Bloomberg Law
Aug. 31, 2022, 9:00 AM

Conservative Shareholder Proposals Rise Amid Anti-ESG Rumbles

Clara Hudson
Clara Hudson

More conservative proposals were filed this proxy season by activists looking to bend the ears of CEOs on social issues, aligning with a political crusade to skewer “woke capitalism.”

Conservative or anti-ESG proposals have doubled this proxy season, according to consulting firm Georgeson Inc., which counted 52 such resolutions filed this year—double the 26 filed 2021. The proposals, targeting issues including racial justice and corporate donations, run parallel to calls by Florida Gov. Ron DeSantis and other Republicans to fight the environmental, social and governance movement.

The resolutions, most of which target major companies including Walmart Inc. and Comcast Corp., received very few shareholder votes on corporate ballots, regularly securing less than 3% support. But the number of proposals won’t be letting up, said Scott Shephard, a fellow at the National Center for Public Policy Research, one of the main organizations driving conservative shareholder activism.

“I wouldn’t expect the numbers to sink,” said Shephard, explaining that one of his aims is to put CEOs on notice for allegedly violating their fiduciary duties when they project personal preferences.

The conservative think tank’s complaints with Walmart, for example, focused on the company’s diversity, equity, and inclusion policies. The group contends Walmart gave preferential treatment to women and minorities but didn’t prohibit discrimination against “center/right” ideology. The company didn’t respond to a request for comment.

Such anti-ESG proposals will likely fuel more board room discussions and require more due diligence on thorny topics, lawyers say, even if they reflect the views of a small number of shareholders.

“All ESG proposals, regardless of viewpoint, always carry a risk of reputational harm to the company,” said Pamela Marcogliese, a partner at Freshfields Bruckhaus Deringer LLP. “Companies will need to focus on shareholder and stakeholder engagement in order to understand what matters most to their constituencies.”

Lambasting ESG

The political anti-ESG fervor began gaining traction earlier this year when some Republicans, including DeSantis, started touting their distaste for the acronym.

The Florida cabinet on August 23 approved the Republican governor’s resolution to prohibit state fund managers from considering ESG factors, taking aim at the “woke financial titans” DeSantis accused of pushing their own far-left agendas. Singling out Paypal Holdings Inc., DeSantis stated that the payment processor has “cut off” political or activist groups it disagrees with.

DeSantis wants state pension funds to use their proxy votes to wrest control of corporate ballots from those who promote pro-ESG changes.

“What I’d like to do is get a lot of the conservative states together, and let’s get our proxy voting rights on all of our funds. Let’s combine those and vote as a bloc,” DeSantis said. “We would be able to check a lot of these ESG votes that are going on throughout corporate America.”

A raft of red states, including Texas and West Virginia, with similar ESG complaints have moved this year to bar retirement and investment funds from doing business with companies that boycott fossil fuels.

Moves like that at the state level are “in line with what we’ve been trying to do from the shareholder activism point of view,” said Shephard, speaking about his organization’s efforts.

Diversity, Climate

At first glance, it’s not always clear that a proposal is anti-ESG. The National Legal and Policy Center put forward a resolution at Comcast that called for transparency on charitable donations but later explained, at a June shareholder meeting, that the main issue was racial justice. A director at the NLPC, Paul Chesser, said Comcast’s efforts were unfair to non-minority employees.

Comcast didn’t respond to a request for comment.

Diversity, equity and inclusion (DEI) is one of the most prevalent topics this proxy season, with shareholders voting in favor of resolutions tasking companies, including Johnson & Johnson and Home Depot Inc., to conduct racial equity audits.

Andrew Behar, the CEO of the shareholder advocacy nonprofit As You Sow, discounted anti-ESG proposals as “political theatre” that make little impact. While conservative proposals rose this year, a flood of ESG resolutions soared along with them, he said.

“There were so many more climate resolutions and so many more diversity resolutions,” Behar said.

As You Sow, in May, secured 91% of shareholder votes for climate reforms at aviation giant Boeing Co. A good board of directors is focused on risk, Behar said, and will understand that the impact of climate change, for example, presents a material risk it can’t ignore.

Shareholder activism is a well-trodden path for environmental groups, which recently secured a string of sustainability wins at Exxon Mobil Corp., for example. But conservatives are entering the arena as well.

One argument made by Shephard is that decisions about such topics as “decarbonization” should be made by voters—not “holders of other people’s money,” a sentiment shared by some Republican elected officials.

At Exxon, Steve Milloy, a top proponent of anti-ESG proposals who previously worked on the Trump administration’s EPA transition team, tried to shut down shareholder resolutions entirely. He ended up securing less than 2% of the vote at a May meeting.

Divisive Landscape

This year marked another record proxy season as shareholders submitted a total 868 bids, an 8% rise from 2021, according to Gibson Dunn. The surge in proposals followed SEC policy changes that made it more difficult for companies to cast aside proxy proposals on significant social issues.

Companies are navigating a more divisive shareholder landscape as a result of the increased push-pull at proxy season, lawyers said.

“In many ways, anti-ESG proposals represent the politicization of corporate America’s proxy system,” said Meagan Reda, a partner at Olshan Frome Wolosky LLP who advises shareholder activists.

Reda said companies have grown to understand that both ESG and anti-ESG proposals can’t be ignored. But the way in which a company responds depends on its industry, the intent behind the proposals, and the geopolitical climate.

“Even if an anti-ESG proposal reflects the viewpoint of a very small constituency, it still serves as a reminder that there are stakeholders with differing viewpoints, and these proposals could result in more board deliberation,” she said.

To contact the reporter on this story: Clara Hudson at

To contact the editor responsible for this story: Michael Ferullo at, Melissa B. Robinson at

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