Good News and Bad on ESG

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Unleash Prosperity Hotline
Issue #1020
05/16/2024
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1) Good News and Bad on ESG
The second edition of our CTUP report card ([link removed]) on investment firm proxy voting was released today. Here's the good news, summarized in the lead editorial by the WSJ ([link removed]) :

In the murky world of shareholder proxy voting, a little media scrutiny goes a long way. Asset managers hoped investors wouldn’t notice how their shares were being voted, but many have curbed their ESG enthusiasm now that word is getting out. Even BlackRock has turned a new leaf.

These are the findings of “Putting Politics Over Pensions,” a new report by the Committee to Unleash Prosperity, which tracks big firms’ records on shareholder votes. Last year’s report broke the bad news that portfolio managers were following the progressive political herd on environmental, social and corporate-governance proposals. Most funds backed political resolutions unrelated to enhancing shareholder value, such as forcing companies to divest from fossil fuels or adopt racial equity audits.

The latest report finds that support for ESG resolutions dropped 25% in 2023 from 2022, including a 30% drop among the 25 most active fund families. Progressive shareholders—often with only a few shares—are putting forward more proposals than ever, trying to pressure executives into adopting their causes as corporate policy. But non-ESG-branded funds aren’t backing them like they were a year ago.

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The bad news is that many of America's major money management firms are still consistently voting for ESG/DEI shareholder resolutions that are pursued by left-wing pressure groups and shareholder activists. These votes are a violation of their fiduciary duty to their clients.

The worst actors of all are the two major proxy voting advisory firms – ISS and Glass-Lewis. These advisory firms – which are employed by most major money managers – almost always recommend “yes” votes on the most egregious ESG resolutions. ISS received an implied grade of F for their recommendations and Glass Lewis an implied grade of D.

CTUP graded more than 600 investment firms ([link removed]) , based on their level of support for 50 extreme shareholder proposals, focused on objectives such as mandating divestment from oil and gas firms, imposing hiring quotas based on race/ethnicity and gender, and conducting internal "racial equity" audits. The average grade earned by the 40 largest firms was a C. More than a dozen of these firms received an F.

The following fund families earned an F:

Click here ([link removed]) or below to read the full report:

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You can go to the report and look up whether your money manager is playing politics with your dollars.

We will keep watchdogging these proxy votes by the big multitrillion-dollar investment firms until ESG is Extinguished-Slayed-Gone.

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2) Get Ready for Biden’s Election-Eve $2 Trillion Stimulus Scheme
The White House is getting desperate. We noted earlier this week that Joe is airdropping tens of billions of dollars of pork spending into toss-up states.

But that’s chump change compared to the latest stimulus scheme.

The Biden administration wants the federal government via Fannie Mae and Freddie Mac to provide taxpayer backing for home equity loans. Talk about mission creep. These agencies are supposed to support homeownership – not juice consumer spending.

Home equity loans — or second mortgages — use the equity in the home as collateral for quick cash. We have nothing against them. But how in the world is this in the interests of taxpayers?

It isn’t.

It’s especially inappropriate at a time when Americans are already over-leveraged up to their eyebrows. Have the Biden brainiacs looked at the record-high credit card debt of over $1 trillion? Overall total household borrowing has reached an all-time $17 trillion. The last thing the feds should be doing is encouraging more debt.

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Our friends at the Wall Street Journal last week cited ([link removed]) Bank of America analysis projecting that this move would unleash $1.8 TRILLION in new borrowing against home equity – which could start pouring in later in the summer. Perfect timing for Joe to resuscitate his campaign.

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The Biden housing experts tell us that this won’t cost taxpayers a penny. Sure. Let us remind readers that‘s what Fannie and Freddie told us before the housing bubble burst in 2008. Oops. The biggest taxpayer bailouts went to Fannie and Freddie.

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This is arguably one of Biden’s most dangerous, reckless, and cynical ideas to date – but there are so many to choose from and undoubtedly more to come.

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3) Meet Pat Rucker: Profile in Courage
Both parties seem to want to oust Pat Rucker from State Senate District 16 in West Virginia. So she must be doing something right.

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(Photo courtesy of WV Legislative Photography)
West Virginia was one of the first states to enact a universal school choice scholarship program in 2022, giving parents a $4,600 scholarship to send kids to the private school of their choice.

Pat Rucker serves on the board of ALEC, was the leading warrior for that program, and she carried it over the goal line. “Everyone was scared of the teachers' unions,” she recalls.

The union tried to defeat her in the last election. They wanted to mount her scalp on their spear for all to see. They needed to send a message across the country that this is what happens when you fall out of line with the union/education cartel. She survived despite being outspent three to one.

Then this year she got cross-haired with the Republican Senate President Craig Blair, who removed her as Education Chair and recruited a State House member to challenge her in this week’s GOP primary. In Tuesday’s primary, she won again – narrowly.

It was woman versus machine and she’s still standing.

We need a lot more like her in every state capital and in Congress.

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4) Medicaid Expansion Is a Bonanza for Fraudsters
Here's a stunning chart from our friends at Paragon:

The Affordable Care Act’s Medicaid expansion has resulted in a massive increase in federal Medicaid improper payments, which soared from an estimated $14.4 billion in 2013 to $98.7 billion in 2021 as shown in this week’s Paragon Pic. The primary reason for the increase: millions of people were enrolled in Medicaid without proper eligibility reviews.

A poorly run Medicaid program harms the truly vulnerable by misallocating resources. Because of the ACA, Washington pays a much greater share of expenses for non-disabled, working-age enrollees than traditional Medicaid enrollees like low-income children, pregnant women, seniors, and individuals with disabilities. This ACA expansion elevated rate creates a large incentive for states to enroll people under the expansion criteria.

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Remember this when the pols in Washington insist there is nothing to cut from the budget.

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5) Video of the Day: DC Is Firing Nursery School Teachers Without College Degrees
Among DC's many insane local policies is a new one requiring college degrees for daycare providers. Many long-time nursery school teachers are about to get fired unless they can get waivers (which they have been waiting on for months). So, this is going about as well as expected. Great video from Reason:

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6) The Election in a Nutshell

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