Finance

Investment Giants Under Scrutiny for ESG Advocacy, CTUP Report Reveals

Financial Stewards or Political Players? The ESG Voting Patterns of America's Money Managers

WASHINGTON, May 16, 2024 /PRNewswire/ -- According to the latest findings disseminated by the Committee to Unleash Prosperity (CTUP), a discord has emerged in the realm of investment management, revealing that numerous prominent firms entrusted with workers' pension funds are enmeshed in controversial ESG and DEI initiatives. These findings have propelled the discussion into whether investment strategies are being politicized at the cost of financial responsibility.

The Frailties of Fiduciary Duties

It is increasingly apparent that a quantity of America's leading money management firms are casting their proxies in favor of ESG/DEI shareholder resolutions advocated by left-wing organizations and agitators, which stands in stark contrast to their fiduciary obligations to their clientele. This behavior raises questions and concerns among investors regarding the true intent and interests that these financial custodians are serving.

Shifting Tides in Money Management

The research conducted by CTUP spotlights a nascent yet perceptible shift in the approach toward ESG mandates. The year 2023 witnessed a 25 to 30% dip in the rate at which significant money managers supported adversarial ESG resolutions, when juxtaposed with the preceding year. However, the report highlighted that in nearly half of considerations, firms persisted in backing ESG resolutions, indicating a conflicted stance within the industry.

Dubious Guidance from Advisory Heavyweights

Amplifying the concerns, the role of influential proxy voting advisory entities, namely ISS and Glass-Lewis, comes under the microscope. These advisories, synonymous with shaping the voting direction of major investment firms, tend to endorse extreme ESG propositions. The CTUP report implicitly assigns ISS a failing 'F' grade, while Glass Lewis narrowly escapes with a 'D', drawing severe criticism for their guidance practices that could be steering investment firms away from their fiduciary duties.

An Extensive Evaluation of ESG Influence

The CTUP's extensive evaluation encompassed over 600 investment firms and their stance on 50 extreme shareholder proposals. These proposals ranged from enforcing divestment from fossil fuel corporations to instituting racial and gender hiring quotas and mandating internal "racial equity" audits. The findings were unsettling, with the 40 largest firms averaging a 'C' grade and an alarming number netting an 'F', showcasing the widespread acceptance of politically charged investment agendas.

A Roster of Underperformers

Adding to the weight of the revelation, the report discloses a list of fund families notable for their subpar standings:

• ProShares Funds
• Principal Funds
• Thrivent Funds
• Touchstone Funds
• Eaton Vance Funds
• Rydex Variable Funds
• Flex Funds
• ProFunds
• Columbia Funds
• Guggenheim Funds
• Direxion Funds
• Thompson, Siegel & Walmsley
• Gotham Funds
• Mutual of America Funds
• Meeder Funds
• Morgan Stanley Funds
• TD Asset Management
• Lombard Odier Investment Managers
• Manulife Investment Management
• Danica Pension
• Victory Funds
• DWS Funds
• AQR Funds
• BNP Paribas Asset Management
• Sparinvest
• Swisscanto

The litany of F-rated entities speaks volumes about the endemic approval of strategies that potentially subvert maximizing client returns in favor of a socio-political agenda.

A Call for Realigning Priorities

The report postulates a call to action, urging firms to steer clear of endorsing ESG resolutions which might hinder the primary objective of optimizing returns for fund beneficiaries. Furthermore, the report contends that such entanglements with ESG policies compromise the fiduciary responsibility vested in money managers, suggesting that a recalibration of priorities is indispensable for the industry's integrity.

Previous Milestones and Political Implications

In a retrospective revelation from CTUP's landmark study from the previous year, the political esprit de corps in investment strategies became evident. Key players like State Street, BlackRock, JP Morgan, and Franklin Templeton were flagged for their tendency to favor political ideology in proxy voting, which ran counter to the financial interests of many Americans dependent on these firms for managing their financial futures.

The Cost of Ideology Over Performance

Stephen Moore, co-founder of the Committee to Unleash Prosperity, candidly stated, "Investors bear the brunt of this ideologically infused investment approach." The critique is that retirees' votes are hijacked to champion policies which could potentially undercut the financial performances of their investment vessels, thereby, chipping away at the retirement savings of ordinary citizens.

In Pursuit of Transparency and Reformation

In response to the findings, investors are encouraged to scrutinize the investment houses that prioritize political positions over fiduciary responsibilities. The CTUP aspires to instigate a migration of investor resources away from such firms, coupled with a cohort effort to quell the tide of ideologically driven investment decisions. The suggested narrative is an appeal for transparency and the repositioning of client interests as the beacon of investment strategies.

Read the Full Report

Those seeking in-depth knowledge and insights can immerse themselves in the complete CTUP report on pension politics. Additionally, the editorial perspective from the Wall Street Journal can be explored for further context on the implications of ESG investing and proxy voting here on WSJ.com.

About the Committee to Unleash Prosperity

The Committee to Unleash Prosperity prides itself on its commitment to enlightening policy makers and the general populace on policies tailored to boost economic growth and well-being across the United States and globally. Anyone interested in their mission and ideology can find more information at their official website, www.committeetounleashprosperity.com.

Contact Information

Alexandra Preate 917-748-6537 cell

Closing Remarks

As the dichotomy between responsible investing and political advocacy within some of the biggest names in the financial sector comes under increasing scrutiny, it is yet to be seen how the industry will evolve to realign with its fundamental objectives. The ramifications of the CTUP's study may instigate wide-ranging changes, prompting a reinvention of fiduciary protocols within these instrumental organizations.

The content above is based on the May 16, 2024 press release by the Committee to Unleash Prosperity, reproduced in accordance with common journalistic practice to include source identification.

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