Shareholder proponents who oppose most of the ideas supported by ESG investors have been around for a long time, but in the last two years they have filed many more proposals and a few new players have emerged.

The National Center for Public Policy Research (NCPPR) think tank in Washington, D.C., is the main player, although its principals and like-minded supporters also file on their own. NCPPR calls itself “the nation’s preeminent free-market” shareholder activist group, via its Free Enterprise Project. Its representatives also attend annual meetings without filing proposals to make statements about corporate policy; these regularly make their way into social media channels. Since 2020, NCPPR has published the Investor Value Voter Guide, with its own spin on data presented in this Proxy Preview publication. The guide says it helps “Christian and conservative investors vote their shareholder proxies in a manner consistent with their values.”

The National Center for Legal and Policy Center (NLPC) also files shareholder proposals, via its Corporate Integrity Project, as part of its mission to combat “practices that undermine the free enterprise system, including corporate giving to groups hostile to a free economy.” It has several China proposals this year, among others.

A few individuals also file. One is Steven J. Milloy, a former lobbyist for the tobacco industry who maintains a website that denies climate science; his proposals question the benefits of corporate action to protect the environment—such as those submitted a few years ago on a letterhead that said, “Burn More Coal.” Milloy sits on the board of the Heartland Institute, a nonprofit think tank that incubates right-wing policy ideas. At a recent Heartland conference, the treasurer of Utah likened ESG to Nazism.

New entrants in 2023 include:

• Inspire Investing supports clients interested in “biblical investing.” It offers Christian financial advisors who “help you glorify God in your financial life,” is the “world’s largest faith-based ETF provider and offers an online screener with nearly 40,000 tickers for companies or funds, including eight of its own. It names “abortion travel” as a “trending issue,” giving negative ratings to eight public companies. Inspire filed a proposal at M&T Bank that has been omitted.

• David Bahnsen leads The Bahnsen Group, which manages $4 billion in assets, and sits on the advisory board of the National Review, founded by William F. Buckley in 1955 to promote conservative ideas. Bahnsen also sits on the advisory board of the Viewpoint Diversity Index, a project of the Alliance Defending Freedom. ADF works to bolster right-wing causes and has been a key champion for like-minded judges who increasingly dominate the American judiciary, including the U.S. Supreme Court—the result of a years-long campaign from The Federalist Society. Bahnsen has filed at least six proposals, several invoking concerns about the fiduciary duty of companies only to make more money for shareholders.

• William Hild is executive director of Consumers’ Research, a Washington, D.C.-based non-profit organization that maintains a webpage tracking anti-ESG legislation. Its Consumers First Initiative, launched in May 2021, says it “has exposed numerous companies that have chosen to put woke politics above consumer interests.” Hild has filed a resolution at ExxonMobil that questions the motives of one of its board members.

Funding and politics: Many anti-ESG groups appear to receive funding from dark money sources that have connections to Leonard Leo of The Federalist Society and The Marble Trust, which Leo founded in 2020. Neither reveals donors or grantees, but The New York Times reported in August 2022 that the trust received an indirect $1.6 billion donation from electronics magnate Barre Seid to bolster work to oppose abortion, undercut voting rights and disrupt efforts to address climate change. An investigative story from CNBC on March 1, 2023, discusses these connections and others between conservative political groups and the currently escalating political campaign against ESG considerations in the capital markets. Leo’s connections to anti-ESG work also are assessed in a March 1 story in Politico.

Broad aims—Substantial political controversy over the merits of considering ESG factors in investment practices blew up in 2022, with a notable May 2022 opinion piece in The Wall Street Journal by former Vice President Mike Pence. Anti-ESG shareholder proponents have been active for years but appear to have a new infusion of cash to pursue their objectives in and outside proxy season. One expressed concern relates to fossil fuel “boycotts” by investment firms and advisors hired by state and local governments and their pension funds, but a more general view from anti-ESG groups is that taking anything beyond immediate financial return into account is a breach of fiduciary duty.

Most recently, the controversy has received national attention because Congress approved rescinding a November 2022 Department of Labor rule that allows pension funds to consider ESG matters in investing retirement savings. The move would turn back the clock to a similar rule eschewing ESG from the Trump administration. That rule had rescinded an Obama-era rule in favor of ESG considerations. President Biden has promised a veto, his first.

Anti-ESG pushback—The ping-pong volleys of pro- and anti-ESG sentiment continue. From the right side of the political spectrum, the view is that companies and investors are hostage to a liberal agenda, making many of the arguments discussed in this section. Proponents of ESG respond by citing 1) widespread public support for looking at ESG factors, 2) studies from state financial officers that project financial harms from limiting investment options and 3) the recent rejection by some conservative state lawmakers of anti-ESG bills. These developments were covered in a recent article in The Washington Post, as well as in a long New Republic analysis in February.

Heidi Welsh
Executive Director, Sustainable Investments Institute