? How many even know how to calculate including a short in their metrics? But if they’re serious about raising the cost of capital for non-ESG projects shorting would be a necessary component of the strategy, and possibly even more effective.

  • It can be possible to do more for environmental and social causes by earning more and donating rather than by imposing strict constraints on business activities. Giving up returns give sup the ability to invest in those causes.

Diller is the travel industry’s Dilbert, but he’s wealthy enough that he doesn’t need to worry about getting cancelled for it. I find this comic about ESG particularly interesting because it’s both offensively dismissive but also insightful into the cynical approach many companies take towards the issue.

There’s nothing wrong with investing your principles. Doing so should cost you! And figuring out where to do so is hard, too, since companies – which are looking to market themselves to ESG-inclined investors – do the best job to position themselves as eligible for these funds. The metrics we use are both gameable and frequently gamed!

As an investor, outsourcing to an algorithm or generic investment fund isn’t likely to align with your goals, either. And pretending it’s all a free lunch is dangerous and silly.

(HT: @crucker)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The comic isn’t offensive. It’s completely accurate. That anyone gets offended by it makes its entire point. ESG is garbage.

  2. He is correct: ESG investing IS virtue signaling. Let’s face reality here: we need airplanes (which pollute the air) to fly people and goods around. We need oil and gas companies (who drill for petroleum and gas) to discover and produce petrochemicals for millions of goods (including life-saving pharmaceuticals) and services (such as powering electric utilities that provide power to our homes and hospitals. The reality is that these “blinker eyed” (get your damned blinders off, morons) have no ideas of how critical many of these industries are, and how much they need investments to continue their own processes and improvements. People like Larry Fink and George Soros who are working WITH OUR MONEY often pursue goals that are quite opposite to what their investors really want. My recommendations are (1) woke people need to remove their heads from their rectums and (2) don’t invest your money with woke investment companies like BlackRock and Vanguard.

  3. At a former investment research job,I did a rank correlation of two scorekeepers’ ESG rankings of US companies. Had they had the same ranking the summary statistic (specifically, the Spearman Rank Correlation Coefficient) would be equal to 1. If totally opposed, -1.

    The value I got was about zero. I.e. two skorekeepers (in my study, Thompson Reuters and LSEG) have no agreement on a typical company’s ESG value. And it wasn’t obscure companies that drove the results. BA was in the top quintile for one, and the bottom quintile for the other.

    What this shows is that ESG is meaningless. Portfolio managers cannot use it, and if you are a company and want a good score, just shop around.

  4. more significantly, environmentalism -which should not be confused with a general concern and care for the environment – is nothing but a massive wealth transfer scheme. It isn’t lost on anyone that Jennifer Granholm, Biden’s “energy” secretary, is and has been deeply invested in electric mobility companies.
    Airlines produce a small fraction of the environmental impact but commercial airplanes are big, highly visible machines – unlike power plants far from urban areas – so airlines have to do something. Buying and burning sustainable aviation fuel is the best thing airlines seem to be able to do so let them knock themselves out trying to develop more of it. All of their efforts will have minimal impact but they will tout all they have done.
    The bigger issue is fleet fuel efficiency – and on that metric, American and United are at the bottom of the list of US airlines. Global carriers by nature score poorly because of big seats and long distance aircraft but American and United’s fleet planes for both international and regional aircraft yield far lower resuls than many global airlines.

    And Delta is adding massive tanks to its refinery complex in Pennsylvania which Reuters says is to store and mix biofuels which it can mix with the output of its refinery – just as refineries run by the big boys such as Exxon already do and which the government says refineries have to do or pay for the privilege of not doing.
    And Delta’s refinery is saving the airline billions of dollars per year in fuel costs compared to American and United – up to 44 cents/gallon in just the 2nd quarter of 2022 alone Given that the big 4 burn close to one billion gallons of jet fuel per quarter, even a 25 cent/gallon savings creates enormous cost advantages for Delta.

  5. Dilbert was NOT “cancelled” because of that comic. One chain — Lee Enterprises — that owns 77 papers decided to cut Dilbert and some other comics for cost-cutting measures.

  6. I think we’d be better off investing the trillions of dollars that we have spent to create “green energy” and completely change the world order, and put that miney towards researching and implementing policies amd infrastructure that will help us live with a world 5degrees warmer. Think cheap and efficient AC, drought resistant crops, smart irrigation, recycling of water, sea walls. This whole ESG thing is just trying to create an entire new industry where the companies that got in on ground level investments (think Blackrock, Vanguard, etc.) can reap huge payouts when their “green” investments grow due to the government overpaying for their products.

  7. Lots of hostility here towards ESG. I’m not sure the explanation Gary provides of ESG covers all instances. For example, BlackRock, cited by several commenters here, actually calls out that they’re looking for investments with *material impacts* to the bottom line. In other words, they believe there are risks not currently baked into pricing for non-ESG investors because they don’t show up on balance sheets, but that do affect the proper valuation of firms.

    That’s clearly distinct from “investing in lower returns in order to reflect our values.”


    (e.g. “ESG is not… addressing stakeholder concerns by applying exclusionary screens based on immaterial ESG information”)

    I suspect a number of investors are underestimating the likelihood of the (almost complete) collapse of the fossil fuel industry globally in the next 15 years. I forget the economic term for this phenomenon, but essentially, lots of folks mistakenly believe that because returns have been good to date, it’s a good time to invest, when in fact, the market is ripe for disruption. For other examples, see taxi medallions as Uber was rolling out.

  8. ESG is fraud, plain and simple. It diverts capital away from activity that creates wealth for shareholders and employees.

  9. There is much better Dilbert ESG comic – in which Dogbert started ESG rating company but suddenly realized that he has to actually, you know, research rate companies. So he decided to sell the ratings instead.

    As for the Dillan, he’s not there yet. He still says the “most” of ESG is VS. He cannot yet admit that it is in a nutshell a religious ritual, so it cannot have any rationale in its essence but is rather just a means to achieve something.

    At least he’s way ahead of Gary who calls Dilbert offensive. virtue signaling just in case, or out of habit, but disgusting anyway

  10. #NewsFlash (not really): Every idea, thought, proposal that comes from the radical left ends up being a failure, causing harm, hurting people and economies. All their ideas stink, plain and simple. They don’t work. Which is why they continue to spiral into their rabbit hole of bad policies – they’re in too deep to dig themselves out of their demented faux-realities.

  11. First we started with global cooling then in the late 1970s it changed to global warming. Miami and where going to be under water by 2000. No more crops. Then global warming. Then climate change now I think it is called climate Catastrophe. Remember we have less then 8 years left on earth

  12. This idiot was crying about trump being “evil” but now cry’s about “woke”. He should have supported President Trump.

  13. @jamesb2147: The problem is that ESG is not adequately unambiguously defined (see my detailed evidence above). The only thing that Larry Fink can guarantee from his approach is lower returns. He can’t give (and can’t even price) alleged gains from his indulgence of preferences.

    “I suspect a number of investors are underestimating the likelihood of the (almost complete) collapse of the fossil fuel industry globally in the next 15 years.” What is their probability and what is yours? How large is your short position and how are you trading this?

    “a number of investors”. ‘A number’ is vague. 4? 3 million?

  14. Companies “virtue signal” all the time. They get behind any movement or position they feel will either not offend customers or draw in more (as they should). It is all about the bottom line which is really why companies exist. Any liberal environmentalist that doesn’t understand that has no grasp of business (which is par for the course for most liberals).

    Personally I think companies, like pro athletes, should stay in their lane and not comment on any social or political matter. However when companies do you can bet it was researched and calculated to improve the bottom line

  15. @ Gary Leff

    Typical lazy article – statements made, but never substantiated with data.

    “ESG investing necessarily means giving up returns.”

    Not necessarily so:


    It just depends (e.g. exposure to oil stocks) and period quoted (e.g. ESG will look bad in last 12 months because of lack of hedging from owning oil stocks).

    ESG investment or non ESG investment also share common attribute – the investor cannot reliably predict future returns.

    Remember, Gary, that information (or lack of it) is a key factor in determining optimal strategy in game theory. And so is the scenario of strategy and counter strategy both being sub optimal.

    So, “thought leader”, show us the actual math rather than resort to facile and superficial logic, and for once, with some substantiating data. That way, we’ll be able to concur with your statements or all agree to move onto a better theoretic position. Arguably, that would be a very worthy contribution from somebody of your skills and knowledge.

    (Hint – your investing strategy could depend on the reliability of the information (how effectively ESG is actually applied in a given company and how well that ESG performance is measured by the fund manager – maybe put that into your model)).

    Yes, it gets more interesting if you put shorting into the frame.

  16. @ EdSparks58

    “He is correct: ESG investing IS virtue signaling.”

    Do you mean Barry Diller of Expedia (the original subject of the article) when you say “he”?

    If so, no, he did NOT say that INVESTING in ESG is virtue signalling!

    Gary Leff decided to spin off his article above in that direction (his blog, his choice, but it’s evidently confused some readers and commentators herein).

    As reported, Barry Diller was talking about how corporations apply ESG, variously poorly (“many such programs just produce “glossy reports.””) and effectively (“some ESG programs make sense…Many of the energy companies are beginning to get it right…When you talk about the big issue in practical terms, they’re at the crux of it.”).

    [@ EdPark58] “The reality is that these “blinker eyed” (get your damned blinders off, morons) have no ideas of how critical many of these industries are, and how much they need investments to continue their own processes and improvements.”

    Small problem with your rant, mate. International finance has been directed towards funding corporations who enact social and environmentally responsible practice FOR YEARS irregardless of how you define ESG.

    Here is an example (for investment by corporations in emerging markets):


    (remove the quotations marks)

    That includes the resources industry.

    Major aviation corporations attract significant government backing in one form or another.

    “(1) woke people need to remove their heads from their rectums”

    That sounds awfully like “virtue signalling” from a high wing perspective backed with little knowledge or understanding of real world applications in the industries you cite!

    Ironically, some resources corporations are taking a lead role (not just talking about it).

    ” (2) don’t invest your money with woke investment companies like BlackRock and Vanguard.”

    Or, generically, if you are an individual investor, simply do your due diligence on any investment opportunity, ESG or otherwise and hedge for the obvious risks.

  17. @platy: ESG must entail lower expected returns for any given risk class. ESG closes options , some of which have higher returns, so ESG portfolio returns are lower than unconstrained portfolio returns.

    I suggest you apologize to Gary for denigrating his intelligence. Its something you could do with more of yourself.

  18. @Dude26

    “Every idea, thought, proposal that comes from the radical left ends up being a failure, causing harm, hurting people and economies….”

    Except…investment in corporations / projects enacting responsible social and environmental practice and corporate governance are not the products of the “radical left”.

    For example:


    [remove the quotations marks]

    Launched in 2003 and adopted by over 130 banks / financial institutions globally across 38 counties guiding investment on emerging economies. I’m not sure how you get more conservative financially than a group of dozens of international bankers.

    The concept of sustainable development has been around since 1987 copied in a report commissioned by the nearly 200 national governments of the UN General Assembly.

    “All their ideas stink, plain and simple. They don’t work.”

    So, you can’t accept the concept that development should meet the needs of the present without compromising the ability of future generations to meet their own needs? Yeah – it’s really radical stuff, mate.

    ” in too deep to dig themselves out of their demented faux-realities.”

    Except, on this issue, you’re the person spouting hysterical nonsense based on your faux-reality devoid of the facts.

  19. specific to airlines, the US government has specifically given incentives for airlines to buy biofuels and to commit to their development.
    As has been noted, airlines have received enormous amounts of government aid and are subject to some of the most intense government meddling.
    Regardless of the economics of ESG investing by other industries, airlines are not and likely will not be treated like other industries.

  20. @ L3

    “ESG must entail lower expected returns for any given risk class.”

    But you’ve changed Gary’s words by qualifying his statement with the leveller “for any given risk class”…!

    Maybe you’d like to edit the whole article for him. It needs it.

    No note:

    The original statement is about whether companies adopt genuine or glossy ESG. Gary spins that into a discussion about individual investor choices evidently leaving some readers confused (read the comments where folk seem to think that Barry Diller was commenting on investment in ESG companies).

    There is an inference that Gilbert has been “cancelled” because of the content of his cartoon strip. Gary’s problem is that we don’t know whether that is factually correct or not (given the majority of PRINTED cartoons were dumped at the same time potentially as part of the evolution from print to digital media of the parent company – as has also been the case for the Murdoch press).

    Gary confuses “environmental” with “ESG” by interchanging the terms. Incidentally, when the term was first coined, Governance was going to be the lead word.

    And then Gary doesn’t just republish the original Gilbert cartoon (which I absolutely love, FWIW), he screen grabs an attendant commentary from some unrelated dude, which changes the context from an entirely comedic observation to one with a presumed spin (the “woke” new world can’t handle humour).

    If Gary is an intelligent as you want to advocate, then he knows EXACTLY how to play his audience!

    Arguably, the application of game theory would be interesting from the perspective of the company.

    Strategy 1 – genuine ESG
    Strategy 2 – glossy (fake) ESG
    Strategy 3 – non ESG

    Now in competition for investment from (a) ESG focused (2) ESG non constrained fund imager or major investor with incomplete information on veracity of ESG claims / poor definition of ESG credentials.

    Like I said, “Arguably, that would be a very worthy contribution from somebody of [Gary’s] skills and knowledge.”, especially if you add in the option to short sell.

    Let’s see the maths to see where the system equilibrates when you play off those three company strategies against the approaches available to our respective fund managers / major investors ?!

    “I suggest you apologize to Gary for denigrating his intelligence. Its something you could do with more of yourself.”

    Are you sure about that?

    You are defending Gary on the basis of something he didn’t write.

    I’ve invited some actual data to substantiate what he did write (having offered some countering his position in real world application, whilst recognising its limitations).

  21. @ DFWSteve

    “ESG is fraud, plain and simple. It diverts capital away from activity that creates wealth for shareholders and employees.”

    But what if the company is falsely claiming ESG credentials when it doesn’t have them? It could preferentially attract investment!

  22. @ David Stone

    “About time someone with a backbone spoke up against this lunacy.”

    The international corporate mining and engineering corporations I have consulted to have been enacting sustainable development, environmental and social programs for many years. It isn usual for major projects to be funded by internal investors seeking credentials on such.

    Your perceptions (in such cases) are entirely misplaced.

  23. Amazing how worked up some people get when other people exercise their right to choose how to invest their own money in a free market. Don’t like ESG? Put your money in a non-ESG fund. Buy extra shares in fossil-fuel companies.

  24. ESG = Extreme Shortages Guaranteed

    As Jamie Diamond just told a Congressional panel:
    “Stopping new oil and gas funding? ‘That would be the road to hell for America.”

  25. That’s really all I need to see for Expedia to get my business. CEO’s all over this great country have been caving to such non-sense (ESG, BLM, DEI, etc) that it is mind-blowing to me. CEO’s have one mission only – deliver shareholder value, that’s it. That means revenues and profits for investors. The rest is virtue signaling.

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