Become a voice in corporate America

After a long period of apathetic disengagement, Christians are now aware that the process by which publicly traded corporations make decisions about political and cultural issues has been captured and exploited by interest groups with a worldview antithetical to theirs. That happened because the left showed up and Biblically grounded Christians did not.

The former days of blissful ignorance are over. Disney woke the sleeping beauty that is the American church. I have repeatedly urged Christian shareholders to get past impotent outrage and use the authority we already have but have neglected to use. In response, readers have asked, “How exactly can I use my vote when I’m not invested directly in companies but through investment funds like the ones managed by BlackRock, Vanguard, and State Street?”

The answer is, “You can’t use your vote.” When you use an investment fund, you give your vote away. The only way to take back that vote is to take your money out of the fund and buy the companies directly. In the financial industry, this is known as “direct indexing.” Investors who like a specific Vanguard or BlackRock fund because of its investment approach but do not like what the company does with their votes can have an equivalent portfolio built for them but one in which they retain ownership of the shares directly. By doing this, they take back their voice. That is because share ownership does not typically confer only the right to vote, it also confers the right to attend annual meetings and ask questions. The only direct indexing solution of significant scale that works from a Biblical worldview base of which I’m aware is Access Portfolios by Ronald Blue Trust. Full disclosure: I consult with that entity.

In addition, investors whose stake is large enough have the right to propose a resolution. In my experience, such proposals have always led to serious engagement about the issue with the company’s managers. For example, I’ve worked with David Bahnsen (who is likely familiar to listeners to The World and Everything in It). He has formally proposed several resolutions, including ones already confirmed to appear on the Exxon and McDonald’s ballots this season. Every one of his proposals has led to extensive engagement with company management. It’s a powerful tool that only works when the investor has control. Resolutions help us move from the status quo in which we respond to their agenda and make them react to ours.

Some conservative financial officials have made public announcements about firing BlackRock. But firing BlackRock is not enough. BlackRock has gotten a lot of negative publicity among conservatives because its CEO, Larry Fink, has been very outspoken. But on controversial issues such as decarbonization, divestment from pro-life states and politicians, and resolutions pertaining to funding Planned Parenthood and similar groups, the other large asset managers are just as bad or worse. Despite its more vanilla political branding, Vanguard, by some measures, has been voting to the left of BlackRock. Vanguard’s CEO has recently made public statements distancing the company from the ESG (environmental, social, and governance) agenda. OK, but as Ronald Reagan said, “Trust, but verify.” Until then, skepticism is warranted. Much of the process is nontransparent, and ideology has become deeply embedded in the culture of these prominent money managers.

Of course, Christians could just put their money with Christian or conservative funds. However, for the most part, those funds do not focus on voting their values but instead on excluding companies from the portfolio that do not share those values. The issue of screening is debatable, but what isn’t debatable is that every time a fund bans a company like Disney from the portfolio, it loses its authority to vote on Disney’s proxies.

Furthermore, when the managers focus on screening, not engaging, often their voting patterns on the companies that they do hold are as bad as, or even worse, than those of the BlackRocks or Vanguards. It’s not that the companies don’t have the right values, it’s just that they focus on reflecting their values in the exclusion decision, not the voting one. However, there is some encouraging news: Some Christian investment firms are aware of the issue, know that they have catching up to do, and are pivoting toward diligence in voting their shares.

But as of now, the simplest way to get something like Vanguard- or BlackRock-type investing but without Vanguard- or BlackRock-type politicking on your dime is to own shares directly and take back your vote and your voice from ideologically unfaithful stewards.