Organizations who argue that ESG considerations are irrelevant to business have been filing shareholder resolutions for many years, but it is only in the last two that they have picked up substantial support from politicians who have been trying to use ESG opposition to their political advantage. There is little popular support for such sentiment, however, and independent polls show Americans generally favor ESG concerns such as fairness at work and environmental protection.
In proxy season, almost all of the proposals from anti-ESG groups have focused on social issues, taking stands that are polar opposite to the views espoused by the main body of shareholder proponents. This section of the report briefly examines these proposals, which share a belief that corporate America is too liberal—”woke” in current parlance—and that companies and investment managers are hostage to left-wing ideals that will destroy corporate America and the “American Way of Life.”
The volume of proposals from anti-ESG groups rose to 79 in 2023, up sharply from earlier years. Anti-ESG groups do not publish their plans in advance and have declined to provide Proxy Preview with lists of their filings.
As of mid-February, there were 44 proposals. Two have gone to votes: A resolution questioning net-zero GHG goals at Costco earned 1.9 percent and a proposal asserting that “viewpoint diversity” should be added to the non-discrimination policy at Walgreens Boots Alliance earned 1.4 percent. Of the 36 challenged at the SEC, two have been omitted, proponents have withdrawn four others before any SEC response, SEC staff have agreed two should be included and 26 proposals await a response from the commission.
A Mirror Image
Themes: Proposals inveigh against corporate efforts to encourage diversity and combat racism, positing that such efforts actually disadvantage conservative people, white men in particular and those with fundamentalist Christian views—under the banner of “viewpoint diversity.” The evidence proffered in the resolutions is far thinner than that presented by almost all other shareholder proponents, however; it consists in large part of opinion pieces from right-wing media outlets. Proposals attacking health care treatment for transgender people have emerged, as well, in sync with red states political efforts to push trans people back into the closet.
New this year are more proposals that contend actions aimed at addressing well-known climate change risks are foolish at best and financially damaging at worst. They clearly seek to stop companies from taking action to measure, manage and mitigate climate change—despite the scientific consensus about coming catastrophic damage and systemic risk and support for action by many companies as well as asset owners and investment firms managing trillions of dollars of assets.
Continuing from last year are a clutch of proposals focused on corporate political activity, with ideas about adding board committees and questioning the political leanings of board members and corporate charitable donations to groups disfavored by the proponents.
Little investor support: Despite what appears to be a well-funded increase in shareholder proposal filings, the investment world has evinced no support for ignoring ESG issues. Anti-ESG resolution support last year dropped from an already low level and only seven of 53 voted on earned more than the 5 percent needed to qualify for resubmission in the first year; the highest vote was 7.5 percent, 11 earned less than 1 percent and the average was 2.5 percent. A tiny slice of common ground concerns views about doing business in China; two proposals appear on p. 58 under Human Rights.
Copycats: A few anti-ESG proponents emulate the resolved clauses of the main body of proposals, which makes them appear to support sustainability objectives, even though the rest of such proposals cite right-wing opinion pieces and argue against their purported goal. But the tactic appears to have backfired as investors are overwhelmingly voting against these resolutions.
Proponents
The National Center for Public Policy Research (NCPPR) think tank in Washington, D.C., is the main player, although its principals and like-minded supporters also file on their own. NCPPR calls itself “the nation’s preeminent free-market” shareholder activist group, via its Free Enterprise Project. Its representatives also attend annual meetings without filing proposals to make statements about corporate policy. Since 2020, NCPPR has published its own voter guide, which copiously uses Proxy Preview data but puts its own spin on the resolutions.
The National Center for Legal and Policy Center (NLPC) also files shareholder proposals, via its Corporate Integrity Project, as part of its mission to combat “practices that undermine the free enterprise system, including corporate giving to groups hostile to a free economy.” NLPC filed the two China-related proposals noted above.
Political objectives: New entrants in 2024 include two groups that have explicit political ties:
The American Conservative Values ETF was launched in October 2020 and asserts that “politically active companies negatively impact their shareholder returns, as well as support issues and causes that conflict with conservative political ideals, beliefs and values.” It lists 34 companies it deems too liberal to hold. It is advised by Ridgeline Research LLC, a Washington, D.C.-based investment advisor that says it supports “multiple affinity groups.” Ridgeline’s research director, Don Irvine, formerly worked at Accuracy in Media, a right-wing Washington policy shop now headed by Adam Guilette. Guilette founded the Florida chapter of the Koch family political advocacy group Americans for Prosperity and also was a vice president of the far-right activist group Project Veritas that promotes conspiracy theories through misinformation.
The American Family Association is a non-profit organization headquartered in Mississippi that originally was called the National Federation for Decency. It calls itself the “largest and most effective pro-family organization” in the United States. The associated AFA Action sister social welfare organization says it is “dedicated to advancing biblical values in society and government by educating and influencing public policy.” These values include opposing LGBTQ rights and abortion. It has been listed as a hate group by the Southern Poverty Law Center since November 2010 given its work against LGBTQ people.
Funding: Many anti-ESG groups appear to receive funding from dark money sources that have connections to Leonard Leo of The Federalist Society, which for years has advocated for a conservative judiciary, and Leo’s Marble Trust, founded in 2020. Neither reveals donors or grantees, but The New York Times reported in August 2022 that the trust received an indirect $1.6 billion donation from a midwestern electronics magnate to work against abortion, undercut voting rights and disrupt efforts to address climate change. CNBC in March 2023 discussed these connections and others between conservative political groups. Leo’s connections to anti-ESG work also were assessed by Politico in 2023.