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Banks and Wall Street firms are pushing environmental, social, and governance metrics to promote left-wing causes. Why are Republican states going along?
Over the past decade, many of the largest corporations in the United States have adopted overtly political causes, including positions on controversial social issues. In most cases, these corporate policies have favored left-wing ideological positions.
For example, in 2021, massive companies such as American Airlines, Dell, and AT&T openly opposed state laws meant to limit election fraud, despite the fact that none of these laws had anything to do with planes, computers, or phones.
Earlier this year, Bud Light hired Dylan Mulvaney, a transgender social media influencer, to help promote its beer to a customer base that had little interest, to put it kindly, in LGBTQ activism.
One of the driving factors behind corporations’ decision to promote left-wing social justice causes is the rise of environmental, social, and governance metrics.
ESG is a kind of social credit scoring system. ESG models typically assign letter grades or numerical values to businesses based on their products, services, or governance practices. Higher-performing companies are usually those that adopt policies that progressives, liberals, and elites like, such as phasing out the use of fossil fuels.
ESG is now widely used by banks, Wall Street firms, insurance companies, and other powerful institutions to screen out disfavored businesses and reward companies that have fully embraced leftist ideals. Companies with good ESG scores are sometimes given lower interest rates in lending, better bond ratings, or other financial incentives to continue keeping their scores high.
Under no circumstances should states with conservative and libertarian populations be required to fund radical environmental policy changes at massive corporations.
By the end of the 2021 fiscal year, more than 95% of big companies had implemented ESG practices, according to a report by the International Federation of Accountants and the Association of International Certified Professional Accountants.
Although few will be surprised to learn that left-leaning Wall Street behemoths like BlackRock have been massive supporters of ESG, it might come as a shock that numerous taxpayer-funded pension and retirement systems in Republican-dominated states have also been using their weight to promote ESG causes.
A 2023 report by the nonpartisan 1792 Exchange summarizes ESG-related proxy voting decisions in 2022 by taxpayer-funded pension systems in all 50 states. (A proxy vote is when an individual or financial firm votes for shareholder resolutions on behalf of the owner of the shares.)
Although pro-ESG proxy votes were cast in all 50 states, some states favored ESG much more than others. Of the 26 states with the highest pro-ESG voting records, 15 had legislatures controlled by Republicans, including Alabama, Kentucky, Idaho, Montana, Mississippi, Ohio, Missouri, Arkansas, Florida, Texas, North Dakota, Indiana, Iowa, and Nebraska.
Of the 15 Republican-dominated states that used taxpayer funds to promote corporate adoption of ESG at high rates, the worst offender was Tennessee. On average, the Volunteer State’s pensions voted in favor of ESG resolutions 56% of the time.
Incredibly, the pro-ESG voting rate for all of the aforementioned 15 states was higher than some far-left states, including California and Illinois.
Of all 50 states, the one with pensions least likely to vote in favor of ESG resolutions via a proxy was South Dakota, which voted for pro-ESG resolutions in just 19% of cases. Wyoming was the most likely to support anti-ESG shareholder resolutions.
Although many conservative-leaning states have been using taxpayer-funded pensions to promote left-wing corporate policies, some states have started to reverse course. More than a dozen Republican-led states have passed laws in recent years restricting state funds from being used to endorse many kinds of ESG policies, including some states that performed poorly in the 1792 Exchange’s report, such as Texas and Alabama.
If corporations decide that it is in their best financial interests to embrace left-wing causes, including ideals that have nothing to do with their business models, they should have the right to do so — so long as they don’t use their power to discriminate against consumers, of course. But under no circumstances should states with conservative and libertarian populations be required to fund leftist and radical environmental policy changes at massive corporations.
Unfortunately, that problem continues to persist, and it likely won’t change soon without significant resistance from the public.
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Justin Haskins is the director of the Socialism Research Center at the Heartland Institute and the co-author of the New York Times best-seller "Dark Future: Uncovering the Great Reset’s Terrifying Next Phase."