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ESG Developments This Week

In the States

Republican midterm gains could strengthen state opposition to ESG according to Roll Call

Republicans flipped five state financial officer positions previously held by Democrats in Kansas, Iowa, Missouri, Nevada, and Wisconsin during the midterm elections. The partisan changes could strengthen opposition to ESG investing, according to a Roll Call report:

“Republicans picked up state financial officer positions during the midterm elections amid a campaign against environmental, social and governance investing.

Five positions — in Kansas, Iowa, Missouri, Nevada and Wisconsin — flipped from Democratic to Republican in races for state auditor, controller or treasurer. Of the 50 directly elected positions, Republicans won 29 and Democrats won 19, according to an analysis from Ballotpedia. Two races remain uncalled.

A handful of Republicans’ campaigns for state financial officers focused on ESG, echoing sentiments from GOP officials at statehouses across the country and in Congress who say ESG investing is harming capital markets and domestic energy production and reject the case made by Democrats, major investors and other proponents.

At stake is a suite of legislation and rules that would curb ESG as a material consideration, along with other financial factors, for investors. The proposals include policies for states’ pension funds to divest hundreds of millions of dollars from financial institutions that incorporate ESG — and especially climate — in their investment decisions.

At least 17 states are proposing rules that would nearly ban the use of ESG in such decisions. Several Republican state treasurers and other financial officers implied they would double down on such policies in the coming months.

“ESG funds only invest in companies based on their environmental and corporate policies, making returns on investment a secondary concern,” Republican Kansas state Rep. Steven C. Johnson, who beat Democratic incumbent Lynn Rogers in the state’s treasurer race this month, said on his campaign website. In his new role, Johnson will manage the state’s investments and pensions, including the $20 billion Kansas Public Employees Retirement System.

Other elected officials have already shown their opposition to ESG in other capacities. Republican Utah state Treasurer Marlo Oaks, who won reelection, this year joined the state’s congressional delegation to criticize S&P Global Inc.’s credit rating division for plans to supplement its analysis of states with a score on certain ESG indicators.”

BlackRock facing political pressure from state officials of both parties 

Writing at National Review Online last week, Andy Puzder, the former CEO of CKE Restaurants and a visiting fellow at The Heritage Foundation, argues that leading ESG asset management firm BlackRock is facing pressure from Republican states to deemphasize its ESG investing strategy and focus on investment performance. At the same time, Democratic states are pressuring the company to continue with its ESG investing strategy:

“The world’s largest asset manager, BlackRock Inc., has lodged itself securely between a blue-state rock and a red-state hard place because of its environmental, social, and governance (“ESG”) investment criteria.

While left-leaning states have long supported BlackRock’s ESG investing, conservative states increasingly object. In August, 19 red-state attorneys general sent BlackRock CEO Larry Fink a letter stating that BlackRock’s ESG investing violates their laws governing fiduciary duties. According to these AGs, investor returns must be a fiduciary’s sole focus, and BlackRock is sacrificing those returns to advance its “net-zero” carbon emissions agenda.

The AGs’ concerns are not unfounded. BlackRock is a net-zero zealot. Its “Path to Net Zero” website states that “the transition to a net zero world is the shared responsibility of every citizen, corporation, and government” and describes at length BlackRock’s commitment to that transition. But is that commitment really in BlackRock’s clients’ best financial interests?

As John Kerry, President Biden’s climate envoy, stated in a recent interview, some of BlackRock’s clients “want the best return they can get,” and “you don’t get that necessarily from climate” related investments. He’s right, of course. Fink’s own 2022 letter to CEOs conceded that “[w]e need to be honest about the fact that green products often come at a higher cost.” Thanks for the honesty, but you don’t need an accounting degree to know that high-cost/low-return “climate” policies will reduce a company’s profits — and its investors’ returns.

So, perhaps it’s no surprise that, since January of 2022, red-state treasurers in Missouri, South Carolina, Louisiana, Utah, Arkansas, and West Virginia have announced the divestment of over $3 billion in assets from BlackRock’s management because of its ESG and net-zero policies….

the blue-state reaction is already beginning. Concerned that BlackRock might moderate its net-zero stance to retain red-state clients following the AGs’ letter, 14 blue-state financial officers launched a website ironically criticizing red states for the negative financial consequences of “blacklisting financial firms that don’t agree with their political views” and failing to acknowledge that “climate change is real.”

Everybody knew this was a signal to BlackRock and other financial firms not to back away from ESG and net zero. A week later, New York City comptroller Brad Lander went and said the quiet part out loud. He wrote to Fink, concerned that BlackRock might moderate its commitment to net zero to the detriment of both New York City pensions (which fall under his purview) and “our planet” (which does not). Lander wants BlackRock to make its net-zero commitment clear “across its entire portfolio,” dedicate itself “to keeping fossil fuel reserves in the ground,” and work “to end lending and insurance for new fossil fuel supply projects.”

Lander also noted, with little subtlety, that he “will be prudently reassessing” the city’s business relationship with BlackRock, “through the lens of our climate responsibilities.” Talk about blacklisting financial firms that don’t agree with your political views! BlackRock manages approximately $43 billion for New York City.

And that’s why BlackRock is between a rock and a hard place.”

On Wall Street and in the private sector 

ESG engagement in practice

One of the distinctions between ESG and its social investing predecessors is that ESG is an engagement-based strategy, meaning its goal is not to divest from poor-performing companies but to leverage shareholder investments to compel poor performers to improve. While shareholder resolutions and contentious proxy votes garner much of the attention in corporate governance, behind-the-scenes negotiations are often where the most significant changes in corporate behavior are made. Reuters notes one recent example of this leveraging tactic from Costco:

“Costco Wholesale Corp (COST.O) will set new targets by next year to cut its greenhouse gas emissions, according to an activist investment firm that said the retailer had been a laggard on climate matters.

Rivals including Walmart Inc (WMT.N) and CVS Corp (CVS.N) already have targets to cut their own emissions and those from their supply chains and customer bases, or have plans to set such goals.

Costco’s new approach “shows that the company is starting to treat climate change with the gravity that the issue – and shareholders – demand,” said Leslie Samuelrich, president of Green Century Capital Management, which had pressed for the change and described the company’s new position in a statement.

“Costco is no longer a laggard among its peers,” she added….

Green Century withdrew a similar resolution meant for Costco’s next shareholder meeting in exchange for the forthcoming targets, yet to be described in detail, a representative for the Boston-based firm said….

Green Century said under the deal Costco will update those targets by next month and will set further targets in the coming year to bring down its Scope 3 emissions including those from goods it acquires and goods it sells to consumers.”

Canadian bank will soon track personal ESG metrics for individuals

For years, corporations have been able to negotiate credit terms using ESG data and targets as leverage. According to a report from Summit News, similar negotiating tactics will soon be available to individuals for personal ESG behaviors. Vancity, a Canadian bank, will soon track the carbon emissions of individual customers based on purchases made with personal credit cards:

“A bank in Canada has become the first in the country to launch a credit card that tracks a customer’s carbon emissions, amid concerns that such a scheme could one day be used to restrict purchases.

In an effort by the credit union to display its commitment to ‘climate action’, Vancity will offer a credit card that links purchases to carbon emissions, allowing customers to compare their monthly carbon footprint to the national average.

The bank will also advise customers on how to limit their carbon footprint.

“We know many Vancity members are looking for ways to reduce the impact they have on the environment, particularly when it comes to the emissions that cause climate change,” said Jonathan Fowlie, Vancity’s Chief External Relations Officer.

“As a member-owned financial cooperative, we believe it is our job to do everything we can to help, especially when it comes to the decisions people make with their money. This tool will equip Vancity Visa credit cardholders with valuable information on their purchases and enable them to connect their daily spending decisions to the change they want to see in the world.”

According to research carried out by Visa, more than 50% of Canadians are interested in monitoring their carbon footprint.”

In the spotlight

FTX Founder Sam Bankman-Fried criticizes ESG

Recently, FTX Founder Sam Bankman-Fried discussed ethics, investing, and ESG in a long Twitter thread. The editors of The Wall Street Journal turned SBF’s comments into an editorial:

“Crypto dark knight Sam Bankman-Fried may have deceived investors, customers and various journalists and politicians. But now the FTX founder is at least telling the truth about a few things. Lo, he says that environmental, social and governance (ESG) investing is a fraud, and so was his progressive public posturing….

Mr. Bankman-Fried virtue-signaled by committing to make FTX “carbon neutral” and donating generously to fashionable progressive causes such as a foundation working to provide solar energy in the Amazon River basin. “We’re giving millions each year to launch sustainability related initiatives,” he said in an April Forbes magazine interview with—you can’t make this up—Brazilian super-model Gisele Bündchen.

Meanwhile, he was leveraging FTX customer funds to make risky, ill-timed bets. “Problems were brewing. Larger than I realized,” he tweeted. “In the future, I’m going to care less about the dumb, contentless, ‘good actor’ framework,” he added. “What matters is what you do—is *actually* doing good or bad, not just *talking* about doing good or *using ESG language*.”…

“ESG has been perverted beyond recognition,” Mr. Bankman-Fried confessed in an interview this week with Vox in which he also acknowledged that his advocacy for strong crypto regulations was “just PR.”

He said he feels “bad for those who get” harmed by “this dumb game we woke westerners play where we say all the right shiboleths [sic] and so everyone likes us.” Ah, yes, the poor saps who invest in companies because they claim to be sustainable.”

ESG Developments This Week

In Washington, D.C.

SEC disclosure proposal means new challenges for auditors

On March 21, the Securities and Exchange Commission (SEC) introduced its proposal on mandatory climate disclosures for publicly traded companies. Ever since, various media and analysts have been combing through the document, trying to figure out what exactly the new proposal will mean and for whom. On March 29, The Wall Street Journal argued the following:

“Professional-services firms are assessing an array of knotty and often subjective information from companies under a new proposal from U.S. securities regulators on climate disclosure.

The Securities and Exchange Commission last week put forward a plan that would require companies to provide information about their greenhouse-gas emissions and climate-change-related risks to their businesses. The proposal, which is now open for public comments, would add to the growing amount of work for auditors around assessing companies’ climate risks.

Under the proposal, climate metrics and disclosures included in the footnotes of companies’ financial statements would be subject to a full audit.

Separately, companies’ estimates of greenhouse-gas emissions from their operations and from the energy they consume—known as Scope 1 and 2 emissions—would require independent assurance, a review typically performed by engineering, consulting or audit firms. The assurance requirement applies to companies with at least $250 million in publicly traded shares.

Auditors would have to consider the additional climate disclosure when opining on the accuracy of the financial statements as a whole.”

As was noted in this newsletter last fall:

“KPMG in October said it planned to spend more than $1.5 billion over the next three years on climate-change-related initiatives, including training on environmental, social and governance issues for all 227,000 employees and efforts to advise businesses on how to meet net-zero emission targets. Ernst & Young in September said it would spend $10 billion over the next three years on audit quality, sustainability and technology. Deloitte, a sponsor of CFO Journal, didn’t respond to a request for comment on its planned climate-change-related investments.

PricewaterhouseCoopers in June unveiled a five-year, $12 billion plan to train employees on climate-related matters and hire 100,000 new people. “We invested and we’ve gotten the cost side under way because that’s what our clients were asking for from our people,” said Wes Bricker, vice chair at PwC and a former chief accountant at the SEC.

The SEC proposal would require companies to disclose if climate change is expected to affect more than 1% of a line item—such as revenue or debt—and explain the impact….”

“Some audit firms will likely generate higher revenue from clients, outweighing any cost increases stemming from hiring and training, BDO’s Mr. Tower said. “The additional cost that we incur would result in additional service billings,” he said.

Professional-services firms also expect higher demand for their consulting offerings. Those would include advising clients on how to calculate their emissions estimates and working with them on the new disclosure rules, for example identifying what’s needed for reporting, tax planning and operations, said Neil Dhar, co-leader of PwC’s U.S. consulting practice.

“On the consulting side, depending on how much expertise [our clients] need, it will require incremental help that we have to obviously plan for,” Mr. Dhar said.”

In the States

California corporate diversity law ruled unconstitutional 

On September 30, 2020, California Governor Gavin Newsome signed Assembly Bill 979, which added a section to the California Corporate Code. The new section mandated that every corporation in the state have at least one racial or sexual minority on its board of directors by the end of 2021. The law was challenged in court and, as of last Friday, has been ruled unconstitutional:

“A Los Angeles court has found a California law mandating that publicly traded companies include people from underrepresented communities on their boards unconstitutional, ruling in favor of a conservative group seeking an injunction against the measure.

Los Angeles County Superior Court granted summary judgment to Judicial Watch on Friday. The conservative legal group had argued the law violates the equal protection clause of California’s constitution. The ruling did not provide Judge Terry Green’s reasoning behind the decision.

The law, passed in 2020, required that publicly traded companies with a main office in California appoint at least one member of the Asian, Black, Latino, LGBT, Native American, or Pacific Islander communities to their boards by the end of 2021 through either filling a vacant seat or creating a new one….

It passed following the murder of George Floyd, an unarmed Black man, by Derek Chauvin, a white police officer during an arrest, which galvanized a national protest movement against racism and the disproportionate use of police force against Black Americans.”

Analysts foresee subsequent challenges to California Senate Bill 826, which was signed into law in 2018 and which requires that:

“[N]o later than the close of the 2019 calendar year… a domestic general corporation or foreign corporation that is a publicly held corporation, as defined, whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California to have a minimum of one female, as defined, on its board of directors, as specified. No later than the close of the 2021 calendar year, the bill would increase that required minimum number to 2 female directors if the corporation has 5 directors or to 3 female directors if the corporation has 6 or more directors.”

Idaho looks to join states curbing ESG

Idaho is, perhaps, about to join Florida, Texas, and West Virginia in looking to prohibit ESG in state investments, according to KTVT in Twin Falls, Idaho. The station reports:

“Several pieces of legislation aimed at preventing Idaho government entities from investing in companies that choose environmental-friendly paths or follow particular social policies are moving through the Legislature.

The Senate State Affairs Committee on Wednesday sent to the full Senate a bill aimed at prohibiting investments in companies that make commitments to environmental, social, and corporate governance, known as ESG.

The House, meanwhile, is advancing a resolution that would task a committee with identifying such companies.

ESG is increasingly seen as an important way for corporations to tout responsible business credentials. But some Idaho lawmakers say they’re suspicious of companies that appeal to what’s known as sustainable investing.

Republican Sen. Steve Vick says the state should avoid investing in companies whose actions are “counter to the values of Idaho.””

Several other states are reported to have legislation under consideration as well.

In the spotlight

Poll: Should retirement and pension funds consider factors other than ROI?

On March 31, Scott Rasmussen’s “Number of the Day” column—published by Ballotpedia—addressed the question of “other factors” in pension investing—factors like political issues, ESG, etc. This question was, presumably, inspired by the Labor Department’s efforts to establish a new rule in which ESG can be included in ERISA-governed retirement funds, overturning a Trump-era rule to the contrary. Rasmussen’s results were as follows:

“Forty-eight percent (48%) of voters believe that firms managing pension funds should focus only on earning the best possible return. A Scott Rasmussen national survey found that, among current investors, 59% hold that view. Thirty-seven percent (37%) believe they should also consider other factors, such as diversity, equity, and inclusion requirements.

When we asked a follow-up question about which other factors should be considered very important, the top choice was earning the best possible return on investment. Overall, 74% of voters say either that return on investment is the only thing that should be considered or that returns are a very important consideration. That figure jumps to 84% of investors.”See the column, including the survey methodology here.

ESG Developments This Week

In Washington, D.C.

Responses to the SEC’s sustainability disclosure rule announcement

In the week since the Securities and Exchange Commission (SEC) announced its plans to require sustainability disclosures from publicly traded companies, the reactions have been both manifold and diverse. Some support the idea, while others don’t. In any case, the new disclosure rules have many in Washington newly interested in ESG, including Rep. Byron Donalds (R-Fla.) who wrote the following for The Hill last week:

“President Biden has his sights set on the next tool to push his destructive climate agenda: Environmental Social Governance. ESG scores are based on a host of woke factors such as a company’s carbon emissions, energy consumption, and board diversity, among others. The more woke the company is, the higher the ESG score. The higher the ESG score, the more “investable” the company is said to be. While this Chinese Communist Party-style social credit score was once limited to a few virtue-signaling companies, there is growing effort from the Biden administration to make ESG a mandatory part of doing business in America. 

The president is attempting another “ultimate workaround” by again legislating through federal agency regulation. Knowing these Green New Deal policies could never pass the democratically elected Congress, the Biden administration is trying to shove their radical agenda down the throats of Americans everywhere through unelected and unaccountable bureaucrats. Worse yet, they are doing it with our hard-earned money.  

The Department of Labor has expressly disregarded any “anti-sustainable investing rules.” When presented the opportunity to demonstrate increased investment returns because of ESG, the DOL failed to do so and simply refused to enforce the Trump-era rule, which sought to prioritize pecuniary interests ahead of non-pecuniary for fiduciaries. The Securities and Exchange Commission is in the process of proposing ESG rules for securities issuers and exchanges as well as establishing an SEC ESG Task Force, designed to investigate and enforce ESG rules. The Office of the Comptroller of the Currency has supported ESG initiatives among private banks and is composing an ESG regulatory framework focused on climate impact.

As Black Rock CEO Larry Fink, laid out in a January 2020 letter, “the goal [of ESG] cannot be transparency for transparency’s sake. Disclosure should be a means to achieving a more sustainable and inclusive capitalism.” In a 2020 New York Times op-ed, former Federal Reserve nominee Sarah Bloom Raskin called for a number of energy companies to be excluded from COVID-19 relief because they generated too many carbon emissions. This is the terrifying business future ESG proponents are trying to create.”

Richard Morrison, a research fellow at the Competitive Enterprise Institute, a Washington, D.C. free-market think-tank, penned a piece for National Review Online’s “Capital Matters” in which he spelled out some of the likely consequences of the SEC’s new proposed rule. He wrote:

“The SEC’s proposal would be difficult, on any reasonable interpretation, to square with the exercise of its normal authority over financial markets, and is yet another troubling example of regulatory mission creep. It is also a disappointing and alarming development for those who care about property rights and a competitive, growing economy….

The SEC has always required firms to disclose financially material information about their structure, operations, and plans for the future. Something doesn’t — and shouldn’t have to — fall into a topic-specific bucket such as climate to be worthy of such attention. The SEC has traditionally used a “principles-based” approach to materiality, under which a company’s management draws attention to the risks and opportunities that it considers most important to that particular company. This allows for, as the SEC’s Walter Hinman described in a 2019 speech, a disclosure regime that “keeps pace with emerging issues . . . without the need for the Commission to continuously add to or update the underlying disclosure rules as new issues arise.” The new proposals foolishly go in the opposite direction.

Similarly, the concept of materiality itself gets a problematic twist. By introducing specific, prescriptive requirements rather than ones based on general financial principles, the agency is trying to put its thumb on the scale and suggest that anything climate-related should be considered presumptively material. This is not an honest attempt to protect investors; it is climate activism in finance-regulation drag. The goal is to force firms to disclose information about greenhouse gases and carbon intensity on the assumption that future investors will penalize them because of it. The one silver lining in this case is that investors — if they are left to make up their own minds — are unlikely to consider “climate exposure” nearly as much of a poison pill as the climate campaigners are hoping….

Much of the specialized reporting and audit assurance called for would need to be outsourced to consultants, accountants, and law firms with climate-focused practices. The world of ESG business services is already salivating over such increased demand stemming from this and similar initiatives. Big Four accounting powerhouse PwC announced last year that it was planning to hire 100,000 new staff to deal with climate and diversity issues over the next five years alone. Additionally, the proposed rule acknowledges that the change may result in heightened litigation risk and the revelation of trade secrets.”

On Wall Street and in the private sector

While ESG has tough year, investors grow impatient

On March 27, Barron’s posted a story citing an investment research report, noting that ESG has, so far, been having an exceptionally difficult year, particularly for those funds that have little or no exposure to energy. Moreover, for the first time, investors are seeming to notice, according to the story:

“Inflation and the war in Ukraine have jolted the U.S. economy—and weighed on the performance and investment flows of environmental, social, and governance, or ESG, funds. That’s especially true of funds underweight energy and defense stocks, according to a recent report from Bernstein.

“ESG funds and indices have underperformed this year across regions,” the authors noted. “While ESG funds have experienced positive inflows this year, the first week of March marked a rare outflow from ESG funds, the largest weekly outflow in the 30-year history of the EPFR database.”

Sarah McCarthy, head of European equity strategy research at Bernstein and co-author of the report, says the outflows and poor performance challenge the conventional wisdom about ESG investing and shed “some light on the fact that ESG funds have been forced almost to take on huge macro risk.” That’s because many ESG funds tend to exclude stocks in sectors such as defense and tobacco, which typically underperform as inflation expectations rise, and energy, which typically outperforms in an inflationary environment….

According to Bernstein, global and U.S. ESG funds both underperformed non-ESG funds in January by 120 basis points. (A basis point is one hundredth of a percentage point.) In the same month, European Union ESG funds underperformed by 50 basis points.

Year to date, the Morningstar US Sustainability TR USD index has fallen 8.7%, while the Morninstar Global Markets Sustainability NR USD index is down 8%. The Morningstar Europe Sustainability NR USD index has lost nearly 13%, according to Morningstar Direct. All three indexes have underperformed non-ESG indexes.

Net outflows from ESG funds, meanwhile, totaled a record $1.3 billion in the first week of March. ESG funds have seen net inflows of $31.4 billion so far this year, according to EPFR.”

Meanwhile, in Canada, the country’s largest pension fund is unhappy with recent ESG results and insisting that directors resign. Interestingly, the results that most concern the company are not returns but the effective application of ESG values:

“Canada Pension Plan Investment Board, the country’s biggest pension fund, said on Thursday that directors of its portfolio companies presiding material environmental, social and corporate governance (ESG) failures should be asked to resign immediately.

The change is part of revised proxy voting rules for the fund, known as CPP Investments, which will allow it to vote against a director seeking re-election following failures of oversight, along with voting against the director deemed most responsible for failing to remove them from the board.

CPP Investments, with C$550.4 billion ($431 billion) in assets, will also consider voting against all directors at portfolio companies with classified boards where ESG oversight failures have occurred. Classified boards are companies in which only a subset of directors are up for election.

“While this structure can provide enhanced continuity and stability … classified boards actively inhibit the rights of shareholders to hold specific directors to account annually,” CPP Investments said in a statement.

The move is aimed at ensuring that CPP’s portfolio companies are compliant with climate change, board gender diversity and corporate governance issues, which are high on investors’ mind.”

ESG and China

In a long report for Bloomberg (and republished here by Yahoo! Finance), Natasha White and Saijel Kishan noted that many ESG funds are using the outbreak of war between Russia and Ukraine to rethink some of their other more potentially volatile investments, particularly those in China:

“Caught flat-footed by Russia’s war on Ukraine, fund managers who get paid to avoid environmental, social and governance risks have started to look at China with a fresh sense of unease.

Their exposure to China is huge. Pure ESG funds domiciled just in Europe have about $130 billion invested in China assets, according to data compiled by Bloomberg. A further $160 billion is held by European-based funds that have screened for ESG-related hazards.

And yet the investment industry finds itself starting to contemplate the once unthinkable, as China’s ambiguous response to Russia’s invasion of Ukraine leaves the world on edge. China, the world’s second-largest economy, has sought to straddle both sides of the geopolitical divide, condemning the loss of life in Ukraine while blaming NATO for provoking Russia. And when the International Court of Justice voted to order Russia to “immediately suspend” military operations in Ukraine, only two countries dissented: Russia and China….

The attack of Ukraine hasn’t only renewed scrutiny of the parallels between Russia and China, it has put the countries’ relationship in the spotlight. Just before the war began, Chinese President Xi Jinping hosted Putin at the Beijing Olympics, a public demonstration of warm relations.

Of the ESG funds holding Chinese assets, a number are categorized as Article 9, which is the highest sustainability classification within Europe’s Sustainable Finance Disclosure Regulation. Together, these funds hold $7 billion. A further $124 billion is in Article 8 funds, which is a laxer ESG category within SFDR.

About $162 billion is in Article 6 funds, for which managers screen their portfolios to decide whether it’s relevant to disclose ESG risks.”

In the spotlight

Financial Times identifies conservative pushback against ESG

On March 27, The Financial Times carried a piece on what appears a rising tide of conservative pushback against ESG in terms of shareholder activism:

“The right has never been this engaged” in shareholder activism, said Justin Danhof of the National Center for Public Policy Research’s Free Enterprise Project, a conservative group that succeeded in placing motions at this year’s Disney, Costco and Walgreens Boots Alliance meetings.

The Securities and Exchange Commission “opened the floodgates” to activists’ resolutions last November by rescinding Donald Trump-era guidance that had limited which proposals on social policy issues could go to a vote, Danhof said. “We had three [proposals allowed] last year; we’ve already presented three this year and we will have at least 10 more that we know of.”

Between them, Danhof’s group and the National Legal and Policy Centre have submitted 19 proposals in 2022, up from a total of 16 last year, according to research from the Conference Board….

Proxy filings are growing across the political spectrum, with the Interfaith Center on Corporate Responsibility reporting that its members have filed a record 436 proposals this year, up from 244 at the same stage in 2021.

A proxy season analysis from As You Sow, the Sustainable Investments Institute; and Proxy Impact found that a record 529 environmental, social, and governance proposals had been filed as of last month, up 20 per cent year on year. Conservative groups had filed 5 per cent of them, it said.

Several of those proposals call for greater disclosure on charitable giving and racial equity audits, topics historically favoured by their liberal opponents.

This stemmed from a deliberate strategy, said Danhof: “Because of procedural hurdles at the SEC we have to file proposals that are rather similar to previously successful liberal proposals,” he said, “[so] our only avenue to the proxy ballot is to use as much leftist language as possible.”…

The conservatives say they are trying to save US companies from being distracted by liberal social causes. “The American capitalist system is the greatest system man has ever created economically but Marxist wokeism is . . . a cancer. We have to kill the cancer without killing the host,” Danhof said.

The left had taken over other institutions from universities to media outlets, he argued, and conservatives feared that it was doing the same in business and finance: “Now we have the leading bankers and tech titans all speaking the language of Davos and not championing American capitalism whatsoever.”