Is environmental, social and corporate governance (ESG) illegal?
By Justin Danhof, Strive’s Head of Corporate Governance
Oct. 25, 2022
In his first novel, “Crome Yellow,” Aldous Huxley warned: “[t]o be able to destroy in goodconscience, to be able to behave badly and call your bad behavior ‘righteous indignation’ —this is the height of psychological luxury, the most delicious of moral treats.” ESG(environmental, social and corporate governance) has reached such a height of psychologicalluxury that it’s frankly becoming illegal.
For example, in May, under the banner of promoting ESG, nearly 50% of Travelers Insuranceshareholders asked the company to break the law. Full stop. Specifically, about 47% of itsinvestors backed a shareholder proposal that would have caused the company to collect andconsider race when writing insurance policies, in direct violation of state law.
How did we get to a point where nearly half of an insurance company’s investors want the company to break the law? It’s complicated but critically important to understand just how the ESG movement operates.
Under corporate law, shareholders in public companies are allowed to submit proposals at the company’s annual meeting, which then get voted up or down by shareholders. Historically, these proposals were uninteresting: Should we have term limits for directors? Should we stagger the board?
In the past few years, this process has been co-opted by ESG activists trying to force companies to align their business activities with their activist agendas. Activists have told Exxon Mobil to stop drilling for oil; they’ve told Walmart to support abortion; they’ve told Twitter to do more to censor so-called hate speech. But until recently, ESG activists have not typically asked companies to break the law.
Read the full article on Washington Times.