The Fight Against ESG Is the Fight Against Cultural Marxism 

This is a story I’ve told before, but it’s worth telling again, in light of recent news. 

Exactly seven years ago today, I sat in a room full of people who had, in my estimation, the power to decide the fate of Western civilization. 

If that sounds a little hyperbolic, well, maybe you’re right. Or maybe you’re not. Read on … 

For the previous quarter-century, I had been a political research analyst and forecaster for the financial services industry. Essentially, my beat was the intersection of Washington and Wall Street. For a couple of years, I had noticed a new, more pernicious dimension to that intersection, whereby Wall Street was trying to direct the discourse in Washington, reversing the usual pattern.  

The more I learned about this inverted arrangement, the more I saw it as a threat, not just to free and fair capital markets, but to American business more broadly and, in turn, to the economic foundations of the nation. 

To be clear, I didn’t learn it all on my own. I had help—a lot of it, most of which came courtesy of the one person who had been the most visible and persistent in fighting back against this phenomenon. His name is Justin Danhof.  

At the time, he was the director of the Free Enterprise Project at the National Center for Public Policy Research. Today, he is the director of policy at the Labor Department’s Employee Benefits Security Administration and the acknowledged expert on these issues in the Trump administration. As for the name of “these issues,” they’re mostly called “stakeholderism,” or ESG—environmental, social, and governance investing—and in 2019, they were ascendant in the financial world. 

By now, much of the political world and all of the financial world know about ESG. You can’t throw a rock in Washington or New York without hitting an ESG “expert.” Back then, however, it was a niche topic, albeit one with serious potential consequences.  

I spoke with Justin several times about his work filing shareholder proposals and engaging with companies, trying to get them “back to neutral” and to help them focus on business over politics. He was savvy, diligent, and resourceful. But he was also outnumbered—dramatically—as well as out-funded—several times more. 

After I put him on a call with my clients, seasoned asset and wealth managers, we both realized that we were witnessing a stealthy effort to change how corporations operate and to change how policy decisions are made in this country.  

Not only were the big players attempting to compel companies to sacrifice shareholder returns to push environmental and social agendas, but they were trying to sidestep the electorate to create a de facto political regime that was answerable to no one, save the top rungs of the financial elites: the biggest asset managers and their allies.  

Even worse, they were accomplishing all of this without raising alarms among their peers in the financial world. Most of my clients, longtime and very successful investment professionals, were aware of ESG and its emergence in financial circles, but almost none were aware of its pervasiveness and its ultimate noxiousness. 

We had to change that. We had to make people understand what was happening, how it was happening, and why it was so potentially destructive.  

On that day seven years ago, Halloween 2019, two critical things happened. First, Justin and I sat down in a conference room at a large political conference, and we made our pitch to potentially allied think tanks, potentially sympathetic media organizations, and most importantly, potential donors. Now, when I say that “we” made our pitch, what I mean is that Justin made the pitch and I sat there, watching him hold the room in rapt attention.  

The story he told was simple. The political Left had, since the end of World War I, shifted its focus away from pushing the “workers of the world” to unite and launch a revolution, and toward capturing the institutions of cultural transmission that had heretofore prevented the workers of the world from recognizing their supposed self-interest and undertaking that revolution. The Left had captured almost all of those institutions: mainstream religion, education (including higher education), news media, and entertainment. The only institution left standing was business, and it too was under attack. ESG/stakeholderism was the Left’s attempt to finish the job and to take ideological control of business, that last holdout institution. 

Not long after that meeting ended, I received a call from Roger Kimball, the editor and publisher of The New Criterion and the publisher of Encounter Books. He told me he thought the book I’d proposed would be interesting and could sell a few copies. “If nothing else,” he said, “it already has a great title”: “The Dictatorship of Woke Capital.”  

The book, like our presentation, made the case that ESG and stakeholderism represented something far bigger than a new business and investment strategy. They were an existential threat to Western civilization. Or, as I put it in the book: “The transformation of Wall Street was no accident. It was the product of a long, careful process, a march through various other institutions, turning them on their heads until the titans of ‘capitalism’ had been fully convinced that their surrender to the culture was not merely inevitable but constituted the only morally legitimate path.” 

The good news is that Justin, with the help of many of the people in that conference room seven years ago, managed to convince a great many others of the threat to American business. The fight against ESG grew and, in many ways, it has been successful—far more successful than either Justin or I expected it to be seven years ago. The bad news is that risk remains and, unfortunately, remains elevated. The worse news is that real damage was done to people and businesses in the interim. 

Last week in the Daily Signal, my friend and colleague Allen Mendenhall told the story of the Office of the Comptroller of the Currency’s report on debanking, which shows that debanking, despite denials from banks and ridicule from the political Left, was a real phenomenon. Among other things, the OCC reports that many of the same culprits I identified as operating in the investment world were also operating in the banking world at the very moment that the ESG/stakeholderism assault on the institution of business and finance was underway.  

According to the OCC, “banks maintained public and nonpublic policies restricting certain industry sectors’ access to financial services, including those in oil and gas exploration, coal mining or coal-powered plants, firearms or ammunition manufacturing or distribution, construction or operation of detention facilities, the manufacturing, distribution or online retail of tobacco or e-cigarettes, and digital asset activities.”  

It is no coincidence that many of these industries—especially oil, gas, and coal—were also targeted by ESG investment screens, shareholder resolutions, and engagement. As one bank told the OCC: “banks were subject to significant external pressures relating to these activities, including congressional oversight, shareholder resolutions, activist campaigns, and scrutiny from state and local officials.” This is the ESG playbook in microcosm. 

Christianity was never really an explicit ESG target, but the report shows that the mechanism the banks built to address “reputational risk” nevertheless hurt religious Christians.  

In 2021, for example, PNC declined to extend a line of credit to a media company after its ESG group recommended against it. Bank employees stated that one owner’s foundation “has funded several Christian conservative groups, including several identified as hate groups by the Southern Poverty Law Center.” TD Bank concluded that a faith-based health care sharing ministry posed an elevated risk, because “the moral and religious requirements to participate in plans like [this plan] appear to conflict with TD’s values of diversity and inclusion.” 

Note, for the record, the source cited by PNC’s employees. According to the OCC’s report, when deciding whom to serve, banks relied on information provided by advocacy organizations, like the Southern Poverty Law Center, third-party ESG reports, and complaint data. The SPLC’s presence, in particular, should surprise no one. As I put it in “The Dictatorship of Woke Capital,” referring to Amazon’s now-defunct charitable program AmazonSmile: 

The biggest problem with the SPLC is that [it] singles out, smears, and then effectively defunds conservative and traditional religious organizations in the name of fighting “hate.” … So, what happens to an Amazon customer who tries to sign up for AmazonSmile and direct his donation to the Middle East Forum or ACT for America? He or she receives a response from Amazon that reads: “ … We rely on the Southern Poverty Law Center to determine which charities are in certain ineligible categories.” … If the SPLC … deems a charity unworthy, then Amazon itself deems the charity unworthy.

Note as well that our friend Justin was also on the SPLC case. In the 2020 proxy season, he submitted a proposal to Amazon arguing that the company’s partnership with the SPLC posed a reputational risk and that it should cut ties. The board disagreed and urged shareholders to reject the proposal. Justin was right about the risk, while Amazon and the banks had it backward. 

In short, then, it’s all connected, and it’s all still a threat. 

ESG and stakeholderism were the tip of the spear in the effort to take business for the cultural Left. The pushback against that effort took on new urgency seven years ago today. The spear has been blunted, but not broken, and the work that started in that room is far from finished. 

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Domains for Sale · GOTPeople.org · TheDSAPlatform · The Truth About Socialism

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