Organization Trends

Shareholder Activism: Woke Capitalism from the Inside

A new report made by and for activist shareholders provides a window into the world of woke financial pressure campaigns.

Conservatives are rightly vexed by “woke capitalism,” exasperated at the ways in which big American corporations are increasingly weighing in on sociopolitical issues—invariably, it seems, in favor of the progressive left. Certainly, many businesses are under pressure to do so.

Sometimes that pressure is open and public. Indeed, it can make national news. But other times it is less so. Many Americans are likely unaware of the coordinated campaigns by shareholder activists—equity owners in a corporation interested in something other than financial gain—to insert their political priorities into those same corporate boardrooms through environmental, social, and corporate governance (ESG) shareholder proposals.

In his recent and timely book The Dictatorship of Woke Capital: How Political Correctness Captured Big Business, Stephen R. Soukup calls shareholder proposals “the primary tool of the corporate activist”—and for good reason. Any shareholder, provided they meet certain requirements, may submit proposals to corporate management to be voted on by other shareholders at the company’s annual meeting. These are typically written in the form of a request or recommendation. Large institutional investors (index funds, public pensions, etc.) hold outsized voting power, and many rely on third-party advisory services for recommendations on how they should vote.

Activists, keen on influencing powerful companies to adopt their sociopolitical priorities, buy shares in corporations simply to file proposals that further those priorities. Importantly, the objective isn’t always necessarily to win a majority vote. Proposals that fail, yet still receive substantial or increased support, signal momentum on a particular ESG issue and put pressure on management. Sometimes a company will elect to negotiate on a proposal beforehand to preempt such a vote.

The 2021 Proxy Preview

The 2021 proxy season—the period during which many corporations hold their annual meetings—is in full swing, and nowhere is the extent of ESG shareholder activism more apparent than in the Proxy Preview 2021 report (available from Politico here). Considered the “Bible for socially progressive foundations, religious groups, pension funds, and tax-exempt organizations,” it details hundreds of ESG proposals filed for this year’s proxy season, with proposal statuses current as of mid-February.

The report also provides a useful overview of the people and organizations most heavily involved in progressive ESG shareholder activism. Dozens of proponents—nonprofits, labor unions, asset managers, and others—submitted proposals, many of which were in turn coordinated or otherwise supported by additional groups. The report singles out the American Federation of State, County & Municipal Employees (a labor union) and four nonprofits—the Interfaith Center on Corporate ResponsibilityCeres, the Center for Political Accountability, and the Investor Environmental Health Network (a program of Clean Production Action)—for particular acknowledgment.

One group that produced Proxy Preview 2021 was also the report’s most prolific proposal proponent: a 501(c)(3) nonprofit called As You Sow. It is probably the most well-known shareholder activist nonprofit in the country. According to a tracker on its website, as of mid-April it had filed 76 ESG resolutions with 65 public companies for 2021.

As You Sow’s 2020 annual report disclosed $11.8 million in revenue, with approximately 96 percent coming from “foundation and sponsorships” sources. As a 501(c)(3) nonprofit, As You Sow is not required to publicly disclose its donors, but some larger ones in recent years include the Wallace Global Fund, the Stephen M. Silberstein Foundation, the Roddenberry Foundation, the Park Foundation, and the Battery Foundation.

The Proxy Preview report breaks down proposals into each of the three ESG categories, along with numerous subcategories, and these provide a comprehensive elucidation of woke capitalism’s vision for corporate America. Just two of the report’s 92 pages are given over to 23 “conservative” proposals—an illustration of just how ideologically one-sided the world of ESG shareholder activism is. Most conservative proposals came from the National Center for Public Policy Research and its Free Enterprise Project, headed by Justin Danhof, a prominent national expert on the issue.

Although readers are encouraged to browse the report for themselves, a brief sampling of proposals gives a good sense of what America’s public companies have been facing from ESG shareholders this year.

Environmental Proposals

Dozens of proposals were filed on climate change—the dominant environmental issue—and the report notes that the 501(c)(3) nonprofit Ceres “coordinates nearly all these proposals.” At least 18 companies—including CarMax, United Parcel Service (UPS), and Domino’s Pizza—received proposals seeking a report on how each intends to reduce its “contribution to climate change and align its operations” with the Paris Agreement. Major energy producers like Chevron, Phillips 66, and ConocoPhillips were targeted by proposals on reducing greenhouse gas emissions.

The “biggest new development on climate change,” the report notes, is a campaign called Say on Climate, which is an initiative supported by billionaire British hedge fund manager Chris Hohn’s Children’s Investment Fund Foundation. It campaigns for companies to issue net-zero emissions transition plans and then submit those plans to annual shareholder review. It is an international campaign, and the U.S. effort is being spearheaded by As You Sow, which plans to file hundreds of resolutions with public companies unless they “voluntarily adopt the initiative.”

Social Proposals

Social proposals cover a variety of different issues, but those related to race and diversity are perhaps the clearest theme of 2021. The Proxy Preview notes that the Black Lives Matter movement prompted diversity proposals to double from 2020. Some—like those submitted by New York City’s public pension funds—focus on getting companies to publicly disclose employee diversity data, while others go further and “demand proof of effective diversity and inclusion programs.”

The Service Employees International Union (SEIU) and the Change to Win labor federation (of which SEIU is a member) filed proposals at eight large financial institutions seeking a “racial equity audit,” and similar proposals were filed at other companies. NorthStar Asset Management submitted a proposal to PayPal encouraging an assessment of (among other things) whether the company fosters a “cultural hierarchy through perceived pressure to use ‘whitened’ names . . . [or] to adopt ‘white-centric’ physical appearance standards.”

The Nathan Cummings Foundation—a $450 million private foundation—zeroed in on police support. Specifically, it submitted a proposal to Target Corporation arguing that the company’s support for local police could “adversely affect shareholder value.” Indeed, according to the foundation, the mere fact that “Target continues its partnerships with law enforcement,” including “charitable giving to police foundations across the country,” provides “both legitimacy and funding for practices that can exacerbate racial inequity.”

Corporate Governance Proposals

Diversity also plays a role in corporate governance proposals, with approximately 30 resolutions typically asking companies either to adopt a diversity policy for their board of directors or to produce a report detailing how they will increase board diversity. To be sure, a diverse board can be an asset to a corporation, but critically these proposals appear to limit the definition of “diversity” to only gender and racial/ethnic categories. This excludes the myriad other measures of human diversity (age, personal or professional background, life experience, political ideology, etc.) that likely provide more real value to board composition than superficial characteristics like skin color alone.

Finally, and in what is perhaps a glimpse of American capitalism’s ultimate destination as envisioned by ESG activists, a whole class of proposals supported by a nonprofit called the Shareholder Commons seeks to have companies like BlackRock, Caterpillar, Alphabet (Google), and Amazon legally recast themselves as public benefit corporations. Doing so would allow them to prioritize the interests of other “stakeholders” over the interests of their own shareholders, “even when it means surrendering total financial return at an individual company.” This is woke capitalism at its logical terminus: shareholders submitting proposals against those shareholders’ own financial interests.

The Conservative Path Forward

Recent polling by Scott Rasmussen suggests a majority of Americans oppose companies taking positions on political issues. Frustrated that many are nevertheless doing so, however, some conservatives have called for boycotting the offending company’s products or services, or otherwise trying to punish them through disengagement. While the frustration is understandable—and vocally dissatisfied customers can certainly be effective—such actions in isolation may well be counterproductive over the long term.

Instead, as Danhof and others have prominently argued, conservatives should prioritize engaging directly with companies that have drifted inappropriately and unnecessarily into politics. Shareholder votes are one avenue through which this can be done. The lopsided ideological breakdown of the Proxy Preview’s catalog of proposals—where conservative ones amounted to all of 5 percent of the total—suggests that the progressive Left has certainly embraced this approach. If the recent and varied eruptions of woke capitalism are any indication, that strategy is paying off.


This article was originally published in The American Conservative on April 19, 2021.

Robert Stilson

Robert runs several of CRC’s specialized projects. Originally from Indiana, he has a B.A. from Hanover College and a J.D. from University of Richmond School of Law, where he graduated…
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