Woke CEOs are undermining the democratic process

OPINION:

One petty tactic seen too often in modern politics is a finger-pointing game to decide which party is “pro-democracy” and which is the “threat to democracy.”

Former President Trump has often been the golden target in the left’s “threat to democracy” game, especially after challenging the results of the 2020 presidential elections. Unsurprisingly, however, the left had no qualms when defeated 2016 candidate Hillary Clinton said, “I think that there are a lot of questions about [the election’s] legitimacy” and called upon an independent commission to “get to the bottom of what happened.”

Likewise, liberal rising star Stacy Abrams still refuses to admit the legitimacy of her loss in the 2016 Georgia gubernatorial election, sourly claiming that “what happened is that we have watched systematic erosion of our democracy.”

Beyond such partisan cat-fighting, however, the left has another, slyer way it belies its rhetorical commitment to democracy: its embrace of Environmental, Social, and Governance (ESG) investing.

ESG investing isn’t a “sexy” topic, which explains the lack of media attention it receives. But this investment strategy is becoming common practice among the Wall Street oligarchy and is slowly undermining our democratic process and taking policy-making power away from the American people.

ESG investors portray themselves as politically neutral forces attempting to make companies greener, fairer, and more honest through “ethical investing.” But this is only a guise. In reality, their efforts are often hard-left initiatives that would, among other things, return race- and sex-based discrimination to American corporations while bankrupting them in the pursuit of agenda-driven zero-carbon targets based not in economics or science but in hysteria.

ESG investing undermines the idea that business is to be conducted primarily for the benefit of the shareholders – the company’s true owners – and instead claims to consider the interest of all possible stakeholders (consumers, employees, the community, the environment, etc.)

But pleasing all stakeholders is impossible because all stakeholders don’t agree on what companies should do, even within each stakeholder category. What this new model really creates is an ability for C-suite business executives to enact any policy they see fit to satisfy their own agendas, whether that be political or social, and then cherry-pick which one of these so-called “stakeholders” is the beneficiary of the implemented policy.

Take, for example, top-tier wokester Larry Fink, the CEO of BlackRock. In a 2021 letter, Mr. Fink declared his intention to use BlackRock investors’ assets to force companies to achieve net-zero carbon emissions by 2050. His analysis failed to consider the tremendous costs that the goal would entail and its technical uncertainty. Nor did he consider the marginal value of this goal: Even if the United States reaches net-zero, only about 15% of global 2020 emissions would disappear, while China continues to build more coal plants than the rest of the world combined.

The mega asset management firms like BlackRock, Vanguard, UBS Group, and State Street, who are entrusted to make decisions for millions of investors, are now making big collective decisions about how the nation should function.

As a result, these corporations play a much broader role in influencing decisions regarding environmental issues, workers’ rights, racial equity programs, and other important political topics that ought to be decided through our democratic processes. Because these asset management companies are so enormous, their wishes – the wishes of their CEOs, actually – are becoming nationwide commands.

This leads to unchecked power for CEOs and corporate board members while skipping over any kind of democratic process in policy-making – like passing legislation in state and federal lawmaking bodies.

This is a true threat to the democratic process. Whenever power is delegated away from the elected members of a republic, the citizens themselves are the ones losing power in deciding our collective direction. The left seems entirely fine with this, so long as ESG activists embrace all of its goals. But if it truly cared about “democracy,” wouldn’t it denounce putting policy-making power into the hands of a few billionaires on Wall Street?

ESG investing guises itself as a sustainable form of capitalism to hide its true face. In reality, it’s nothing more than a plan to divest power away from constitutional lawmaking bodies and corporate shareholders while allowing self-righteous CEOs to pose as saints on the moral high ground and enact leftism that stretches far beyond the purview of their companies.

• Davis Soderberg is an associate for the Free Enterprise Project at the National Center for Public Policy Research. Follow him on Twitter @soderberg_davis