The right finally exercises its rights

One of the most interesting developments in financial markets this year has been flying largely under the radar screens. It is the surge in conservative, often Christian, engagement with corporate America. Why this surge? During the past several years conservatives have been repeatedly shocked by the degree to which public companies have engaged in one-sided political and moral pandering.

There were the threats against workers in states that passed religious freedom and heartbeat bills. Then came threats against states that protected girls from the intrusion of male competitors into their sports and minors from sexual reassignment medical procedures. Disney’s blundering, tone-deaf defense of including gender fluidity in kindergarten curricula was probably the largest trigger event in an ongoing conflict that is simultaneously destroying both cultural values and share price values.

Conservative outrage against corporate America is, understandably, at high tide. Outrage does have its God-ordained role to play, but that role is limited. Ultimately, outrage is at best a starting point for action. Otherwise, it is just another form of useless worry that adds not a single cubit to our life. The practice of conservatives talking to other conservatives on conservative media at a safe distance from the frontline doesn’t accomplish much on its own. You can’t change people just by talking about them, but never talking to them. And the most powerful position from which to talk to the corporations that stray off-mission is the role of owner.

That’s why the left, which is far more expert at leveraging power than the right, has largely moved away from boycotts and towards the use of proxy power. The left uses the institutions of shareholder capitalism to undermine shareholder capitalism. This is what is behind the ESG movement. This is how Blackrock was able to bring about a revolution in corporate boardrooms away from shareholder centrism, which is grounded in nothing more or less than the principle of private property applied in publicly traded markets. It is time those who believe in private property actually use their private property rights, which include the rights to vote at annual meetings and even to place proposals on the ballot for other shareholders to vote on.

And that is what is starting to happen now, as the annual meeting season for 2023 is commencing. As You Sow, which is the chief coordination point for the stakeholder capitalism/ESG movement, recently reported that the fastest-growing category of proposals coming from shareholders (as opposed to proposals coming from company management) is what they call “anti-ESG” proposals. This is their description of proposals coming from conservative groups.

As You Sow estimates that there were roughly 50 proposals coming from the right this year. Scott Shepard of the Free Enterprise Project (the chief coordination point for conservative shareholder activism) thinks that number is closer to 100. But whichever estimate one uses, the trend is undeniable, conservative engagement with companies is growing much more quickly than that from the left. Much of that conservative engagement is coming from Christians.

Topics are varied. A major theme this year will be viewpoint diversity and religious freedom. There are proposals on this topic on the ballot at JPMorgan Chase (triggered by the debanking of Ambassador Sam Brownback’s religious freedom non-profit), PayPal, Capitol One, Mastercard and perhaps others. Other topics include proposals for companies to study the risk of decarbonization, which will appear on Exxon and Chevron ballots, and which are particularly apt given the actions taken by Blackrock to elect anti-fossil fuel board members at those companies.

Other proposals ask companies to count the cost of getting drawn into hot-button political topics. Reverse discrimination is a major theme this year. Companies that have inserted Critical Race Theory concepts into their diversity training programs are being asked to evaluate the risks involved. Are they violating their own stated anti-discrimination rules when they tell employees to “be less white” or to check their (Christian) “religious privilege”? Are they violating the law? Are they hurting their brand?

Let’s be clear. It is highly likely that all these proposals will fail in the short term. Management opposes them. The large asset managers oppose them. The proxy advisory services oppose them. But what they accomplish for the sake of future return is to turn a one-sided monologue into an actual debate. Don’t ever underestimate the power of truth in a debate.

If you’re a shareholder in some of the large well-known companies, you likely have an opportunity to use your voice this year. If you have delegated proxy voting to your advisor, insist that it be given back to you. It’s your right. Read the section under “shareholder proposals.” Use the “control number” the company sends you, log on, vote, and ask questions. Speak to the people you want to change. Don’t just talk about them.