Bloomberg had a story this week on some new anti-ESG shareholder proposals put forth by the National Legal and Policy Center. The proposals ask McDonald’s and other companies to de-link executive pay from diversity goals, on the grounds that, among other things, DEI programs are now the subject of various lawsuits (I will leave it to the reader to imagine a picture of a guy in a hot dog suit).

I had a very mixed reaction to this news. My priors are, there are a lot of legitimate criticisms of DEI programs – they’re ineffective, they’re greenwashing, and the compensation measures are weak – but I worry that many of the current attacks are not grounded in concern that DEI programs are ineffective, but in concerns that they are effective in making workplaces and other spaces more welcoming to underrepresented groups, a position that I find morally objectionable.

Historically, though, anti-ESG proposals tend to fare very poorly at the ballot box, and even though activists like Robby Starbuck have been successful in intimidating companies into backing away from DEI efforts, it is not at all clear this is something shareholders support. Therefore, my original thinking was, I’m glad NLPC is offering these proposals, and I hope companies don’t settle them the way they have so far caved to Starbuck’s demands, because I would rather see a public rejection of them.

That said, given the realities of the incoming administration, I am not certain that institutional investors would cast their ballots against these proposals; they’re precatory, after all, and BlackRock et al might find it more politic either to support them or stay neutral, rather than risk another wave of anti-ESG legislation aimed at constraining institutional shareholder behavior. Similarly, proxy advisors like ISS and Glass Lewis are already in the incoming administration’s crosshairs – ostensibly over their support for ESG, though I’ve written before that I think that’s an excuse for management to push back on shareholder power – and I can imagine them shading their recommendations, as well, to curry favor with the incoming administration (something I was concerned about during the Disney proxy contest earlier this year).

To be fair, of course, that’s not just a concern when it comes to conservative causes; Jeff Schwartz has argued that asset managers shade their voting behavior to favor liberal priorities when Democrats are in power, as well.

Anyway, all I’m saying is, this is what we professionals call “private ordering.”

And another thing. New Shareholder Primacy podcast is up – Mike Levin and I talk about the (new) lawsuit filed by Ben & Jerry’s against its sole shareholder, Unilever, and about the practice of buying shareholder votes. Available at Spotify, Apple, and YouTube.