To hear Mike Pence tell it, ESG (Environment, Social and Governance) is “a pernicious strategy” of the “woke left” to “enforce their radical environmental and social agenda on publicly traded corporations.”

Pence is not alone.So far this year, at least 99 anti-ESG bills have been filed in statehouses, most Republican-led, and seven have passed in states like Alabama and Florida. At the federal level, GOP Representative Pat Fallon of Texas led off a House Oversight Committee hearing on June 6 claiming that ESG policies “deliver nothing but higher prices, fewer market choices and cultural oppression, not to mention jeopardizing returns on investments.”

But if the right really understood ESG, they would celebrate it, not denounce it. Because ESG is simply a risk management tool meant to increase companies’ profits, not make them act in accordance with higher social values.

Fund managers in the United States currently oversee ESG investments worth $8 trillion, largely depending on company ESG ratings to shape their investment decisions. But when the ESG rating agencies, including market leaders like MSCI and Sustainalytics, make their assessments, they don’t ask whether companies help or harm the world while managing ESG risks. Only the impact on the bottom line counts.

To understand the implications of this, consider the case of tobacco. Cigarette companies kill their customers—an antisocial act by anyone’s definition. You might suppose their ESG score would be zero. But no—Big Tobacco typically earns middle-of-the-road ESG ratings (Altria, for example, maker of market leader Marlboro). The reason? Smoking is legal, and protected from liability claims by the landmark 1998 settlement agreement with states.

ESG overlooks tobacco’s lethality because it poses no risk to a company’s bottom line. Instead, the rating agencies look to other environmental and social risks that do have the potential for financial harm, like carbon pricing and water availability. Cigarette companies rack up ESG points by moving to renewable electricity and by reusing their wastewater, even as their products kill an estimated 480,000 Americans annually.

Similarly, fossil fuel companies (like Shell) can earn high ESG scores, despite pumping megatons of carbon into the air, because their business model is not under serious threat from either governments or consumers. Big Oil is pulling in record profits and ESG funds are happy to invest—83 percent of their portfolios contain fossil fuels, just 1 percent less than non-ESG funds.

Ever since the term ESG was coined in 2004, the ESG industry has promised that adroit management of social and environmental risk would yield superior returns, both socially and financially. But the promise has proven bankrupt on both counts. In the real world, financial and social interests often conflict—but ESG always resolves them in favor of corporate profits. Even so, ESG funds fail to provide above-market financial returns. For the privilege of asset management that delivers neither social nor financial outperformance, ESG investors pay an average of 40 percent more in fees.

Both defenders and detractors of ESG conflate it with “stakeholder capitalism”—the principle that companies should be run in the best interests of all their constituents including employees, customers, suppliers, and the community at large. The reality is the opposite. With its exclusive focus on financial performance, ESG is simply a reflection of “shareholder value,” the belief that the only social responsibility of business is to build its profits. Milton Friedman would approve. More than half a century after this free-market extremist first brought shareholder value into corporate boardrooms, ESG has given it new life.

For value-oriented investors, ESG is just greenwash. But for the radical right it encompasses all they are fighting against in their ever-expanding culture war. A recent report from Consumers’ Research, an influential interest group tied to Republican dark-money donors, is typical in warning that “the American free enterprise system is under attack from within” by ESG. The report claims that under the influence of ESG, asset managers have managed “to coerce corporations to adopt critical race theory, boycott states with Republican governments, fund employees’ abortions, and divest from investment in drilling for oil and natural gas, among a wide range of other left-wing causes.”

The real tragedy of ESG is not that it fails to achieve a high level of social and environmental progress, or that it hands the radical right a straw man to bash, but that it actually blocks progress by playing directly into the neoliberal creed that markets are the solution to humanity’s ills. ESG paints an alluring picture of far-seeing investors solving environmental and social crises by directing capital to corporations that produce community benefits as a side effect of enhanced profitability. That is a dangerous fantasy.

ESG doesn’t tame corporate profit-seeking, or impose social objectives on companies. It is only a name for risks that corporations will seek to manage in any case to protect the bottom line. Worse, it distracts investors and the public from demanding that governments stop depending on enlightened capitalism and start directly addressing the grave environmental and social problems that have brought us to the brink of global catastrophe.

Perhaps progressives should join the right in their determined attack on ESG. At least then the nakedness of the ESG promise would be apparent to all and we could stop pretending that corporations will ever put social values on a par with—much less ahead of—financial returns. The only way that will happen is if they are forced to—by changing the rules of the game.