The Connection Between "Air" and ESG
Some movies not only entertain and inspire but convey broader lessons. “Air” is one of them. The film is about Nike’s efforts in 1984 to secure Michael Jordan’s endorsement of its basketball shoes, which soon after became the iconic Air Jordans. But it also tells anyone who will listen that ESG investing—environmental, social and governance—is a trap.
When the company begins its quest for Mr. Jordan (played by Damian Young), Nike is an underdog. He and his parents are leaning toward a Converse or Adidas sponsorship, as these companies are more established in basketball. Adidas is a front-runner until Nike alerts Mr. Jordan to a problem with that company. Nike’s determined employee, Sonny Vaccaro (Matt Damon) tells Mr. Jordan’s mother, Deloris (Viola Davis), that because the head of Adidas has just died, there will be turmoil at the top of the company that would hurt her son’s interests by creating uncertainty about his sponsorship.
These are the opening paragraphs of Donald J. Boudreaux and David R. Henderson, “Air is a Cautionary Tale About ESG,” Wall Street Journal, April 13, 2023 (April 14 print edition.) I don’t love the title because I think it’s an overstatement. Our point is that if you understand Sonny Vaccaro’s point in the movie that uncertainty about who will run a company hurts stockholders, then a fortiori, you should understand that uncertainty about whether the company is trying to maximize stockholder value or conform to ESG will hurt stockholders. (Or, as the character in the play Other People’s Money put it,“stuckholders.”)
I’ll post the whole thing in 30 days. This, by the way, is the first time I’ve co-authored with Don. I hope and think that it is the beginning of a beautiful writing relationship.