Democrats Back Corporations as GOP Punishes Them

DeSantis Says Corporations Are Political Actors, Schumer Says ‘Let the Market Work’

The ideological clash about how much control government should have over private companies was encapsulated yesterday in two Wall Street Journal op-ed pieces that many readers might find surprisingly contradictory. The first, written by Senate Majority Leader Chuck Schumer (D-N.Y.), rails against government intervention in corporate affairs; the second, by Republican Florida Gov. Ron DeSantis, justifies his anti-corporate actions.

These two pieces succinctly capture the tug of war between political parties over how to respond to the rising influence of the environmental, social and governance (ESG) ideology among the world’s largest corporations today. And they appear, on the surface at least, to mark a dramatic shift in the views of both conservatives and progressives regarding how far government should intervene into the affairs of private companies.

Under the heading, “Republicans Ought to Be All for ESG,” Schumer states his opposition to a GOP House bill, which would reverse a recently instated rule by the Department of Labor that allows pension fund managers to invest retirees’ money according to ESG criteria. According to Schumer, when it comes to ESG, a laissez-faire approach is best; it would be wrong for politicians to “tie investors’ hands” by limiting how fund managers invest pensioners’ money.

“ESG opponents are trying to turn it into a dirty acronym, deploying attacks they have long used for elements of a so-called woke agenda,” Schumer writes. “They call ESG wokeness. They call it a cult. They call it an incursion into free markets. We’ve heard it all before. I say ESG is just common sense.”

ESG is an umbrella ideology that includes climate change, and racial and gender equity, and has been expanded to include gun control and abortion rights. Public companies today are rated according to ESG compliance, and many of the largest asset managers have signed pledges with groups like the Net Zero Asset Managers initiative (NZAM) to advance ESG goals “across all assets under management.”

Because the ESG ideology has become so ubiquitous throughout private industry, many Democrats, like Schumer, have become active in fighting laws or regulations that might infringe on corporate freedom, particularly when it comes to pursuing ESG goals. At the same time, the GOP, which historically has been the more pro-business party, is increasingly taking on companies that push ESG ideology, with states such as Florida, Texas, and West Virginia banning the use of state pension funds to support the ESG movement and boycotting asset managers and banks that they say discriminate against industries like fossil fuels and firearms.

DeSantis, in his op-ed, “Why I Stood Up to Disney,” writes: “When corporations try to use their economic power to advance a woke agenda, they become political, and not merely economic, actors. In such an environment, reflexively deferring to big business effectively surrenders the political battlefield to the militant left.”

DeSantis made headlines recently over a fight with the Walt Disney Company when then-CEO Bob Chapek vowed to fight a new Florida law that banned the teaching of sexual topics in kindergarten through third grade. As the conflict heated up, Florida revoked Disney’s privileged self-governing status of its 43 square-mile Reedy Creek District, the location of the DisneyWorld theme park.

“Woke ideology is a form of cultural Marxism,” DeSantis argues in his op-ed piece. “Leaders must stand up and fight back when big corporations make the mistake, as Disney did, of using their economic might to advance a political agenda.”

Schumer, by contrast, lauds the spread of ESG ideology within the corporate world, noting that “America’s most successful asset managers and financial institutions have used ESG factors to minimize risk and maximize their clients’ returns. In fact, according to McKinsey, more than 90 percent of S&P 500 companies publish ESG reports today.”

According to Schumer, ESG investing is simply prudent risk management, and, therefore, pension managers should be free to invest pensioners’ money according to this criteria.

“Republicans talk about their love of the free market, small government, and letting the private sector do its work,” Schumer writes. “But their obsession with eliminating ESG would do the opposite, forcing their own views down the throats of every company and investor … I say let the market work.”

By contrast, DeSantis writes: “Democrats often rail about corporations’ nefarious influence over politics and oppose favorable exceptions for big companies. Yet they supported keeping Disney’s special-governing status.

“This confirms how much the modern left has jettisoned principle in favor of power,” says DeSantis. “As long as large corporations help advance the left’s woke agenda, the left is willing to do their bidding.”

Private pensions are regulated by the U.S. Department of Labor, taking into account, among other things, a 1974 law called the Employee Retirement Income Security Act (ERISA), which was passed in response to misuse of retirees’ money and other corrupt practices by pension managers. ERISA, the subject of Schumer’s op-ed, states that managers of private pension funds must act purely in the interest of maximizing monetary returns for retirees. Under the Biden administration, the Labor Department provided new guidance that the use of ESG criteria was also acceptable for the approximately $12 trillion in 401(k)s and other private retirement plans.

According to reports, enough Senate Democrats may support the GOP to attempt to block President Biden’s move to allow ESG within ERISA. But Biden is expected veto this effort.

The effects of the ESG movement go well beyond Disney and sex education. For example, BlackRock, the world’s largest asset manager and an outspoken advocate of “sustainable” investing, was just granted an exemption by the Federal Energy Regulatory Commission (FERC) to own up to 20 percent of public electricity utilities. Vanguard, the second-largest asset manager, is seeking a similar exemption. At the same time, nearly one-quarter of the coal-fired power plants are scheduled to be retired by 2029 as the United States rapidly shifts its electric grid toward dependence on wind and solar power.

While it may seem from the debate in The Wall Street Journal that Democrats are the new champions of the free market, they are rapidly expanding state intervention into the private sector. According to the American Action Forum, which tracks the scale of government regulation, the Biden administration has implemented 532 new executive orders and regulations, at an estimated cost of $359 billion. By comparison, it calculated the cost of new regulations during the Trump administration at $6.8 billion.

Ventures into industrial policy by the Biden administration, in parallel with private ESG initiatives, include hundreds of billions in subsidies for renewable energy and electric vehicles (EVs) through the Infrastructure Act and the Inflation Reduction Act. A new regulation from the Securities and Exchange Commission requires listed companies to report their CO2 emissions and plans to reduce them, for themselves, their suppliers, and their customers. This aligns with laws in so-called blue states like California, Washington, and Massachusetts to ban the sale of gasoline-powered cars or curtail gas heating in new homes and buildings.

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