Perhaps there was no place more appropriate for a conservative group's assessment of "woke corporations" than a resort at Walt Disney World, as Gov. Ron DeSantis leads his culture war against companies like Disney that pursue such policies.
However, the Governor seemed barely on the minds of panelists for The Federalist Society's Florida Chapters Conference.
The discussion focused more on whether considering environmental, social, governance (ESG) criteria was legal and whether it was good for business. While the practices could end, as we know them, under political pressure at some point, panelists mentioned being ready for ESG to remain a key part of corporate decision-making.
"The large institutional investors, the sort of 'Big Three,' BlackRock, Vanguard and State Street, increasingly are the driving force behind much of the corporate engagement with ESG," said Jesse Barrett, a partner with SouthBank Legal. "A lot of that just comes from the vast assets that they control."
That's about $20 trillion in assets between the three. With the purse strings comes the power to influence corporations in which they invest.
"Of all of the votes at shareholder meetings of S&P 500 companies, currently 25% of those are voted by the Big Three," Barrett said. "Estimates are that in the next 20 years, if trends continue, that would be 40%."
That's led to actions taken by companies they may not have done otherwise.
"Companies like Apple and Disney, which you wouldn't call conservative companies, they have had proposals that they supported voted down, and instead they've been forced to do … gender equity audits and pay disparity studies and things of that nature," Barrett said.
While Republican state governments like Florida's pursued divestment strategies, at the federal level, the Clayton Antitrust Act could be used because of the cross-ownership and perceived coordinated activity between the Big Three firms.
Of course, sometimes the political topic of the day isn't new, it's just treated in a new way. Such is the case here, according to Kevin O'Connor, Senior Vice President and Chief Legal Officer for Carrier.
"When I left the Bush administration in 2009, I pulled United Technologies' annual report," O'Connor said. "We had greenhouse gas emissions, we had zero waste to landfills, we had water consumption, we had diversity and inclusion, we had governance. We had all the pillars. The difference is people didn't really care as much."
He said that for years, a group of nuns would come to these shareholder meetings and make their case for ESG policies, which the companies could, to a degree, afford to ignore because the nuns were such a small percentage of the shareholders. Now those concerns are the concerns of these big institutional investors, so companies are listening and acting.
"I think from the in-house (counsel) perspective, those are voices we have to listen to," O'Connor said. "Whether we like it or not, and whether we think that what they're doing is in the best interests of all our shareholder, they are (also) shareholders, and shareholder primacy says you listen to your shareholders.
"In the old days, your shareholders said to make money. Now, they're saying save the world, but they're still our shareholders. Whether saving the world's going to return capital to them is for them to weigh."
Or, executives can stick to their guns opposing what shareholders advocate, including initiatives that prioritize minority groups.
"A lot of ESG is now aimed at getting companies to flagrantly violate the law, and they're doing it in plain sight," said Ashley Keller, partner and co-founder of Keller Postman LLC. "There are so many examples that we wouldn't have time to list them all here.
"You've seen multiple illustrations of companies flagrantly discriminating on the basis of race in the name of equity. I don't care if 51% of your shareholders tell you to do that, you need to push back and say, 'No, that's illegal, it violates the civil rights laws, and those are good laws.' We support those laws as a society. We don't think that you should have racial quotas."
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