May 16, 2023 | 8:10 PM
A new study by the Unleashing Prosperity Commission, Putting Politics Over Pensions, finds that the majority of large corporations routinely violate their fiduciary duties and that political bias prevents sound business conduct. found.
Getty Images for the Congressional Integrity Project
Investment management firms such as JP Morgan, BlackRock and Fidelity manage trillions of dollars of Americans’ lifetime savings.
They indirectly own about 75% of the shares of publicly traded companies in America.
These asset managers also have a legal obligation to get the best possible returns for the tens of millions of Americans whose lifetime savings and pensions are under their legal control.
But the Unleash Our Prosperity Commission’s new study, “Putting Politics Over Pensions,” found that the majority of large corporations routinely violate their fiduciary duties, and that political bias hinders sound business practices. It turned out that
Asset managers like State Street vote for shareholder resolutions in client-owned companies through a process known as “proxy voting.”
Large asset managers routinely endorse resolutions put forward by left-wing social activists without the support or knowledge of their clients.
These “ESG” resolutions (“Environment, Social Justice and Governance”) require companies to sell oil and gas stocks, ban plastics, impose “diversity” quotas in employment, and unilaterally eliminate zero carbon emissions. They are asking for a shift in policy.
We researched hundreds of shareholder resolutions and identified the 50 most burdensome resolutions in terms of hindering the goal of maximizing shareholder returns.
All of which were opposed by company management.
For example, Costco’s shareholder resolution calls for the company to “adopt science-based short-, medium-, and long-term greenhouse gas emissions reduction targets that include emissions from the entire value chain (Scope 1, 2, and 3).” is required. To achieve net zero emissions by 2050. ”
What does this have to do with selling groceries?
We analyzed the proxy voting behavior of 40 of the largest asset managers to find out how often they voted for ESG resolutions that were detrimental to or associated with company profitability.
Dimensional, Vanguard, T. Rowe Price and Fidelity were selected for the A grade. They voted against almost all ESG initiatives.
Meanwhile, ‘woke up’ companies with the worst voting records included UBS, BNP Paribas and Northern Trust.
Over 80% of them vote for Awakened Initiatives.
State Street, one of the largest money management firms, received a D grade.
This information should be of great value to retail investors when choosing a company to manage their funds.
First, most investors don’t want politics or ideology to get in the way of asset managers getting the best possible returns in retirement.
Dozens of studies have found that ESG policies often reduce shareholder returns.
Last year, for example, ESG resolutions often required companies to sell their oil and gas holdings, despite a year in which companies like Chevron and Exxon had their stock markets crash.
Second, many investors may not share the awakening political leanings of corporate board shareholder activists and their advocates.
They would rather have their money invested in a politically neutral company.
I would add that there is nothing wrong with explicit ESG funds where investors are free to choose to direct their funds politically.
Surprisingly, some companies, like State Street, have been found to vote by proxy on hostile ESG resolutions more frequently than explicitly pro-ESG funds.
Our goal of monitoring proxy voting (this report card will be updated annually) is to expose funds that prioritize political beliefs and social policy biases over returns.
It is hoped that investors will be persuaded to withdraw from awakened money management funds, and that money managers will cease to be ideologically swayed in their investment decisions.
People don’t want Wall Street investment advisors to be preoccupied with saving the planet or ending the ills of society.
They just want the best possible return on their money.
Steve Forbes is Chairman of Forbes Media. Stephen Moore is a Senior Research Fellow at the Heritage Foundation. They are co-founders of the Commission Unleashing Prosperity.