Will There Be Responsible Leadership?

Now faced with the full bureaucratic wrath of Pakistan’s military establishment, nearly 150 court cases, a deluge of party defections, and his own narcissism, populist former Prime Minister Imran Khan has steered himself and his party into the abyss. Since taking the reins of power in 2018, the Pakistan Tehreek-e-Insaf Party (PTI) was the preeminent civilian force in Pakistani politics but the recent reversal of tides has been so swift that even Khan’s critics have voiced surprise. The military establishment, which has been the main power-broker in Pakistan during the majority of its 75-year existence, now seems to have dusted off nearly every measure of repression and coercion in its playbook to destroy Imran Khan as a political entity.

After his removal from office via a vote of no-confidence in April 2022, attempts were made to muzzle the outspoken Khan by censoring any coverage of him across domestic media. Those outlets that defied the censorship campaign by providing a platform to Khan and his party were forced off-air. Despite this, the famous-cricketer-turned-politician was able to draw ever larger rallies to lambast the current government and invigorate his populist message. As his momentum grew, so did his willingness to confront the military establishment head-on.

The size of the rallies and Khan’s increasingly bullish posture has led the security establishment and the civilian government to the conclusion that Khan’s populist influence will not diminish without prosecuting him and his associates. Furthermore, Pakistan’s senior leadership - both civilian and military - seem determined to keep Khan from returning to power. The recent charge of murder for the killing of lawyer Abdul Razzaq Shar (who had filed charges of treason against the former Prime Minister) is perhaps the most serious of the accusations that could get him disqualified from public office ahead of elections. Khan has, unsurprisingly, called the accusation “foolish”. But with Pakistan’s highest courts pushing back against the current government and the military’s leverage weakened by public fury, this strategy of legal disqualification is less likely to succeed. That is unless Khan is taken to military courts where he lacks partisan allies to protect him.

In the pending case of Abdul Razzaq Shar’s killing, the lawyer was traveling to the Balochistan High Court complex on June 6th when he was shot by unknown gunmen, according to a criminal complaint. Shar had filed a petition last month with the Balochistan High Court, seeking action against the former prime minister under Article 6 of Pakistan’s Constitution, charging him with high treason. Khan would not be the first prime minister to be put on trial by military courts, nor has he been the first populist leader to turn against the military establishment after it helped usher them into power. He may follow the path of former Prime Minister Zulfikar Ali Bhutto - the recent charges of murder are reminiscent of those leveled against Bhutto - who was hanged in April 1979 only on charges of attempted murder.

Back on the political stage, the comparative lack of fortitude among allies and mid-level party members who have abandoned the PTI has been staggering relative to other parties who have faced similar repressive measures by the military. The scale of the exodus has led some to speculate Imran Khan’s lack of ideological focus and his party’s overreliance on a cult of personality has left those under fire with little reason to persist with the party in the face of severe personal consequences.

Former PTI leaders who are trying to rebuild the party without Khan have acknowledged to the Guardian that “Anyone who has known him closely, knows he just thinks about himself. Khan is a big narcissist.” In this vein, Imran Khan’s explosive and emotional reaction to his removal from office suggests that his ego was severely wounded by the event. His semi-conspiratorial rhetoric at rallies and in interviews further the notion that his thinking and decision-making have become more pathological as his feelings of personal injustice and insecurity grow.

The rising stakes of the political confrontation between Khan and his former benefactors can be squarely attributed to the rash choices he made both during his tenure and after. While none of the last five prime ministers before Khan had been allowed to serve their full 5-year term and had all been indicted or imprisoned after leaving office, Khan has been the only one to take it so personally and direct his ire at the military establishment and its senior leadership. Last September, observers of the intensifying political situation commented on the dangerous course of Khan’s remarks - criticisms of the military which he has only redoubled in the months since.

His dramatic arrest on May 9th from the premises of the Islamabad High Court by paramilitary forces in riot gear was almost certainly in response to Khan’s claim just the day before that the chief of the country's intelligence agency, Major General Naseer of the Inter-Services Intelligence (ISI), had been behind an assassination attempt against him back in December. Such a blunt accusation - even if fully substantiated - was a reckless move. As former Pakistani Senator Mustafa Nawaz Khokhar explains, “naming [members of the military establishment ]directly offends them and invites consequences.”

Additionally, during his time in office, Imran Khan made adversaries of both the former and current Chief’s of the Army (widely considered to be the most powerful position in Pakistan). Khan decided to meddle in (then Army Chief) Major General Bajwa’s appointment of General Munir to the post of ISI Chief, and ultimately dismissed him from the position after only 8 months. Fast-forward to November 2022, Major General Munir was selected as the next Chief of the Army. It is hard to know exactly the extent of personal animosity that Munir holds for Khan, but it does not currently appear as though the army is in a forgiving mood. Whatever restraint existed before has come loose in the wake of May 9th’s violent riots and vandalism of military monuments and infrastructure - protests which were sparked by Khan’s abrupt (and later deemed illegal) arrest that day. The unprecedented attacks on symbols of military sacrifice and power have been referred to as a “black day in the history of Pakistan” by General Munir, and it has given the army a pretext to try 16 PTI members in military courts under the controversial doctrine of necessity.

“This dramatic crackdown is a clear strategy by the military to break down all the support structures that Khan has,” said Avinash Paliwal, an associate professor in international relations at Soas University of London. “Once those structures are gone, Khan is next in line” predicted Professor Paliwal, and the 16 civilians currently facing military trials may be intended as a precedent for bringing Khan before those same courts.

The PTI wants elections as soon as possible, while the government has pushed for elections no earlier than October - this being the latest date that the government can constitutionally hold such elections. Although it is more than likely that Khan would be disqualified from participating in these elections his ultimate fate is in the hands of Major General Munir. Had he played the long game like the preceding political dynasties, rather than biting the hand which fed him power, it is more than likely that his party would not have been subject to such unprecedented erasure by the military establishment.

“The executive Power shall be vested in a President of the United States of America”

Article 2 of the Constitution of the United States

“A government of laws, and not of men” John Adams

On June 9th, a grand jury indictment was unsealed by a federal court that charged Donald J. Trump, the former President of the United States and President Biden’s likely leading political opponent for the 2024 election, with 37 counts of alleged felonies. Most of these counts revolved around charges of Trump’s willful retention of national defense documents under the Espionage Act and conspiracy to obstruct justice. This marked the first time in American history that a former president was criminally indicted on federal charges. This indictment was, however, preceded in April by New York state’s Manhattan District Attorney Alvin Bragg bringing 34 charges against Trump that accused him of falsifying his business records “in order to conceal damaging information and unlawful activity from American voters before and after the 2016 election.” It is inferred by many (although not named in the indictment itself nor the statement of facts) that the damaging information mainly concerned alleged hush money payments to Stormy Daniels, an adult entertainer. If found guilty of all (or some of the) charges in both indictments, Trump faces the prospect of spending the rest of his life (and then some) in jail.

Nevertheless, it has already been established that a person can run for the presidency if convicted and jailed. Eugene V. Debs of the Socialist Party famously ran in 1920 after being (ridiculously) indicted and jailed under the Espionage Act for giving an anti-war speech. The perennial presidential candidate received nearly a million votes, which was the largest total number of votes he ever received. The winner of the 1920 presidential race, Warren G. Harding, commuted Debs’s remaining sentence as time served and released him from prison. When Debs turned up in the White House, Harding greeted the former convict with the words “I have heard so damn much about you.” Trump is a greater figure than Mr. Debs in that he is the likely Republican nominee and the main challenger to Mr. Biden. Not surprisingly given this fact, accusations are already flooding in that the investigations into Trump are politically motivated and cases of selective prosecution. This article will examine some of the defenses that Mr. Trump can raise to both indictments and explore the political effects that these court cases may have on his race for the White House.

This article will first examine Alvin Bragg’s case. His case is itself riddled with problems and shoddy legal theory as evidenced by the mere fact that his office previously passed over it. Bragg, however, reconsidered and even campaigned for the District Attorney office boasting about investigating the former president. So shoddy is Bragg’s case that neither the indictment nor the statement of facts clearly articulates the underlying crime that Trump falsified his records over. As previously mentioned, it is largely assumed to be that Trump’s hush money constituted an illegal election campaign contribution. Since Trump ran for federal office, this would be a federal offense rather than a state one. Bragg’s jurisdiction is over state-related crimes and not federal ones. Furthermore, the Federal Election Commission (FEC) already investigated the matter in question and dropped the case. The reason they may have done this is that even if Trump made these payments and it constituted a campaign contribution, the candidates themselves have no legal limit over how much money they can give their own campaigns.

Additionally, should Bragg directly charge Trump with a violation of the Federal Election Campaign Act, he must prove that the hush money was used directly, and only, for campaign purposes and not because Trump wished to avoid embarrassment for himself or his family (or for literally any other reason). A similar indictment, with arguably a worse set of facts, of John Edwards, a former 2008 Democratic presidential candidate, failed to secure a conviction because Edwards was able to argue that the money he gave to his pregnant mistress was not election-related but to spare himself a humiliating fallout from his family.

There are also serious problems with the potential witnesses against Mr. Trump. Stormy Daniels signed a document back in 2018 that denied any affair ever took place with Trump at all (but has since issued statements that contradicted said document). Trump’s former lawyer, Michael Cohen, who allegedly paid Stormy Daniels the hush money back in 2018 had his own lawyer write a letter to the FEC explaining that Cohen had acted on his own and that Trump was not a party to the transaction. Cohen is also a convicted perjurer.

Bragg may have also committed violations of the New York rules of professional conduct in his handling of the prejudicial press conference announcing the charges against Trump. In this conference there were statements he made that did not accord the accused the presumption of innocence and failed to uphold several other ethical obligations toward an accused person that protects the right to a fair trial. There are plenty of reasons why one legal scholar called this case “the ultimate Frankenstein” and “patently political prosecution.” Other legal scholars also have deemed the case “targeted injustice” and “much thornier than it looks.” A Washington Post legal columnist, Ruth Marcus, admitted that Bragg’s case is “a dangerous leap on the highest of wires.” Marcus expressed a desire for Trump to suffer for his (undescribed) crimes to such an extent that she wrote:

They [the Manhattan District Attorney’s office] could well win, and I hope they do, because a failure to secure a conviction will only inflame Trump and his supporters in their claims that the criminal justice system is being weaponized against them.

She evidently failed or refused to comprehend that a conviction on such a weak legal theory as this would only reinforce the claim of political weaponization of the law. Her stance is like saying to state attorneys in the 1950's South that their convictions of civil rights activists will prove that the criminal justice system is not being weaponized against the activists and will demonstrate that blacks have civil rights. That is the absurdity of Marcus’s logic here.

Special Counsel Jack Smith’s case against Mr. Trump is more serious in its legal theory and more serious in what it is charging the former president with. Trump’s federal indictments are based on violations of the Espionage Act, through his willful retention of documents pertaining to national security and on conspiracy to commit obstruction of justice. While Smith charged that Trump stored “hundreds of classified documents” in his Mar-a-Lago home and that he was “not authorized” to have said materials, he did not directly charge Trump with unlawful possession of all these documents. Smith further detailed that Trump may have disclosed and/or shown some of the material to persons who lacked proper security clearances. In fact, one of the documents that Trump is charged with unlawfully possessing had no classified marking on it (see offense 11). It is necessary to add here that the 1917 Espionage Act preceded the modern classification system, which was only created in 1951 through executive order. The Espionage Act has a much broader reach of applying to all “national defense” information and its 1917 version applies to a violator who unlawfully obtains and possesses this information with the intention to harm the United States or benefit a foreign country. According to Smith’s legal theory, the former president was in violation of the Espionage Act since he possessed this and other documents after his presidency. (It bears noting that there is no charge that the former president had any intent of harming the United States or handing the material over to a foreign power.)

Smith’s theory has some serious flaws to it. His treatment of Trump as just an employee of the federal government rather than as a former president has bearing here. For one thing, the President has the ultimate powers of (de)classification and can empower any individual with the ability to access any information. This power emanates from Article 2 of the Constitution that squarely places all executive power and privileges in the hands of the president. To put it another way, the unelected executive bureaucracies exist to serve the elected president and not the other way around. The president is not bound by the internal bureaucratic rules of his own branch. For instance, executive orders are binding on the executive branch but not on the president who can change them at will. The Supreme Court itself has commented on the president’s powers of classification and his ability to empower anyone to view said material. In the Department of the Navy v. Egan (1988), they ruled that:

The President, after all, is the "Commander in Chief of the Army and Navy of the United States." U.S.Const., Art. II, § 2. His authority to classify and control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to occupy a position in the Executive Branch that will give that person access to such information flows primarily from this constitutional investment of power in the President, and exists quite apart from any explicit congressional grant.

The president can through various means declassify material and share it. Such is the president’s power that they do not have to follow the formal process of declassifying documents or materials.

This is the case even when the president takes said materials as his post-White House private records. Here too there is court precedent. There was a case involving 79 audiotapes, some of which contained sensitive national security related information, were discovered in Bill Clinton’s sock drawer and that Clinton did not previously give to the National Archives and Records Administration (NARA). Clinton had also shared these tapes with a historian. The judge in this case ruled in Judicial Watch v. NARA (2012) that:

NARA does not have the authority to designate materials as “Presidential records,” NARA does not have the tapes in question, and NARA lacks any right, duty, or means to seize control of them…the Court has seriously doubts about whether the former President’s retention of the audiotapes as personal is a matter that is subject to judicial review. But the Court need not decide this question because whether judicial review is available or not, the relief that plaintiff seeks – that the Archivist assume “custody and control” of the audiotapes – is not available under the PRA…the PRA does not confer any mandatory or even discretionary authority on the Archivist to classify records. Under the statute, this responsibility is left solely to the President.

The act cited in the court is the Presidential Records Act (PRA), which distinguishes between presidential records and private records of a president. If a document is classified as the former, it is placed in public ownership under the care of NARA, whereas if it is the latter record status it remains the personal property of the outgoing president.

However, even if Trump’s documents were presidential records, the PRA decrees that “the Presidential records of a former President shall be available to such former President or the former President’s designated representative.” In effect he is entitled to have access to them and to have representatives in his stead access them. As noted in Clinton’s case, NARA does not control what ultimately qualifies as a presidential record or a private one. The person who does is the outgoing president. This presidential prerogative and its consequences have been further noted in a 2019 Congressional Research Service report. This report declares that:

[T]he President has a high degree of discretion over what materials are to be preserved under the PRA…. As noted previously, whether these records are classified as presidential or personal records affects public and congressional access to such materials. For example, the PRA does not provide an access mechanism for personal records.

Finally, even if Trump were somehow in violation of the PRA through his possession of these documents, the statute is not criminal. As noted by NBC 15 News, “[t]here are no criminal penalties or an enforcement mechanism associated with this law.” Nowhere in the indictment of Trump is the PRA cited, nor does Smith try to explain why this provision is irrelevant.

This may be the prosecution’s fatal flaw in his whole theory since the records at Trump’s home are records from his own administration and Trump in one form or another is entitled to access to these records. If the Espionage Act applies when ex-presidents have mishandled records containing information about national defense, then practically all previous presidents should have been prosecuted under this law. The fact that none of them were is indicative of the novelness of Smith’s theory and highlights its selective application. Indeed, even recent scandals about purportedly classified documents being found in the homes or offices of former vice presidents (who have less legal protections than presidents) and the decision to close the investigation surrounding Mike Pence also further highlights the selectivity issue.

If Trump committed no crime by storing the documents at his home as his private records, then the Department of Justice (DoJ) may face another problem with their indictment. This being that a 2019 DoJ memo, that according to one former Supreme Court clerk and counsel to the Senate Judiciary Committee is “binding”, proclaims that it is generally acknowledged that the DoJ should not charge someone with obstruction of a non-crime. Page 6 of the memo states that:

Such a prosecution [of obstruction charges] is doubly inappropriate where, as here, the conduct under investigation is lawful on its face, and the evidence of any corrupt motive is, at the very least, questionable. Federal criminal statutes should be construed to avoid criminalizing generally innocent conduct [emphasis added].

Special Counsel Smith will likely need to address such defenses. He will also need to avoid the appearance of political prosecution. Given Smith’s record this will be difficult to do. Smith previously helped to illegally weaponize the Internal Revenue Service against organizations that his superiors felt did not deserve tax exempt status based on their political affiliation. A few of his notable prosecutions of American politicians displayed his attempt to stretch the law. The Supreme Court in a 8-0 decision overturned the guilty verdicts of Bob McDonnell, a former governor of Virginia, on account that Smith took an overly broad interpretation of bribery statutes which if applied “would likely chill public officials’ interactions with their constituents due to fear of persecution.” Jack Smith was also involved in the aforementioned lawsuit against John Edwards that resulted in a mistrial and the government dropping all charges.

Potential major problems of bias also enter into the equation due to the Federal Bureau of Investigation (FBI) unit that was chosen to conduct the raid on Mar-a-Lago. This was the same unit that was implicated in an earlier discredited investigation of Mr. Trump on accusations of Russian collusion. There is a litany of evidence that the unit broke with its own professional, ethical, and legal obligations during the course of the Russia-gate investigation. For example, one agent involved in the investigation illegally altered evidence to obtain a warrant. It has been observed that the raid on Mar-a-Lago was unusual in many respects. These unusual observations are that the FBI in DC - rather than the local FBI unit - was the lead in the investigation and search of Trump’s residence; that the FBI did not first seek consent to search Trump’s premises despite the local office’s belief that Trump would have been cooperative; that there was no US attorney office that was assigned to the matter; and that the FBI did not wait for Trump’s lawyer to appear before starting the search. Furthermore, despite Attorney General Merrick Garland’s promise that his department “will speak through its court filings and its work”, prejudicial material regarding the investigation was leaked to the press. Such leaks could have come either from the DoJ or the White House. These are just some of the defenses that Trump’s legal team can use to counter Smith’s indictment.

This is not to say that there is no chance of conviction of the former president on either indictment. Merely that the legal theories behind them will hopefully be adequately addressed by a judge or jury in a way that does not suddenly flip legal standards based on the defendant. The Constitution is above any person and one ought to be afforded all due defenses that can be legally mustered against their accuser. What these indictments have done politically for Trump is to reinforce the sense that many of his supporters have that the man is being unjustly and selectively prosecuted. Each indictment has rallied the Republican base to him. The reaction by anti-Trump new outlets like CNN and MSNBC to not air live unvetted footage of Trump after his latest indictment live was done purportedly out of their concern that he may say untrue things. This only further underscores the point that they are prejudicing their audience toward him and his cases. The United States now joins the rank of countries like Turkey and Pakistan, where leading political challenger(s) to the incumbent find themselves saddled with legal issues by the government. It is not a bright day for American democracy.

ESG, or Environmental, Social, and Corporate Governance, is the latest movement within the economic and financial world - one with the potential to create value for stakeholders at every level. ESG goals are a set of criteria used to measure the sustainability and ethical impact of a company's operations. The “E”, or environmental criteria, describes a company's carbon footprint, waste management practices, or utilization of renewable energy. The “S”, or social criteria consist of a company's labor practices, human rights policies, or impact on local communities. The “G”, or governance criteria, includes a company's board structure, executive compensation, or transparency in financial reporting. While the ESG movement is a new economic initiative, its roots stem from the 1960s when the issue of socially responsible investing (SRI) became relevant due to increased environmental degradation and awareness of social rights. The current framework of ESG, as it stands today, did not materialize until January 2004, when Kofi Annan, the former Secretary General of the United Nations, extended invitations to more than 50 CEOs of prominent financial institutions. This was a joint initiative sponsored by UN Global Compact in collaboration with the International Finance Corporation (IFC) and the Swiss Government. The initiative would set the foundations for integrating the principles of ESG into capital markets. In less than two decades, the ESG movement transformed into a financial juggernaut, with ESG assets set to reach over $50 trillion by 2025.

ESG ratings are determined by third-party, independent companies and research groups; often, companies will also have in-house ESG departments that will issue internal ESG reviews. Each ESG rating agency has its own specific areas of focus: some may prioritize the assessment of a company's efforts in the realm of sustainability (i.e., the carbon footprint and energy efficiency of a corporation), while others place a strong emphasis on social criteria (i.e., labor practices and human rights). Moreover, each agency also employs a different approach when evaluating companies: some focus on a quantitative approach, meticulously analyzing data such as financial performance, while others use a qualitative approach, conducting interviews and on-site visits. The world of index funds has also witnessed a notable integration of ESG principles, giving rise to the emergence of ESG-focused or sustainable index funds. These funds incorporate ESG factors throughout the investment and due diligence process.

Companies and institutional investors are increasingly putting ESG in the spotlight for various reasons, such as the potential for improved financial performance. According to an NYU Stern study, a positive relationship was found “between ESG and financial performance for 58% of the “corporate” studies focused on operational metrics such as Return on equity (ROE), Return on assets (ROA), or stock price.” A meta-analysis that reviewed over 2,000 empirical studies, found a 90% positive or neutral correlation between ESG factors and financial performance. These studies show the financial viability of ESG. Risk reduction is another reason corporations and investors are drawn to ESG. A 2020 survey conducted by the US SIF: The Forum for Sustainable and Responsible Investment found that the primary reason for ESG incorporation was risk reduction. Internationally, companies have implemented ESG criteria to combat both political and social regulatory pressure. For instance, On the 21st of April 2021, the EU commission announced the adoption of the Corporate Sustainability Reporting Directive (CSRD). The CSRD mandates ESG reporting from businesses, regardless of their size. This development cannot be understated, as the EU accounts for roughly 14% of the world’s trade in goods and is one of the largest economies in the world.

As one of the most dynamic and competitive economies in the Middle East, Israel serves as an excellent case study to observe the rise of ESG in the global economy. Being recognized as the "start-up nation," this trend is reflected in the increasing number of Israeli start-ups that have decided to tackle the issues of sustainability and corporate governance. Furthermore, Israeli financial institutions and government agencies have taken significant strides toward fully integrating ESG into the Israeli economy. These efforts demonstrate a commitment to incorporating ESG principles into the core fabric of the nation's economic landscape. The Israeli case study poses two crucial questions that will be explored by this article: can ESG truly lead to long-term sustainable development, create a positive impact on society and the environment, and be economically viable, or are they simply passing trends used to attract investors who are interested in sustainable investing? Moreover, can Israel become a leader in the ESG movement?

The current state of ESG in Israel is still in its infancy, gradually developing and gaining traction. However, the evolution of ESG within Israel has followed a dynamic path, reflecting the country's unwavering commitment to innovation. Two of the bases of legislation regarding corporate governance in Israel are the Partnerships Ordinance, introduced in 1975, and the Companies Law, introduced in 1999. Moreover, pertaining to environmental regulations, Israel has a robust environmental protection framework that includes laws and regulations covering issues from air pollution to water contamination, marine pollution, hazardous substances, packaging, electronic waste, and radiation. Positive developments have emerged within the Israeli government’s approach towards ESG, marking a noteworthy shift in the country's approach to sustainability and equitable development; for example, the Israel Securities Authority (ISA) published its recommendations on ESG reporting back in April 2021. The recommendations called for all Israeli public companies to publish yearly ESG reports based on international standards such as those established by the Global Reporting Initiative (GRI) and Sustainability Accounting Standards.

Regarding economic stimulus measures, the Israeli Ministry of Strategic Affairs and Public Diplomacy, in partnership with the Israeli Securities Authority (ISA), initiated the “Impact Nation” program; this program gives grants of up to 100,000 NIS ($29,952) to companies that include an ESG evaluation in their annual reports. Aside from the “Impact Nation” program, the Israeli government established an ESG index aimed to promote companies’ usage of ESG. Established in 2022 under the auspices of the Israel Innovation Authority (IIA), the program primarily targets the high-tech industry by providing grants to companies that comply with the ESG index. According to the IIA, “the index will gradually be assimilated into all of the authority’s funding mechanisms and will serve as a risk management tool for high-tech companies.” The economic and financial importance of this is profound, as high-tech exports in 2021 amounted to $67 billion and are 54% of Israeli exports.

Aside from governmental initiatives, ESG has taken center stage within financial entities and Corporate Social Responsibility (CSR) reporting organizations. One notable example is Maala. Founded in 1998, Maala is a non-profit corporate membership organization with over 160 companies represented and turnover of approximately 500 billion NIS. It is considered the industry leader in CSR and ESG reporting and rating within Israel. Maala examines six key categories of corporate responsibility and ESG criteria (environmental responsibility, business ethics, work environment, community involvement, corporate governance, and management and reporting.) Maala represents a wide range of industries and is essentially a corporate platform for companies to disclose and showcase their ESG practice. Publicly listed companies that are listed on the index are included in the TA-Maala ESG Index on the Exchange (TASE). Established in 2005 it accounts for around 40% of the total market cap of the TASE. TASE has also assisted in the proliferation of ESG discourse within Israel. For example, in 2020 TASE launched two ESG adjacent indexes the TA-Cleantech (an index “comprised of all shares classified under the cleantech sub-sector and renewable energy sub-sector, which meet the index criteria”) and the TA-125 Fossil Free Index (an index which excludes “shares of Fossil corporations as determined by Life and Environment organization”). Furthermore, in 2022 TASE published its first ESG Report in an attempt to standardize and promote ESG within the Israeli economy.

It is also important to note that Israel is at the forefront of sustainability-related technologies, ranging from advancements in sustainable energy to desalination. One such company is Israel's Eco Wave, a pioneering venture that generates electricity from ocean waves and seawalls. Eco-wave has recently started a planned 5-megawatt project, which is expected to meet 15% of the country's electricity demand. ESG has also permeated the high-tech startup ecosystem in Israel, with the emergence of myriad high-tech startups dedicated to sustainability. These startups have leveraged Israel’s position as a center of high-tech innovation to create and develop sustainable products and solutions. One such company is BeeHero, which has developed a technology-based platform that uses algorithms, Big Data, and an Internet of Things component that enables data collection from beehives alongside environmental information. BeeHero, in essence, provides optimization for the pollination process by identifying at-risk colonies and reducing hive problems through targeted intervention. Another notable example is ESGgo: ESGgo serves as a platform for ESG reporting, allowing for the collection, monitoring, optimization, reporting, and benchmarking of sustainability and ESG data.

Nevertheless, there exists a certain degree of skepticism surrounding the feasibility of implementing ESG and its financial viability. In an interview with the author of this article, Sandrine Bernstein, the founder of Better Investments SB LTD and a seasoned financial expert with three decades of industry experience, held a particularly skeptical stance toward ESG. When asked about the significance of ESG initiatives and whether they are here to stay or merely a passing fad, Bernstein expressed a firm conviction, stating, "I think it’s very much a trend." Bernstein argues that the objectives of ESG initiatives can potentially undermine the fiduciary duty of individuals or organizations. By prioritizing ESG goals, there is a concern that the focus may shift away from maximizing financial returns for shareholders. Bernstein posited, “I think we have to remember that the goal of a firm is really to maximize returns for their shareholders.” According to Bernstein, investors will continue to favor high-dividend stocks, even if they typically do not align with ESG criteria. As per Bernstein's assessment, “A lot of investors still like to invest in high dividend stocks. For example, if you really look at the high dividend world, a [large] majority [consists of] oil, liquor, coal, and tobacco.”

Furthermore, Bernstein highlights the presence of several gaps in the criteria of ESG ratings and their practicality. For instance, Bernstein highlights a profound alarm regarding the absence of standardized and consistent frameworks and rating systems, which can lead to widespread manipulation and misuse. (Important Note: This interview was conducted before International Sustainability Standards Board (ISSB) released the IFRS Sustainability Disclosure Standards which provide a roadmap to standardization of ESG disclosure). While being interviewed, Bernstein remarked, “Within the rating system and industry, you can have quite a lot of manipulation coming out of it.” Bernstein’s sentiments are not without credence, in 2022 the US Securities and Exchange Commission (SEC) charged Goldman Sachs for failing to “follow its policies and procedures Involving ESG Investments”.Furthermore, Bernstein believes that a significant pitfall of ESG is that it is a phenomenon primarily exclusive to western-oriented economies and markets. Bernstein stated:

“I think the first thing, which is a fact and it's pure numbers, is the world population today is around 8 billion people. The global population has grown exponentially in the past 50 years and very fast. More than one-third of that population is in India and China. India and China, quite frankly, are not very active in terms of ESG. As a result, I do not believe you can seriously advance in terms of ESG for as long as these two countries will not be active participants. That's a simple fact of numbers.”

Other experts are in agreeance with Bernstein. According to a Barron’s report, “Many ESG investors already shun China, because the stocks generally don’t have high ESG ratings.” While Bernstein is of the opinion that ESG is a fad, she does believe that Israel is in a unique position to capitalize on it, specifically in the realm of technological advancements. Bernstein mused that “Israel can really be at the forefront of ESG. You see clearly how fast Israel develops in terms of all sorts of technology. And there's clearly an emphasis that a lot of those technologies being developed by Israel today are with a focus on the environment.”

Additionally, Bernstein recognizes and believes in the potentially transformative power of equitable development and the promotion of social justice advocated within ESG principles. Bernstein believes that Israel is at the forefront when it comes to these principles. During the interview, Bernstein stated that “in terms of diversity, I think Israel has done very well at that level and certainly a lot better than many countries, including the U.S. and Europe.” Bernstein, in particular, highlights the representation of women in high-level positions within the workplace. “Already early on, Israel was able to have women executives of the major banks, and that's pretty amazing.” Bernstein is also of the opinion that Israel is in the position to serve as a testing bed for these principles and later a leader in exporting them to developing nations. Bernstein opined, “I think this is something which hopefully they can work to export.”

However, other experts are more optimistic about the future of ESG and their integration into not only the Israeli economy but the global economy at large. Dr. Shiri Zemah Shamir, an accomplished economist who heads the Economic-Sustainability track at Reichman University School of Sustainability, believes that ESG could potentially revolutionize both the Israeli economy and the global economy. According to Dr. Shamir, “Israel has been placing a growing emphasis on ESG factors. The Israeli government, in collaboration with [other] entities, has been actively working to encourage the adoption of ESG practices and transparency throughout the nation.” Dr. Shamir believes that the aim of these projects “is to bring Israeli businesses in line with global standards and attract investment.” This is extremely important as recent socio-political developments within Israel have stymied the flow of foreign investment into the Israeli economy. This idea is not without precedent, as academic literature has suggested that ESG initiatives may be helpful “for firms in developing countries to capture more cross-border investment.”

In an interview by this author with Dr. Shamir stated that ESG initiatives are particularly important for attracting investment from what she describes as “mega-funds”. Dr.Shamair defines “mega-funds” as “private equity funds that hold the highest amount of assets under their management within the global economy.”). In fact, Dr. Shamir emphasized the importance of ESG reporting in attracting large multinational mega-funds, “multinational mega-funds like BlackRock, which invest in the Israeli capital market, expect Israeli companies included in their portfolios to provide ESG reports.” Moreover, Dr. Shamir, believes that “the growth of the global ESG field can be partially attributed to mega funds, which according to Dr. Shamir, “encounter difficulties in balancing risks within their extensive portfolios.” Moreover, Dr. Shamir holds a firm conviction that the competitiveness of countries in the global marketplace is impacted by ESG considerations. In particular, Dr. Shamir noted that “ESG integration has a notable influence on global trade and investments. It directly affects a country's market access, regulatory landscape, investor preferences, innovation capabilities, and risk management strategies. Prioritizing sustainability and responsible practices strengthens a country's competitiveness in the international arena.” Additionally, during our discussion, Dr. Shamir also highlighted a few recent developments and emerging trends in the field of ESG that she believes will have significant implications for both the Israeli and global economies. Including “the implementation of mandatory ESG reporting, the rise of green bonds and sustainable finance, increased focus on climate risk assessment and disclosure, the transition towards a circular economy, and the growing importance of social impact investing.” Dr.Shamir stated that in the case of Israel as well as other countries, “embracing these trends can drive competitiveness, access to capital, and long-term economic resilience.”

ESG initiatives have the potential to transform the global economy for the better, despite the controversies and concerns surrounding them. As the common adage suggests, ESG principles could enable companies to "do good while doing well." In fact, ESG initiatives can deliver win-win outcomes for companies, investors, and society at large. Empirical studies at the macroeconomic level have provided evidence supporting the positive impact of ESG projects on the economic well-being of a country. A paper published by the University of Oxford found that “across the sample group, an increase of firms’ ESG performance in a country is associated with a positive, statistically significant effect on living standards in that country, as measured by GDP per capita.”

The geographic position of Israel allows for the possibility to act as a bridge between East and West and therefore as a template for how to implement ESG principles within a multitude of economic frameworks. Furthermore, the “startup nation” is a significant hub for venture capital, thus opening possibilities for technological-based solutions within the context of sustainability. Moreover, Israel's diverse population, comprising Jews, Arabs, and other minority groups, can play a significant role in advancing ESG principles by serving as a template to foster inclusivity and equity within society and a firm. If successfully implemented, a hypothetical Israeli model can serve as a template on how to successfully create a more equitable and sustainable economy.

Despite facing resistance and skepticism, ESG has the potential to revolutionize the global economy by creating a more virtuous world, thereby benefiting society at large. Israel, in particular, has the opportunity to be at the forefront of this movement. With prominent figures in the global economy, such as Larry Fink, the CEO of BlackRock, becoming vocal advocates for ESG, as well as forecasts predicting that ESG investments will reach $30 trillion by 2030, it is evident that there will be a march towards ESG initiatives. Taking everything into account, Israel's potential to become a significant player in the ESG ecosystem becomes apparent if it were to receive adequate investment and attention. Israel, as a leader in technological development and a global exemplar in promoting inclusivity and forward-thinking workplaces, possesses an untapped potential as an ESG powerhouse.

Max Sigal is a driven student at Reichman University and an IGI (Investment Group Israel) member. Max is passionate about creating positive change through sustainable practices and leveraging business for social and environmental impact. Through his studies and personal initiatives, Max aspires to contribute to a more sustainable and equitable world, combining his knowledge of government and business to drive meaningful progress.

Around two decades after the start of Iran’s nuclear program, Tehran is less than a year away from acquiring a deliverable nuclear weapon. Last month, Israel’s defense minister, Yoav Gallant, said Iran has enough enriched uranium to build five bombs. Gallant's concerning estimate of Iran's progress towards the bomb has been shared by others observing Iran's nuclear program. Earlier this year in January, Rafael Grossi, the head of the International Atomic Energy Agency (IAEA), estimated that Iran had acquired enough material for at least three bombs. The following month after Grossi’s warning, the third highest ranking member of the US Defense Department for policy, Colin Kahl, warned that Iran could compile enough material for a bomb in under two weeks. Although exact estimates of Iran’s breakout time have differed slightly, there seems to be a general consensus that Iran already has amassed the sufficient amount of refined uranium necessary to create a nuclear weapon.

However, producing the necessary amount of weapons grade (uranium-235 refined to 90% purity and above) uranium is only one of the two important technological steps required for a country to acquire nukes. A country also needs to be able to take this material and load it on to a means of delivery that can effectively detonate and reach its intended target. Although Iran has not yet reached the second technological milestone at this point in time, the Islamic Republic is considered to be quite close to mastering this final step. In March of this year, Chairman of the Joint Chiefs of Staff, General Mark Milley, testified at a Congressional committee hearing that it would only take several months for Iran to acquire a usable nuclear weapon. This appraisal by General Milley is yet another reminder that Iran is closer than ever towards joining the list of states that possess nuclear weapons.

There was once a time when the White House was committed (at least rhetorically) to doing whatever it takes to stop Iran from gaining nuclear weapons. During Biden's visit to Israel in July of 2022, he gave an illuminating interview on Channel 12 news. When asked if the US would be willing to use force to prevent a nuclear Iran, Biden answered “as a last resort, yes”. Still, his foreign policy record to date has been a story of retreat and surrender in the face of Iranian aggression. The United States Institute for Peace estimated that between Biden’s entry into office in early 2021 and March 2023, there have been around 80 instances of Iranian-affiliated forces in Iraq and Syria attacking American forces stationed there. During this same time period, there have only been 4 US airstrikes targeting Iranian-backed forces.

The White House’s rhetoric on Iran has also changed drastically since the president pledged to use force as a last resort. Last month at the Washington Institute for Near East Policy, Jake Sullivan, the US National Security Advisor gave an interesting speech that presented the Biden Administration’s flawed outlook for dealing with Iran’s nuclear program. Sullivan stated that: “It is a genuine danger to regional security and to global security, and, indeed, to the United States of America. And we are going to continue to take action to, yes, deter Iran from getting a nuclear weapon, and then to seek a diplomatic solution that puts this on a long-term pathway of stability.” Sullivan’s focus on using a “diplomatic solution” to stymie Iran’s nuclear program is another verbal clue that suggests the Biden Administration has not seriously considered employing military options to prevent Iran from having the bomb.

In late May, Axios reported that US diplomats had reached out to Omani officials for help mediating negotiations with Iran. Axios also spoke to several Israeli officials who were concerned that the Americans would agree to an interim agreement with Iran that would temporarily freeze some sanctions in exchange for a short-term halt to Iran’s ongoing enrichment. These recent diplomatic efforts are particularly delusional because attempts by the US to coax Iran into a mutual return to the 'Iran Deal' have already been rejected by Tehran. Even if Iran was willing to re-enter the JCPOA (Joint Comprehensive Plan Of Action), any agreement would have to be approved by Congress, a prospect that is unlikely, given that any deal struck is almost certain to be inferior to the Iran Deal or merely the same agreement with far less time remaining for enforcement. Moreover, while sanctions are a somewhat effective method of coercing Iran into giving up its pursuit of the bomb, their impact is eroded when Iran is still trading with many non-Western nations such as China and Russia. This is because Iran can use its ample reserves of natural gas and other national resources to bring in the necessary resources (primarily, but not limited to, money) to diminish the impact of the sanctions.

It is understandable that the current administration would want to exhaust all diplomatic options before deciding to use force against Iranian nuclear infrastructure. Any airstrike against these enrichment sites would be quite challenging because Iran’s nuclear sites are scattered across the country and some of them are extremely deep underground. It could also lead to a massive regional conflict and prompt large-scale attacks on US forces and its allies throughout the Middle East.

Yet, fears of an overwhelming Iranian response to any strike may be overblown. When former President Trump killed Iranian general Qassem Solemani, the Iranian response was mild in comparison to the retaliation that was expected for killing such a senior member of the military leadership. Israel has been bombing Iran and its proxies in Syria for more than a decade, with negligible retaliation from Iran. The most recent strike reported was a suspected Israeli air strike this past March, which killed an advisor for Iran's Revolutionary Guards Corps (IRGC). Israel's Chief of staff at the time, Aviv Kochavi, said Israel had struck 500 Iranian-affiliated targets in 2020 alone and credited the IDF for slowing Iranian efforts to entrench themselves in Syria.

Perhaps if the US adopted the same strategy towards Iran and its proxies, the mullahs would be convinced that the US would use force as a last resort. Eager to avoid a war that would remove themselves from power, they would back down and agree to a deal that would be to the benefit of the West. Instead, the strategic modus operandi of the Biden White House can be summed up with four words: desperate and delusional diplomacy.