Shareholder proxy advisors are guiding trillions of state pension and treasury money toward woke agendas that put liberal ideals ahead of performance, according to the American Accountability Foundation.
Most notably, this includes environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) principles, neither of which has been proven to boost investment returns.
Liberal states may be aware that their capital is being invested according to far-left principles, according to the Foundation. However, at least 10 traditionally conservative or moderate states — including Michigan, Florida and Arizona — have relied on the advice of these liberal advisors in the past two years.
What’s even more troubling is that individual investors are also unaware of these unprofitable, radical ESG and DEI guidelines. Some investment experts are even beginning to say that not only are these principles not as advisable as traditional investing guidelines, but that they are unprofitable and put trillions of retirement savings at risk.
Proxy companies’ recommendations affect stock holdings by giant institutional investors of the nation’s biggest and most influential companies, including Amazon, Bank of America, Citigroup, Goldman Sachs, JPMorgan, Delta, United Airlines and Johnson & Johnson.
By association, and due to the trillions of investment dollars at stake, it impacts how these major U.S. companies are run.
The duopoly power of two of the biggest proxy advisors, Glass Lewis and its larger competitor, Institutional Shareholder Services (ISS), is shocking.
The two companies control an estimated 91% of the proxy voting business, the American Accountability Foundation estimates. As proxy advisors, Glass Lewis and ISS advise institutional investors on how to exercise the shareholder votes to which, as holders of millions of stock in corporate America, they are entitled.
Combined, these two proxy voting companies are guiding at least $135 trillion in assets. For Glass Lewis, that’s $35 trillion, according to the Harvard Law School on Corporate Governance. ISS does not disclose the size of the investments it influences, but its Simfund platform of mutual funds and exchange-traded funds covers $100 trillion in assets.
“Glass Lewis — one of the most important companies you’ve never heard of — is leading the move of the radical left to co-op Wall Street to push ESG policies at American companies,” says American Accountability Foundation President Thomas Jones.
“Woke activists on Wall Street are using your money to advance their agenda,” Jones says — thereby threatening American jobs and stoking “further division in this country.”
Instead, Jones says, what Glass Lewis and ISS should be doing as top proxy advisory firms, is honor their fiduciary duty to focus on shareholder returns of the massive pensions and state funds they advise.
Glass Lewis has “weaponized shareholder resolutions” with its “ideological bullying to shame individuals and companies that support conservative groups and causes,” as the American Accountability Foundation says in its report, “Proxy Wars: Glass Lewis.”
So what are the radical, anti-shareholder ideas that Glass Lewis is recommending?
Glass Lewis is telling shareholders of publicly traded companies to vote on: environmental audits, pay parity, racial equality, board gender and diversity mandates, LQBTQ management representation, anti-handgun measures and dissident board members.
In many instances, these ideas are completely at the exclusion of profit-seeking agendas.
As Neil Whoriskey, an attorney at Cleary, Gottlieb, Steen & Hamilton chastises Glass Lewis, says, special interests are “bludgeoning corporations to accept the new civil code of corporate governance law.”
The Securities and Exchange Commission has tried to step in to moderate these proxy voting ideas and their impact on pensions and other retirement plans since 2003. However, with changes in presidential administrations, the SEC has not been effective in de-weaponizing shareholder resolutions.
Undeterred, Glass Lewis has told companies it tracks that if they fail to follow its ESG and racial equity principles, they may lose investments and be examined by regulators.
Clinton, Sanders Supporters
American Accountability Foundation did a deep dive into the makeup of the key players at Glass Lewis and discovered a multitude of information about their radical beliefs from their prolific posts on LinkedIn and social media.
Many Glass Lewis execs individually support transgender surgery, the Paris Agreement, and anti-Christian and pro-abortion policies. They overwhelmingly support and have made political donations to Hillary Clinton, Nancy Pelosi, Maxine Waters, Adam Schiff, Kamala Harris, Bernie Sanders, Pete Buttigieg and John Fetterman.
They espouse Black Lives Matter and legal marijuana. Some of their ideas are astonishing, like being anti-Thanksgiving, or wanting animals in state parks to be masked during the COVID pandemic.
A handful of Glass Lewis executives are against the United States Constitution, and at least one wants the American flag to be redesigned.
Performance: The Bottom Line
Political and ideological beliefs aside, the most important question to ask about how Glass Lewis and ISS are influencing trillions of institutional money is: Does it have a negative impact on the performance of the funds whose proxy votes they advise?
According to investment experts and economists, the answer is, yes. ESG, DEI and other radical ideas being overlaid onto pensions and retirement plans, and state treasury coffers, are costing American taxpayers and retirees hard-earned money.
As Mike Edleson, former chief risk officer of the University of Chicago’s endowment, and Andy Puzder, a Heritage Foundation senior fellow, explain in “Is ESG Profitable? The Numbers Don’t Lie” in The Wall Street Journal:
“Companies that focus on profits outperform those that don’t, as common sense would suggest. Asset managers won’t maximize shareholder returns if that isn’t their focus. It’s hard enough to generate profits and returns when that is your focus, let alone when you’re trying to change the world.”
Vanguard CEO Tim Buckley concurs: “Our research indicates that ESG investing does not have any advantage over broad-based investing.”
According to the Harvard Business Review, “Researchers at Columbia University and London School of Economics found that companies added to ESG portfolios did not subsequently improve compliance with labor or environmental regulations.”
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