To the ESG movement, a company whose board is primarily accountable to shareholders is thought to be endangering its own reputation.
To the ESG movement, a company whose board is primarily accountable to shareholders is thought to be endangering its own reputation.
A lmost every National Review reader is familiar with George Orwell’s famous assertion that “the word Fascism has now no meaning except in so far as it signifies ‘something not desirable.’” From this, the lesson for conservatives seeking meaningful headway in a debate that reflects the politicization of everything is simple: In the struggle to bring institutions back towards political neutrality, we dare not forget that attempts at neutrality from groups on the left often don’t represent neutrality at all, but broad-brushstroke moves aimed at painting progressive dogma as normal while smearing conservatives who dissent as radicals, when in reality, the opposite is true.
An example of this came on Tuesday at Mastercard’s annual meeting, where shareholders argued for the company to change its lobbying practices and provide more transparency as to what causes it supports. Do those demands seem innocuous? Probably. The activist game, however, is frequently a subtle one, and the seemingly pro-shareholder veneer, as is so often the case, hid a decidedly anti-shareholder ask. “Mastercard’s lack of disclosure presents reputational risk when its lobbying contradicts company public positions,” the proposal reads, the clear implication being that Mastercard needs to sever corporate partnerships in order to maintain its corporate reputation and obligations to shareholders.
And who are these dangerous entities that pose such a threat to Mastercard? Organizations such as the State Financial Officers Foundation (SFOF), a group of financial officers from red states working to oppose environmental, social, and governance (ESG) investing and stand up for doing their fiduciary duties. “Mastercard’s support for SFOF has drawn scrutiny for ‘pandering to a handful of pro-fossil fuel US politicians’ and fueling the fight against ESG investing,” the proposal says. The only real crime that’s been committed is standing up for shareholders in the face of demands from corporate activists. For this, Mastercard is supposed to drop SFOF to stay in the good graces of ESG ideologues. What appears on the surface a mere request for transparency is actually a veiled demand to defund conservatives and red-state financial officers. The activists have made their demands to Mastercard, Wells Fargo, and other companies, but they have yet to succeed.
It’s hardly just SFOF that’s been made a target. The language of “congruence” (a word that means to be in agreement with, or compatible with) is continually weaponized against conservative groups and politicians.
Take an issue like abortion. In 2021, activists lambasted JPMorgan for donating $185,000 to organizations “work[ing] to undermine women’s reproductive rights” and “contribut[ing] . . . at least $2.8 million to anti-choice candidates and political committees.” The language used? Political-expenditure “congruency.” The clear meaning? Stop funding politicians, including ones who support tax and regulatory policies that benefit Mastercard, if they also happen to support pro-life candidates and organizations.
Or, take another example: pushes for Israel divestment. In March, activists pressured Lockheed Martin to terminate its relationship with the Israel Defense Forces, citing the IDF’s supposed “irremediable human rights violations.” In this case, the demand was couched in the language of human-rights “alignment.”
Awkwardly for such activists, the vast majority of red-state fiduciaries, such as Aaron Kinsey of the Texas State Board of Education, have the priorities that anyone in their positions should be expected to have, above all to generate return for those whose money they manage. Nor are they somehow outside the Overton window by virtue of being skeptical of ESG. Many have watched anti–fossil fuel and pro-ESG activism wreak havoc on crucial industries within their states and (correctly) view defending those industries as a far more worthwhile task than appeasing the demands of ideologically driven corporate activists and asset managers who view their states’ oil and gas industries as doomed and dangerous, as opposed to tremendous creators of employment and shareholder value.
In the age of ESG and stakeholder capitalism, a company whose board is primarily accountable to shareholders is thought to be endangering its own reputation. Shareholder primacy is anti-business, under this new set of doublespeak-coded rules. Energy companies should apologize for being energy companies and produce less energy. Food companies should produce less food; producing more food is actually anti-business. Weapons companies should sell fewer weapons to fewer clients. Donating to both sides of the political aisle is indicative of deep corruption — bipartisanship is bias.
These are the rules of the ESG system, and the rules that conservative fiduciaries like SFOF are fighting against.