What to do about woke big business?

By Douglas Carswell
February 2, 2023

Why do some firms go ‘woke’?

Disney recently got embroiled in a row about transgender identity in kindergartens. Why would anyone think that that was a good idea for a family-friendly business?

A couple of years before then, Gillette ran a campaign about ‘toxic masculinity’. What made a company that sells shaving products to millions of men think that was a smart move? (It wasn’t. Gillette dropped the campaign and was reported to have undergone a massive write-down).

Yesterday, I read that the CEO of BP was planning to dial back investments in wind and solar to focus more on oil and gas. How did a company called British “Petroleum”, I wondered, get into a position where it was being defensive about petroleum production in the first place?

Corporate executives make decisions for all sorts of reasons. We just don’t know the full story behind what happened at any of these firms. But what we do know is that a growing number of people fear that big businesses are coming under pressure from investment funds to make decisions that are not purely based on maximizing returns.

Over the past few years so-called Environmental, Social & Governance investing – or ESG – has become an established orthodoxy on Wall Street. Big investment firms have devised various metrics by which they measure corporate performance that is not necessarily related primarily to profitability.

What, they demand to know, is the business in which they are investing doing to promote diversity? How is the board looking to combat climate change? Is the business inclusive enough?

If large investment firms make their investments conditional upon meeting these kinds of metrics, those that run the business will do what they can to comply. I worry that pressure from ESG investors has made a lot of corporate America ‘woke’.

“So what?” you might well say. “It’s not your money, Carswell. It’s up to these investment funds to invest any way they want. If they insist on things that don’t make commercial sense, that’s their business.”

In a free market, we should not be in the business of telling those that own capital how they might invest it. The trouble is that the ESG investment firms on Wall Street don’t generally own the capital. They merely manage it.

Some of the large public investment funds on Wall Street might act as if they own the funds they allocate. In reality and in law, they are merely entrusted to manage other people’s money.

Investment managers have what is known as a fiduciary duty to those that invest in their funds – be they small retail investors or a large pension fund. A key part of that fiduciary duty is to aim to maximize returns for their investors.

When the high-flying CEO of a large Wall Street investment fund, hot off the plane from Davos, decides to disinvest in oil and gas in order to save the planet, are they fulfilling their obligation to maximize returns? Or, in pursuit of what is essentially a political agenda, are these large money managers, forgetting their fiduciary responsibilities?

We should have no problem with an investment firm wanting to invest any way it wants – provided they make it clear to their own investors if and when they are not aiming to maximize returns.

To try to tackle this problem in the US Congress, Rep. Bryan Steil has introduced the ‘Putting Investors First Act’. This is a sensible solution that every conservative ought to be able to support at a federal level. But what should conservatives seek to do to address this issue at a state level?

Here in Mississippi, state Senator Chad McMahan’s bill (SB 2849) is a great local solution. His bill clarifies the fiduciary duty of Mississippi’s Public Employees’ Retirement System board, making sure that the board sticks to maximizing returns and ensuring the safety of investments. It is encouraging to see his bill make progress through the Mississippi Senate.

I believe this is a good, conservative approach. An additional guardrail for PERS will help ensure the safety of money invested on behalf of our teachers, law enforcement officers and other public servants.

What possible justification is there for not wanting to ensure that those that run a state’s Public Employee Retirement System maximize returns? A bill that puts investors first and maximizes returns seems like an ideal solution.

Mississippi lawmakers have an opportunity to tackle ‘woke’ corporations, and ensure against government interference in the free market and attempts to pressurize corporations into implementing a ‘woke’ agenda. Let’s hope they take it.


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