The Biden economy – stressed by high spending, inflation, and interest and now low confidence, growth, and energy output – is shuddering, like a plane before a stall. Several banks have collapsed, gambling on low interest bonds and crypto – but the problem may be bigger, traceable to the left’s “ESG,” or “Environmental, Social, and Governance” investment agenda. ESG is raising new legal issues.
As the political left pushes the “ESG” agenda on corporate America, replacing profits and traditional returns with “transformational” social and climate change, influencing banks, pension funds, and wider investment decisions – what rights do countless distraught shareholders, pensioners, and retirees have?
In general, the answer is shareholders can influence these decisions, if they act in large enough numbers, but so can thoughtful, responsible members of these corporate and investor boards. The backlash against ESG is already beginning to happen, as shareholders watch their savings vanish.
Whether overzealous left-leaning companies, funds, and pension boards go “whole hog,” or just place social and climate change ahead of financial returns to shareholders, using the Marxist term “equity,” or redistribution of earned income to groups who did not earn it for “social justice” – shareholders are going to get uneasy. They are already getting uneasy.
Shareholders – and their representatives on these corporate boards – were already taking legal action even before the recent bank collapses, seeking not just a return on lost income, proper compensation for what they see as a breach of fiduciary duty by these corporate leaders, but their resignations.
The bigger question– as wild-eyed Biden talkers seek to crudely coerce private action, ending gas cars, stoves, and mowers, water rights, fossil fuels, and fertilizer – is who will pay the price when this house of cards collapses.
Already, some inside this White House – and in the nation’s newly “woke” boardrooms – are beginning to have second thoughts. The economy is NOT getting better. Inflation remains high, interest rates continue to rise, energy costs are killing consumers at the pump, grocery store, in rent, and credit cards.
Even as Biden blames everyone except himself and drains America’s precious Strategic Petroleum Reserve, seniors continue to retire – and they want their money, the money the invested to earn. They do not, by and large, want annual reports bragging about more wind power, transgender or gender redefinition policies, and not how the company, fund, or bank is advancing “equity.”
The scrutiny of these “woke” policies, boards, and board members is only going to grow, with it calls for resignations and new leadership, a return to tested investment strategies, and personal accountability. This, in the end, is where the rubber meets the road.
When it comes to accountability for screwing up the US economy, and holding those who are complicit within the private sector, a few predictions are worth making. Since people who invest their money – directly or indirectly – typically do so to preserve its value, and grow their savings, people will get mad.
When they do, the call for shareholder action against these companies, funds, banks, boards and individual board members will get louder. You can expect a swell of “where is my money, what are you doing?” shareholder actions, calls for resignations, impatience with “woke” justifications.
Perhaps more interestingly – since change accelerates when publicity gets bad, people get mad, and personal liability begins to show up – what makes all these “woke” corporate leaders and board members think they will avoid personal responsibility, and specially liability?
Bets are two-to-one that insurers who write “directors and officers” (D&O) liability policies for all thee “woke” investors, leaders, and board members were not thinking about insuring the individual board members for decisions that look like a breach of “orthodox” fiduciary responsibility.
How many of those D&O policies protect their board members from personal lawsuits by other board members, activist shareholders, and class action suits – for making political decisions, for losing their money – a lot of money – when board members shift from traditional fiduciaries to a “woke” religion?
Again, these questions have yet to be fully tested, but imagine if more banks go under, more corporate, pension, and investment fund returns are lower. The straight line is easy to draw – right back to board members who, on the record, made blundering, anti-profit, pro-woke decisions and cost shareholders, investors, pensioners, and those who counted on their behaving as traditional fiduciaries, dearly.
Bottom line: What the recent bank collapses, and spate of corporate resignation calls – for “woke” hysteria and misjudgment – signals is both big and small. On the big end, it signals Biden’s mismanagement of the US economy is stunning, can no longer be hidden. National debt – and interest on it – have exploded, spending utterly irresponsible, as is the “woke” shutdown of key sectors.
On the small end – as the devil always hides in details – one has to wonder if those who have pushed this “woke” agenda, leaders public and private, are not due for payback. Public leaders may be swept out. But “woke” board members and CEOs may want to check their D&O policies – then check their bank accounts, as liability for costing Americans their savings could be high. ESG raises big issues.
Robert Charles is a former Assistant Secretary of State under Colin Powell, former Reagan and Bush 41 White House staffer, attorney, and naval intelligence officer (USNR). He wrote “Narcotics and Terrorism” (2003), “Eagles and Evergreens” (2018), and is National Spokesman for AMAC.
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I view ESG as a way for wealthy liberals and corporations to circumvent campaign laws and deny the American voter a say in what should be decisions on Environment, social and governance determined by the electorate. These should be ballot issues. A conservative constitutional lawyer should be able to bring a Supreme Court case on the matter. Business government partnerships are really monopolies against the people!
The Black and White point which has raised its pointed head here, is what was revealed early this week in the AMAC List of Corps. that donated investors capital and corporate profits to the (BLM ) movement. 83.1 billion… over 1000 companies were on that list, each page I scrolled through showed me another that I am involved with in some financial way. I was getting more more ill as the 100 pages scrolled by. My question then and of course now that I read the above article which was so well written. My question is, how can a company invest that amount of money ( MILLIONS in some cases) it must have been approved by some board members or corporate execs. at some point. Funds that should have been left in the investment portfolios to provide income and return on investment for the share holders. Talk about a scam and extortion. ESG and BLM are one in the same a scam. The BLM leaders whomever they are threatened to out the companies and to use woke rules to destroy and deface the organizations if they did not donate to the BLM movement. No one knows just how those funds were used or where those funds are now. 83 billion could easily improve the lives of many who are struggling to pay off student loans. Fiduciary responsibility is truthfully at the core of all this. and I hope some where this is laid at the feet of the Biden BOYS all of them .. this has gone on too long 35 years is it that Biden has been on the Public dole. He had a lot of spare time to arrange and setup and manipulate all this and to finally believe he now sits in the Oval Office what a sham. Yea they don’t care none of them do they have been paid off the CCP has come calling with suitcases full of cash. And don’t forget old George, he is in the wings doing his worst as always.
You cannot say “black” and “white” anymore. You should have said “oppressed victim” and “racist oppressor” instead.
This all started with the Corporate Social Responsibility Reports. (part of the Agenda 21 movement, remember?)
Give them an inch and they’ll take a mile.
I don’t want any of my stocks in ESG initiatives. PERIOD!
It’s a very convoluted issue and the tentacles are many. While it started in the Defined Benefit plans in 2005, the forcing of ESG into Defined Contribution (401K) plans administered by the same companies is the root of this new debate. Many of the States who are disallowing their State and Municipal pension funds by instructing their money managers to stop ESG investing need to go a step further – they need to change their Investment Policy Statement to specifically disallow this type of investment as the money managers already have ESG factored into their Investment Products. UNPRI states that “Fiduciary duty is a contested term, with different definitions and different legal interpretations in different countries. In the US: A fiduciary duty is the legal responsibility to act solely in the best interest of another party. In the UNEP document Show me the Money – stated on page 4, by the chairpersons of this exercise, they believe the Trustee has, in the UN’s definition, three fiduciary responsibilities 1) is to make money; 2) is to applty ethical values…whether they make money or not; and 3) which connects this to AG21 -they are to channel investmebnt flows…consistent with the goals… in Agenda 21 or the Millennium Development goals:ShowMe 070706 HorizTable (unepfi.org)
If you are part of a Public or Corporate controlled 401K plan, attend Board meetings and express your dissatisfaction with ESG investing. If your are an independent 401K plan investor, choose Money Managers who are NOT signers of the UN Principals for Responsible Investment. unpri.org/signatories. Look at the companies these Money Managers invest in. Many Corporations have adopted ESG into their Corporate Principles. Al Gore sits on Apple’s Board. Look at the beliefs of all Board members of the companies you choose to invest in and understand their position on ESG. Be an educated investor. unpri.org/signatories. Look at the companies these Money Managers invest in. Many Corporations have adopted ESG into their Corporate Principles. Al Gore sits on Apple’s Board. Look at the beliefs of all Board members of the companies you choose to invest in and understand their position on ESG. Be an educated investor.
Are Democrats trying to do away with capitalism?? Or is it the country that they want to fail just like the banks are starting to?? All of the proposed changes here look to me like Joe isn’t doing his job, doesn’t know how to do his job and is bankrupting the country!! The problem is that Joe and his crime family will be fine, they have lots of money from all of these foreign countries he plays footsie with all the time!!! Joe and Democrats don’t care about the national debt or the out of control spending that is happening!! We need an actual budget for the federal government that they are required to stick to – no more raising the debt ceiling, period and if any Democrat even suggests that as a possibility, they should be fired immediately!! We need some fiscal responsibility from our elected lunatics!!!
Not due away, but control who gets to be a capitalist.
Mr traitorous Biden needs to be removed from office; and his budget needs to be killed ASAP!
How does this bode with investors in the government-controlled Thrift Saving Plan?
How about putting the mask on government and force it to stay away from business far enough so it can’t touch Let business take care of it self If it fails so be it let it get up again I can hear a howl from both sides they both go hand in hand now unfortinately in the wrong direction
We both know how this ESG nonsense is going to play out in the end. Of course it is going to lead to tons of lawsuits when the value of their retirement and investment funds invested in this [email protected] significantly underperforms the market. The trial lawyers, a major donor block of the Democrat Party, will be making money hand over fist as their clients struggle to get by on the lower value of their life savings come up short.
On the corporate side, the effect of ESG is already being seen in several sectors of the economy. Lower rates of return, less innovation, increase overhead due to higher administrative costs, and less profit in the end to either compensate shareholders, expand the business or diversify into new market segments. Again, trial lawyers will be the big beneficiaries as shareholders of all types, who don’t opt to simply sell their shares in the company instead opt to sue the company via some class action lawsuits. In either case, the company becomes less attractive as an investment and its share price tanks over time. That in turn makes such companies less attractive as a place to work. The ripple effect of this ESG lunacy has quite a broad reach.
Joe Biden wants to make it mandatory that all retirement and most investment funds adhere to ESG rules. Instead, it should be illegal for any broker, professional investor or other companies that claim to be fiduciaries.to do so unless they give full disclosure that they follow ESG rules.
I will NOT comply with FASCIST ESG garbage.
This is the United States of America.
NOT Communist China and DICTATOR Beijing biden’s ESG Score would be at the bottom just like the rest of his administration and policies.
He couldn’t even get a positive ESG score since he is KING OF RACIST and supports Communist China.
To top it off…ESG garbage is Unconstitutional.