20 Years of ESG Activism

The 20th annual Proxy Preview was recently released. As in past years, it provides a detailed window into the coordinated and largely left-leaning campaign to use environmental, social, and corporate governance (ESG) shareholder resolutions to pressure major corporations into involving themselves in controversial and politically divisive sociopolitical issues—a phenomenon that critics sometimes call “woke capitalism.”

Notable Resolutions

The 100-page report is available for free on the Proxy Preview website, though an account is required to view it. It is published by As You Sow—a Berkeley, California-based 501(c)(3) nonprofit that is probably the most prominent ESG shareholder activist group in the country—in conjunction with the Sustainable Investments Institute and Proxy Impact. The report is extensive and covers more material than can be summarized, so readers are encouraged to browse it for themselves. Still, for those interested in developments surrounding ESG activism, a few highlights appear worth remark.

According to the Proxy Preview, at least 527 resolutions have been filed thus far in the 2024 proxy season, which is only slightly lower than at this point last year. Notably, it observes that support for ESG shareholder resolutions has “fallen substantially on average in the last two years, largely because the biggest asset managers have stopped supporting as many proposals.” It attributes this decline to a combination of anti-ESG pushback, the nature of the specific ESG resolutions being filed, and broader macroeconomic factors. The report singles out artificial intelligence (AI) as one of the most notable new resolution topics this year.

As in recent years, climate change remains the single largest topic, and reducing emissions is the primary issue being raised with corporations. Other climate resolutions asked companies about a “just transition” away from traditional energy, with the United Steelworkers labor union requesting reports from Chevron and ExxonMobil on how those companies could mitigate the alleged “social impact on workers and communities from closure or energy transition” at their facilities.

Interestingly, ESG activists appear to have backed off some of their most extreme climate proposals from recent years: those asking banks to stop financing new oil and gas projects. The Proxy Preview concedes that such resolutions have proven unpopular with shareholders, and this year’s resolutions focus instead on getting financial institutions to report on their “carbon finance” activities. This of course reflects tactical and practical considerations, rather than any shift in the broader antipathy that ESG activists harbor toward humanity’s most important energy sources.

Resolutions concerning “racial justice,” which spiked in the aftermath of the 2020 Black Lives Matter protests, continue to be submitted. One filed at AT&T by the Nathan Cummings Foundation asks the company to commission a third-party “racial equity audit,” in part because AT&T has reportedly given money to certain police foundations and the National Sheriffs’ Association. The Nathan Cummings Foundation’s resolution claims that “many police departments demonstrate not only implicit bias but outright racism.”

Multi-issue “values congruency” resolutions also continue to be filed. These proposals purport to highlight contradictions between what companies say and do on issues of sociopolitical relevance. For example, the Walt Disney Company received a resolution from the Educational Foundation of America asking the company to report annually on “the congruence of Disney’s political and electioneering expenditures” with its “publicly stated company values and policies.” Disney responded that the resolution “does not enhance shareholder value” and that it was instead “designed to serve the particular interests of the proponent.”

A theme that is evident across several ESG shareholder resolution categories involves attempts to hold companies responsible for impacts that are largely beyond their direct control. This is characteristic of proposals asking companies about their Scope 3 emissions. Green Century Capital Management filed resolutions at Tractor Supply Company and Walmart asking the corporations to report on emissions produced through the use of their products. As You Sow filed a resolution at Altria Group asking it to report publicly on how it could take responsibility for cleaning up cigarette butts improperly discarded by smokers.

Several resolutions ask companies about their ties to authoritarian countries such as Russia and China. More controversial—particularly following the October 7 Hamas terrorist attacks and the resulting Gaza conflict—are those that target business connections with Israel. The School Sisters of Notre Dame allege in a resolution at RTX Corporation that the weapons the company sells to Israel are being “used to maintain the system of apartheid.” Amazon is also facing a resolution from the American Baptist Home Mission Society, which claims that the company’s products “support the apartheid system under which Palestinians are surveilled, unlawfully detained, and tortured.” It also refers to allegations that the Israel Defense Forces, as a significant Amazon customer, may have committed war crimes “since October 7, 2023.”

Amazon also received an eyebrow-raising resolution from People for the Ethical Treatment of Animals (PETA), which is opposed to what it calls the “human-supremacist worldview” of “speciesism.” PETA asked Amazon (specifically its Whole Foods subsidiary), to report on the feasibility of ending all coconut milk imports from Thailand. PETA claims that the Thai coconut milk industry relies on “forced monkey labor” to harvest coconuts from tall trees, and it wants Amazon to boycott the country until the industry transitions to “monkey-free harvest methods.” Somewhat relatedly, the Physicians Committee for Responsible Medicine filed at least eight resolutions at health care companies and airlines concerning vegan meal offerings. One submitted to Encompass Health Corporation asked the company to make “plant-based meals the default option in all food service settings, other than for patients who have special dietary exclusions.”

Filers

The Proxy Preview features a series of tables that break down resolutions by category, those who filed them, and company. As You Sow was listed as having filed 54 resolutions, making it the report’s single most prolific proponent. As of late March, its website listed 79 resolutions in which it “represents investors” this year, although not always as the lead filer.

The remaining organizational proponents featured in the Proxy Preview are eclectic, illustrating the wide assortment of groups engaged in ESG activism. Frequent left-of-center filers include the massive public pension plan New York State Common Retirement Fund (21); the faith-based asset manager Mercy Investment Services (17); the Accountability Board (16), a relatively new ESG activist group heavily funded by Dustin Moskovitz and Cari Tuna through their Open Philanthropy organization; an ESG-oriented investment firm called Arjuna Capital (16); and the national labor union federation AFL-CIO (14). Right-of-center resolutions were primarily filed by the National Center for Public Policy Research and the National Legal and Policy Center.

Not every ESG resolution is readily classifiable as ideologically polarizing or politically divisive, but most of them are. The Proxy Preview notes what it calls “a tiny slice of common ground” between Right and Left on concerns about companies doing business in communist China. In that vein, for the second year in a row the Proxy Preview has used the term “anti-ESG” for the right-of-center resolutions that it profiles, having previously for many years used the term “conservative.” While “anti-ESG” might indeed be a fair characterization, it also implicitly concedes the conservative point that in practice ESG is synonymous with left-of-center ideological activism. This in turn undercuts the argument routinely made by ESG advocates: that their campaigns are merely about securing more information for investors and helping companies make better business decisions. If ESG is ideological by definition, that means there is a clear case for eliminating it from corporate America.

Funders

The Proxy Preview also claims that “many anti-ESG groups appear to receive funding from dark money sources” connected to Federalist Society co-chairman Leonard Leo. Putting aside the difficulty of defining what is or is not “dark money” in an era of fiscal sponsorships, donor-advised funds, and politicized charities, this assertion makes it worth briefly examining the finances of some of the most notable pro-ESG nonprofits from the report.

In 2022, As You Sow reported just over $8.5 million in total revenue. Its most important funders since 2020 have been the Open Society Foundations and the Foundation to Promote Open Society—two gigantic foundations established by liberal political megadonor George Soros—which have given it a combined $1.7 million. Other major organizational donors to As You Sow since 2020 include the Stephen M. Silberstein Foundation (almost $1.05 million), the Energy Foundation ($800,000), the Wallace Global Fund ($740,000), the Roddenberry Foundation ($700,000), ImpactAssets ($668,000), the Oak Foundation ($600,002), the Tara Health Foundation ($550,000), and the Tides Foundation ($495,000). It has also received $230,000 from the New Venture Fund, part of the gigantic political “dark money” network managed by Arabella Advisors.

The New Venture Fund has also given heavily (over $4.3 million from 2020 to 2021) to the ESG activist group Ceres, which the Proxy Preview credits with having coordinated most of the climate change resolutions profiled in the report. Ceres had total revenues of over $31.6 million in 2022, and some of its other major funders include the ClimateWorks Foundation ($9.03 million from 2020 to 2022) and the MacArthur Foundation ($6.5 million from 2020 to 2022). The Bloomberg Family Foundation, established by billionaire Michael Bloomberg, gave Ceres $4.4 million from 2020 to 2022.

As You Sow also apparently assisted with a series of shareholder resolutions filed this year by Amalgamated Bank. While it may seem strange for one public company to engage in shareholder activism at another, Amalgamated Bank is no ordinary public company. Billing itself as “America’s Socially Responsible Bank,” it is an explicitly ESG-focused financial institution that employs its considerable resources to support “sustainable organizations, progressive causes and social justice.” The Democratic Party and its associated campaigns and political action committees are some of the bank’s most important clients. As of 2022 the labor union Workers United, a Service Employees International Union (SEIU) affiliate, owned approximately 41 percent of the bank’s equity. Amalgamated Bank is also affiliated with the Amalgamated Charitable Foundation, a 501(c)(3) grantmaker and donor-advised fund provider that paid out $167.6 million worth of functionally anonymized grants primarily to left-of-center activist groups in 2022.

Two Decades Hence?

Shareholder resolutions are an excellent barometer for understanding the trends and priorities underlying the ever-increasing demands that left-of-center ESG activists are making of public companies. This has in turn helped drive a problematic shift within corporate America, whereby businesses are involving themselves in divisive and controversial issues that are more properly handled through the political process.

The publishers of the Proxy Preview, of course, see things differently. They call those who are concerned about ESG activism “regressive thinkers” or even “extremists.” As the report notes, the story of the last 20 years has largely been one of advances for left-of-center ESG advocates. Time will tell if increased public and legislative scrutiny—including Republican-led congressional antitrust investigations of As You Sow, Ceres, and other organizations—will herald a reversal of those trends over the next two decades.