New research shows trillions leveraged to advance ESG/DEI in public companies

1792 Exchange analyzes latest proxy voting data from 2023, ranks states’ retirement funds on ESG pressure on the world’s largest public companies.

Press Release: JDA Worldwide for 1792 Exchange
April 1, 2024

DAYTON, OH — 1792 Exchange’s latest research includes three sections:

• The 2023 shareholder resolution proxy voting records of all 50 states‘ public retirement funds managing trillions of dollars. States are ranked by ESG support.
• The 2023 proxy voting records of over 100 Asset Managers serving the states.
• 2024’s upcoming shareholder resolution “Votes to Watch”

The data demonstrates how asset managers and state retirement funds either promote or oppose harmful ESG and DEI agendas, including with taxpayer dollars. Alarmingly, most Americans do not know that their retirement dollars are being leveraged to promote controversial agendas, while diminishing their return on investment, harming the economy, and undermining our political process.

“If you’re a state legislator, use this database to show the need for reform. If you’re a state employee, call your fund and ask about their proxy vote policy. If you’re in a private retirement plan with a politicized asset manager, demand change and vote your own proxies if possible,” said 1792 Exchange CEO Daniel Cameron.

The database shows that the retirement funds in many red states are being leveraged by asset managers and proxy advisors to push radical agendas. For example, Goldman Sachs fended off three different proposals aimed at restricting lending to oil and gas and reducing the GHG emissions of its customers by 2030, a move that would blacklist thousands of profitable businesses. AT&T, Walmart, and others were asked to perform racial equity audits. A Chevron proposal, supported by pension funds of California, Illinois, New York, Maine, Rhode Island, and Washington, sought to target the corporation’s tax practices.

These are but a few examples of the tens of thousands of votes detailed in the 1792 Exchange Proxy Voting database that distract businesses from “getting back to business.” Surprisingly, Mississippi, Idaho, Missouri, Kentucky, Arkansas, North Carolina, and Ohio all voted for more of these proposals than California.

“These state pension funds and their investment managers control trillions of dollars and can sway all of corporate America when they act in concert,” Cameron added. “They can leverage their beneficiaries’ money to change boards, force behaviors, and promote divisive agendas. Now, more than ever, it is essential to help corporations get back to business and steer their decision-making away from political and ideological agendas. We encourage the pension funds and asset managers named in this report to stop pushing ESG agendas with their beneficiaries’ money and for lawmakers to ensure taxpayer dollars are invested only to maximize returns.”

ESG on the Decline

Overall, the data demonstrate a decrease in support for ESG shareholder proposals. After last year’s report, asset managers were less supportive of ESG shareholder resolutions. This was due to new legislation, concurrent investigations, and backlash against ESG led by Republican Attorneys General, State Treasurers, and some legislators. BlackRock, State Street, and Vanguard reduced their support for ESG from 30%, 50%, and 21% in 2022 to 7%, 18%, and 6% respectively. Because of asset managers’ reduction, the average support by states dropped from 40% to 21% year over year.

Red states led the way in pushing back on ESG proposals. Tennessee, Connecticut, and Arizona reduced their ESG support the most. Meanwhile, Florida, Wisconsin, North Dakota, and Virginia supported the most anti-ESG measures meant to re-focus businesses.

To educate asset managers, proxy advisors, state legislatures, state treasurers, governors, pension boards, and pension staff collectively responsible for public retirement dollars, 1792 Exchange published hundreds of upcoming proposals at public companies’ annual shareholder meetings in 2024. Despite vote support for ESG being diminished, stakeholder activism continues, and many money managers are still supporting hundreds of progressive proposals with states’ and individuals’ money.

Lack of Transparency, Accountability, and Action

Transparency and accountability remained a major problem in 2023. Only 19 states’ pension funds publicly disclose their proxy voting records on the stocks they own directly.  

“Many state pension funds are withholding proxy voting records from constituents and are enabling politically motivated asset managers and proxy advisors to support leftist agendas with public funds,” Cameron went on to say. “This misuse of taxpayer dollars can deflate investment returns. State legislators and state officials should carefully scrutinize and correct this practice and learn from the steps that other courageous states have already taken.”

Texas began the legislative efforts to regain control of state funds in 2021, preventing the state from contracting with companies discriminating against the oil, gas, coal, and firearms industries. In 2022, four states passed similar laws. In 2023, 15 states enacted laws defining fiduciary duty for pension funds which prevent investing for ideological purposes, several on contracting, and one regarding insurance. To date in 2024, four states have new laws enacted or awaiting the governor’s signature.

The legislative efforts are a good start, but more is needed. Governors and those with the requisite authority must appoint responsible pension board members who put the beneficiaries and the state first. And the pension boards must hire staff who are not loyal to the financial services industry’s interests.

To view the full Spotlight Report: Proxy Voting database, click here.

1792 Exchange is a 501(c)(3), educational, non-profit organization whose mission is to preserve freedom by partnering with allies to steer public companies back to neutral on ideological issues. They create Spotlight Bias Reports, policies and resources that expose coercion and corporate bias. They protect First Amendment freedoms and ensure all viewpoints have a seat at the table. They help corporate board members and executives maximize shareholder value, respect stakeholders, return to cultural neutrality, and serve customers with excellence and integrity. They also educate Congress, other leaders and the American people about the dangers of stakeholder capitalism to safeguard Free Exercise, Free Speech and Free Enterprise.