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Advocates for Environmental, Social and Governance (ESG) policies label opponents as “anti-ESG.” But what we really are is pro-fiduciary-duty.

On June 1, 2023, Heidi Welsh, Executive Director at the Sustainable Investments Institute, posted “Anti-ESG Shareholder Proposals in 2023” on the Harvard Law School Forum on Corporate Governance.

In that post, she noted that our employer, the National Center for Public Policy Research (NCPPR) – via its Free Enterprise Project – is “the main player” in terms of filing “anti-ESG” shareholder proposals. Among other things, Welsh argued that we “have gained little … traction with investors.” What follows are some responses to that claim.

The current debate about the role of ESG factors in corporate governance may be summed up as follows.

  1. Corporate executives and directors are generally duty-bound to avoid consciously destroying shareholder value.

  2. In order to avoid consciously destroying shareholder value, corporate decision-makers are generally duty-bound to become informed of all material information reasonably available before embarking on particular projects, and to analyze and apply that data in an unbiased manner.

  3. Obviously, consideration of impacts on customers, employees, and the environment were already being included in this analysis before anyone started pushing ESG.

  4.  All of which leads to the unavoidable question of what exactly ESG is changing about the foregoing process. Given the glaring overlap between progressive wish-lists and ESG “guidance” – it is reasonable to conclude that ESG is doing precisely what the Business Roundtable infamously called for in 2019: repurposing the corporation for non-shareholder stakeholder interests – particularly those stakeholders who can best be used to advance the political agendas favored by corporate and institutional investor C-suites.

While it took people some time to figure out how something as benignly labeled as “ESG” could be such a problem, recent events confirm that they are waking up to that fact.

For example, Steve Forbes and Stephen Moore reported that a study produced by their Committee to Unleash Prosperity found that “a majority of the largest [money managers] are routinely … letting political biases interfere with sound business practices” by supporting ESG resolutions that “require firms to divest oil and gas stocks, ban plastics, impose ‘diversity’ quotas in hiring, move unilaterally to zero-carbon-emission policies and so on.”

All this may explain why we’ve recently seen an increasingly successful pushback against ESG. Case in point: Of “the dozens of proposals put forward at annual shareholder meetings of U.S. banks, insurers, and oil and gas companies over the last month, only one received majority support, the worst showing for ESG-related proposals since 2017.”

At the same time, the Pro-ESG / Anti-Duty forces have been pushed back on their heels by (1) “more than two dozen states introduc[ing] anti-ESG-style bills,” (2) over 20 state treasurers and financial officers sending letters to some of the biggest proxy advisory firms and asset managers “ask[ing] pointed questions about how these institutions are fulfilling their fiduciary obligations to [pension] beneficiaries,” and (3) twenty-one AGs writing a letter addressed to over 50 U.S. asset managers citing “concerns about the ongoing agreements between asset managers to use Americans’ savings to push political goals … [with] political ESG commitments, [which] present multiple conflicts of interest and are unlikely to be justifiable on financial grounds.”

Turning specifically to criticisms of the success rate of pro-fiduciary-duty proposals that we filed, at least three points are worth keeping in mind.

First, we believe we represent the views of retail investors, and according to at least some expert accounts “retail shareholders don’t vote.” Second, “[s]hareholder proposals almost always [lose], especially ones not of the left,” and it is unlikely that ESG proposals fared any better when they were first being filed.

Finally, consider the array of powerful left-leaning institutional forces arguably aligned against us, including (1) the SEC, (2) proxy advisers, (3) asset managers, and (4) pension funds.

From our perspective, this ESG cabal supports ESG because they are (1) true believers willing to sacrifice shareholder value for their vision of “social justice,” and who have no qualms about subverting the political process toward this end, (2) utopians who are in denial of the reality of tradeoffs, or (3) opportunists who seek to profit by redirecting the ire of the Occupy Wall Street mob, or via various forms of crony capitalism and peddling ESG products and services.

Regardless, our pro-fiduciary-duty proposals are part of a freedom movement that is winning battles and gaining momentum. And these successes will only grow so long as we continue to educate people about the truth about ESG.

We just want companies to get back to business. The fact that this is labeled “anti-ESG” by people like Heidi Welsh is actually quite revealing. From our perspective, it amounts to admission of the hard-left partisanship hiding beneath the banner of ESG.


Scott Shepard is a fellow at the National Center as well as the director of the National Center’s Free Enterprise Project.

Stefan Padfield is an associate at the Free Enterprise Project (FEP), which is the original and premier opponent of the woke takeover of American corporate life.

This first appeared at Newsmax.

Author: Scott Shepard