Investment funds run by financial giants such as Goldman Sachs and BlackRock are “foregoing billions of dollars in shareholder returns” to comply with “woke” environmental, social and governance (ESG), according to a free market think tank.
The Committee To Unleash Prosperity’s new analysis looked at the funds’ ESG factors to see if proxy votes were cast in favor of woke shareholder proposals — or actually in their clients’ best interest.
The report — titled “Politics Over Pensions: The First Annual Report Card on Investment Fund Managers and Proxy Voting Behavior” — argued that many shareholders’ asks didn’t contribute to the company’s bottom line.
The “major investment houses are routinely violating their legal obligation – known as ‘fiduciary duty’,” according to the report.
“By putting their own political biases first, their clients are foregoing billions of dollars in shareholder returns,” according to the think tank.
The report found that proxy votes dealing with ESG initiatives “are cast on behalf of shareholders by fund managers — and are not based on a survey of their clients’ wishes.”
Goldman Sachs, BlackRock, JPMorgan Chase, BNY Mellon, State Street, and Charles Schwab were given grades of average and below for failing to eschew ESG-related “extreme” initiatives put forth by shareholders, according to the think tank.
UBS, Deutsche Bank, First Trust Advisors, and PNB Baribas were given failing marks.
The Committee issued the grades after examining “4,814 non-branded ESG funds” to see the results of proxy votes cast on “50 of the most extreme ESG-oriented shareholder proposals from 2022.”
Those proposals included “racial equity audits” for Home Depot to see the “adverse impacts on nonwhite stakeholders and communities of color.”
Johnson & Johnson and McDonald’s were imposed with the same requirement, while JPMorgan Chase, Pfizer, Verizon, and Amazon agreed to the race-equity audit rather than lose a shareholder vote.
In another shareholder proposal, Disney was asked to “report on pay gaps by sex and race,” which it opposed before BlackRock and State Street voted in favor of the audit, which then passed.
Chipotle, Home Depot, and Target faced the same proposal, while Costco was told to set climate targets for “Scope 3” emissions.
At least seven states — including Florida, Oklahoma, Texas, and West Virginia — have enacted anti-ESG laws in the past two years which bar state funds from investing in companies that make decisions based on ESG-centered criteria.
Dimensional, Vanguard, T. Rowe Price and Fidelity received an A grade for pushing back against ESG-mandated initiatives that have swept across the investment sector.
“Our research indicates that ESG investing does not have any advantage over broad-based investing,” Vanguard CEO Tim Buckley told Financial Times.
Vanguard, the world’s second-largest asset manager, pulled out of the Net Zero Asset Managers initiative which numbers some 300 firms who have committed to reducing greenhouse gas emissions.
“It would be hubris to presume that we know the right strategy for the thousands of companies that Vanguard invests with,” Buckley said.
“We just want to make sure that risks are being appropriately disclosed and that every company is playing by the rules.”
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