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Proxy season culture war: Republicans urge investors to vote against 'woke' big business like Disney

Show Caption
  • Calling the effort a “fight for corporate America," conservatives are challenging 'woke' policies.
  • Conservative groups have submitted a record number of shareholder proposals: 43, up from 16 in 2021.
  • The shareholder activism got a boost from the faceoff between Walt Disney and Florida Gov. DeSantis.

At the Wells Fargo annual meeting in April, a conservative activist presented a shareholder proposal that would force the bank to disclose more information about its charitable giving and warned company leaders against engaging in the kind of LGBTQ advocacy that prompted Florida Gov. Ron DeSantis to repeal Walt Disney’s special tax privileges just days earlier.

“Instead of funding this sort of extremism, Wells Fargo needs to take a hard look at the fix that Disney finds itself in,” Paul Chesser, director of the National Legal and Policy Center’s Corporate Integrity Project, said in his remarks. 

Wells Fargo shareholders rejected the measure by a wide margin, but that has not stopped conservative activists.

Two groups, the National Legal and Policy Center and National Center for Public Policy Research, are making regular appearances this proxy season, the time of year between April and June when most large publicly traded companies host their annual meetings.

Calling the effort a “fight for corporate America," they've submitted a record number of shareholder proposals – 43, up from 16 in 2021, according to data from The Conference Board’s ESG Center – while urging investors to cast their votes against “woke” big business. 

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Facing growing pressure from customers, employees and investors, companies are increasingly taking public stands on hot-button political and social issues such as racial justice and climate change. 

Scott Shepard, director of the National Center for Public Policy Research’s Free Enterprise Project, says the political right is responding to the unchecked influence of liberal politics in the executive suite and the boardrooms of major companies. 

This week in an energy policy speech in Houston, former vice president and possible 2024 presidential candidate Mike Pence criticized the push for companies to follow "left-wing" principles

“Center-right Americans were asleep at the switch for a long time,” Shepard said. “Their thinking was: You can trust businessmen to run their businesses and they are not going to get too involved in politics, so it’s fine. They (center-right Americans) recently discovered it’s not fine at all."

These businesses "have lost their minds," he said, "and we have to get involved to roll that back.”

Shareholder activism has ‘ear of politicians’ after Disney and DeSantis

The burst of shareholder activism is part of a broader campaign against what conservatives are calling “woke capitalism.”

Six years ago, North Carolina bowed to pressure from companies like PayPal, which canceled expansions in the state over a new law requiring transgender people to use public bathrooms that correspond with the gender identity on their birth certificate.

No more, says the National Legal and Policy Center’s Chesser.

Instead, conservatives are targeting corporations that have become more vocal on social, environmental and governance issues, commonly known as ESG, and they are refusing to cede ground, particularly as midterm elections approach.

The GOP pounced on Delta Air Lines and Major League Baseball for opposing Georgia’s restrictive voting laws. Texas Republicans threatened Citigroup over its policy to pay for employees to travel out of state for abortions. The Disney-DeSantis standoff marked the sharpest escalation yet.

“Conservative-leaning groups are more emboldened now to push back,” Chesser said. “Our view is that it’s overdue.”

GOP proposals on racial justice, climate change get little support

So far, none of the shareholder proposals from the National Legal and Policy Center and National Center for Public Policy Research have passed.

Of the 95 proposed resolutions the two conservative groups have submitted since 2018, just 31% made it to a vote, Conference Board data shows.

"I think what’s new now is that the anti-ESG folks seem to have the ear of politicians on the national stage," said Heidi Welsh, founding executive director of research firm Sustainable Investment Institute. "What they all are saying is pretty much the same thing: that one can equate ESG considerations with a Marxist plot to take down capitalism. That is simply not accurate." 

Taking into account environmental, social and governance factors in corporate decision-making has emerged as a hot trend in recent years.

In 2021, 62% of ESG shareholder proposals were taken to a vote and 10% passed. So far this proxy season, 64% were taken to a vote and 7% earned majority votes, including one at Apple on racial justice, one at Costco on greenhouse gas reduction targets, one at Jack in the Box on plastic packaging, and one at Walt Disney on pay inequity.

ESG initiatives like these are good for business and boost shareholder returns, advocates argue. And they have backing from top money managers like BlackRock, Vanguard Group, and State Street, though there are early signs that some of that support may be cooling.

This week, BlackRock took a step back. After supporting nearly half of environmental and social shareholder proposals in 2021, BlackRock wrote in a memo that "many of the climate-related shareholder proposals coming to a vote in 2022 are more prescriptive or constraining on companies and may not promote long-term shareholder value."

Still, few conservative shareholder resolutions have significant backing from fellow investors, with many earning 3% or less support

Morningstar has dubbed them “anti-ESG,” saying they are "disingenuously submitted proposals, usually by groups that oppose the work of ‘pro-ESG’ investors.”

“We get the sense that the intent behind some of these proposals is less to offer a constructive path to change and more to disrupt a movement that is gaining steam,” the independent investment research firm said.

Like their liberal counterparts, conservatives often advance shareholder proposals, even those likely to get low-single-digit support, to “make a point or gain attention,” said Paul Washington, executive director of The Conference Board ESG Center.

In marketing materials to investors, Shepard concedes that conservatives trail the political left.

“So we may not win on vote-count alone, but we don’t need to,” he wrote. “We are rallying allies like yourself to our cause, as well as the pension funds of states run by people who think like we do, and other big players.” 

The end game? To keep companies from mixing business with politics conservatives don't approve of. 

“American corporations, hyper-politicized and corrupt as many may be, are among the few public institutions where there’s still a fighting chance to reverse course,” read one report from the National Center for Public Policy Research, “Balancing the Boardroom: How conservatives can combat corporate wokeness.” 

Critical race theory, diversity are main GOP targets

Some of the proposals from the National Legal and Policy Center and National Center for Public Policy Research focus on governance issues such as separating the roles of CEO and chair or the ideological diversity of boards of directors. Others take on political contributions or human rights.

The No. 1 target for conservative groups this year are corporate diversity, equity and inclusion policies which Shepard says harm employees who are not underrepresented.

“That new discrimination has inexplicably caught fire in recent years and so it is the fire we are trying hardest to put out,” he said. 

At Johnson & Johnson’s annual meeting last month, shareholders voted on two proposals, each asking the company to conduct a racial equity audit but for different reasons.

Faith-based asset manager Mercy Investment Services wanted the company to address the “disparate racial impacts” of Johnson & Johnson’s policies and products, including claims it “aggressively” marketed its talcum powder products to Black women

The resolution from the National Center for Public Policy Research's Free Enterprise Project, on the other hand, wanted Johnson & Johnson to determine if its diversity policies discriminate against “non-diverse” employees.

Investors rejected the Free Enterprise Project proposal but backed the group of nuns whose proposal was the only one to earn a majority vote.

Undeterred, conservative activists say more like-minded individuals and groups are joining their efforts. 

Backed by the billionaire investors Peter Thiel and Bill Ackman, Vivek Ramaswamy, author of “Woke, Inc.,” has started a new fund manager, Strive, that will encourage companies not to dabble in social or environmental issues.

The Free Enterprise Project recently teamed with the Job Creators Network Foundation, an advocacy group founded by former Home Depot CEO Bernie Marcus, and another conservative group 2ndVote to form The Boardroom Initiative, whose stated goal is “to defend shareholders, employees, and communities from ‘woke’ policies at corporations.” 

It’s led by Ed Rensi, former president and CEO of McDonald’s USA, who says companies are imperiling shareholder returns by wading into the nation’s culture wars. 

The Boardroom Initiative teamed up with the Free Enterprise Project to call for a civil rights audit of Bank of America’s diversity policies “to ensure no race or gender groups are being excluded in the name of equity or anti-racism.” 

At the annual meeting in April, Shepard accused Bank of America of engaging in a system of “racial spoils” that benefit people of color and consign “millions of poor white people to penury and powerlessness.” 

Shepard told Bank of America that the audit should draw on a range of viewpoints “including those of the center right representing the majority of Americans and almost certainly the majority of both Bank of America’s shareholders and employees.”

The measure failed.