Investment-management companies — including J.P. Morgan, BlackRock and Fidelity — have trillions of dollars of Americans’ lifetime savings under their care.
They indirectly own roughly 75% of the shares of America’s publicly traded corporations.
These money managers also have a legal obligation to earn the highest return for the tens of millions of Americans who have placed their lifetime savings and pensions in these firms’ legal custody.
But our new Committee to Unleash Prosperity study “Putting Politics Over Pensions” finds that a majority of the largest firms are routinely violating that fiduciary duty and letting political biases interfere with sound business practices.
Through a process known as “proxy voting,” money-management firms like State Street vote on shareholder resolutions of the companies their clients own.
Without the support or even the knowledge of their clients, big money managers routinely support resolutions brought by leftist social activists.
These “ESG” resolutions — “environment, social justice and governance” — require firms to divest oil and gas stocks, ban plastics, impose “diversity” quotas in hiring, move unilaterally to zero-carbon-emission policies and so on.
We examined hundreds of shareholder resolutions and identified the 50 most burdensome from the standpoint of interfering with the goal of maximizing shareholder returns.
Every one of them was opposed by the company’s management.
A Costco shareholder resolution, for example, would require the firm to “adopt short, medium, and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions from its full value chain (Scope 1, 2, and 3), in order to achieve net-zero emissions by 2050.”
What does this have to do with selling groceries?
We analyzed proxy-voting behavior of the 40 largest money-management firms and determined how often they voted for ESG resolutions that are detrimental or incidental to the company’s profitability.
The A grades went to Dimensional, Vanguard, T. Rowe Price and Fidelity. They voted against nearly all ESG initiatives.
On the other side of the scale, among the “woke” firms with the worst voting records were UBS, BNP Paribas and Northern Trust.
They vote 80% of the time or more for woke initiatives.
One of the largest money-management firms, State Street, received a grade of D.
This information should be of great value to mom-and-pop investors as they choose what firms to manage their money.
First, the vast majority of investors don’t want politics and ideology to interfere with their money managers earning the best return possible for their retirement.
Dozens of studies have found ESG policies often reduce shareholder returns.
Last year, for example, ESG resolutions often required firms to sell their oil and gas holdings, even as companies like Chevron and Exxon had a blowout year in the stock market.
Second, many investors may not share the woke political leanings of shareholder activists and their advocates in corporate boardrooms.
They would rather have their money invested in politically neutral firms.
We should add that we have no problem whatsoever with explicit ESG funds that enable investors to freely choose to have their money steered in a political direction.
Amazingly, we found some firms like State Street proxy-voted for hostile ESG resolutions more often than even the explicitly pro-ESG funds.
Our goal in monitoring proxy voting (and we will update this report card annually) is to expose the funds putting political beliefs and social-policy biases above rates of return.
This will, we hope, persuade investors to withdraw their money from woke money-management funds and encourage money managers to stop letting ideology drive investment decisions.
People don’t want their Wall Street investment advisers to be distracted by saving the planet or ending society’s ills.
They just want the best possible return on their money.
Steve Forbes is chairman of Forbes Media. Stephen Moore is a senior fellow at the Heritage Foundation. They are co-founders of the Committee to Unleash Prosperity.
This story originally appeared on NYPost