Powerful Ways Everyday People Can Counter 'Anti-ESG' Campaigns That Target Sustainable Investing

The anti-ESG movement, led primarily by a small set of right-wing politicians and pundits, continues to target the use of environmental, social and governance factors in investing. The pushback against ESG and "woke capitalism" is set to be central in the next U.S. presidential election cycle, with critics ramping up the discourse in advance. 

Still, the public appears uninspired by the far-right's latest bogeyman, with only about 35 percent of U.S. voters viewing "woke ideologies as a 'major threat' or a 'very important' issue when thinking about their 2024 vote," according to July polling from Morning Consult.

Those growing tired of the anti-ESG discourse don't have to resign to simply tuning it out. We spoke with Andrew Behar, CEO of As You Sow, a nonprofit foundation that promotes shareholder advocacy, about powerful ways everyday people can voice what they really think about ESG and the shift toward more sustainable and socially responsible ways of doing business. 

Take action: Counter anti-ESG narratives by learning and sharing

The much ado about anti-ESG may not have the effect critics intended. While the majority of the public remains ambivalent, anti-ESG criticism has also sparked new conversations where there were none before. "The good news is there are tens of millions of people who'd never heard of ESG who now have heard of it. They'd never heard of sustainable investing — they didn't know you could invest sustainably," Behar said. "Now they're aware their investing has an impact. And actually a lot more people are coming to ESG investing because of it. I think it's really backfiring."

Still, anti-ESG narratives can create confusion about what ESG criteria are actually meant to do. Last year, As You Sow launched the AmplifyESG content library to counter the misinformation about ESG online. It's curated by an editorial review board that includes representatives from business and both U.S. political parties, Behar said.

Hosted on Hootsuite, the library is updated at least a few times a week with articles, quotes, videos and other resources about ESG, which users can easily share across their social media platforms as they choose. Shares from AmplifyESG have reached nearly 3 million people over the past year, and anyone can get involved in driving more evidence-based conversations about ESG in business. 

Take action: Leverage your right to vote

No, we don't mean at the ballot box. Of course that's important, too, but in this case we're talking about the proxy voting rights afforded to everyone who owns shares in a publicly-traded company. "If you're an individual who has bought shares on E-Trade or Schwab or Robinhood or whatever, you have the right to vote — even if you own just one share," Behar said. "And that vote is very, very important."

An estimated 25 percent of all shareholders do not exercise their proxy votes, he explained. "If those 25 percent decided to get off the bleachers and get on the playing field, that makes a big difference. That makes the difference between a majority vote or one that's just under the majority line."

But exercising the right to vote by proxy is traditionally not a user-friendly process for individual shareholders. "It's always been difficult," Behar said. "Generally you get an email that says, ‘Time to vote.’ But when you look at the ballot, there's 20 or 30 decisions to make. Who's on the board? How much do the executives get paid? Who's the auditor? What about all these shareholder resolutions? It's very complex." 

As You Sow has published annual proxy guidelines for decades, outlining votes they deem to be aligned with ESG principles. Three years ago, it automated the process by embedding its guidelines into Broadridge Financial Solutions' ProxyEdge platform for institutional investors. The paid service allows institutions like asset managers, endowments and foundations to vote in an ESG-aligned way in only a few clicks. They can also customize their votes from As You Sow's defaults as they choose.

This year, As You Sow went a step further with a free service for individual investors at AsYouVote.org. "You can now redirect that email so we will automatically fill in the ballot," Behar said. "It'll all be filled out in an ESG-aligned way, and you can make adjustments." 

This simple shift allows individual shareholders to move from being overwhelmed by proxy voting emails to automating the process of voting with their values, with the option to customize if they'd like. "I think a lot of people feel guilty. They see all these proxy statements piling up in their inbox and they think, 'I just can't deal with it.' What you'll get instead is, 'Thanks for voting.' You'll feel great about yourself, and it takes literally two minutes to set up." 

Take action: How mutual fund and 401(k) investors can make their voices heard

Traditionally, people who invest in funds rather than individual stocks have a much harder time making their voices heard come proxy season, but this is beginning to change thanks to new technology. 

"If you own shares in a mutual fund, you have the right to vote. Right now, you have abdicated that right to Vanguard or BlackRock or State Street or whoever, and they're voting on your behalf. They're probably not voting the way you like," Behar said. "You might want to vote for a livable planet. You can demand that. You can say, 'I want that vote,' and they will give it to you. It's very new. The technology is just unfolding." 

Technology advancements mean that individual mutual fund investors can vote their own proxies, with the fund manager voting in alignment with the aggregated results at a company's annual shareholders meeting. This is known as pass-through voting.

In April, As You Sow linked up with the proxy technology company Iconik to make this option available to investors in an S&P 500 mutual fund. Hundreds of investors have already taken advantage of it, Behar said, with more funds on the horizon. "We're now in conversations with every other proxy voting service," he said. Broadridge Financial Solutions, a major tech provider for institutional investors, is among those working with fund managers to make this option available to their customers. Get in touch with your fund manager to see what options you have. 

Similarly, those who invest in 401(k) plans through their employers also have the right to vote by proxy, but they need to reclaim it from the fund managers associated with their plans. "If you're in a 401(k) plan — where you probably own a target date fund, which is a fund of funds —  you're going to need to go to your plan administrator and say, 'I want to vote.'"

If employees band together to ask for their vote, the employer can decide to work with the fund manager to make the option available. As You Sow is in talks with employee-organized groups at companies including Google and Microsoft, who want to leverage the voting power associated with their 401(k)s. 

The bottom line: You have more power than you think

Counter to the anti-ESG narrative, most people want to see business operate sustainably, with 99 percent of millennial investors, 82 percent of women and 72 percent of people overall saying they would choose to vote their proxies with sustainability in mind, according to polling from As You Sow. 

"We know we've got this vast majority of folks who actually want to vote to get corporations to provide a livable planet," Behar said. "It's a matter now of just getting people to talk about it and say, ‘Okay, I'll do that. I'll click that.'"

Where market forces are already driving business closer to ESG principles, everyday people realizing and claiming the power they hold could open the floodgates. 

"People abdicate their power. The way people give away their private personal information to Facebook, they abdicate the power of their money to Vanguard, State Street and BlackRock. It's amazing. People give away all their power and all their information for nothing," Behar said. "We have a culture where people look at things like climate change and think, ‘There’s nothing I can do.’ No. You have so much power. You just choose not to use it." 

Image credit: Tom Seger/Unsplash