Environmental Social Governance (ESG) is a sneaky way for far-left activists to browbeat corporations into supporting far-left social justice warrior causes with company money. Texas passed a law requiring ESG advisors to disclose such fiduciary conflicts of interest, and the SJW set is so mad that they’re suing Texas Attorney General Ken Paxton over it.
Several nonprofit organizations have filed a federal lawsuit against Texas Attorney General Ken Paxton in the U.S. District Court in Austin, challenging the constitutionality of Senate Bill (SB) 2337 by state Sen. Bryan Hughes (R-Mineola) because they say it chills their speech about “value-based investing.”
SB 2337, passed during the 89th Legislative Session, requires a proxy advisory firm to disclose when its recommendations are based on “non-financial factors” or “conflict with other proxy advisory services.”
The lawsuit claims that the Texas Legislature passed the law “to suppress growing shareholder demands that companies consider important issues that can affect long-term performance.”
The three plaintiffs are the Interfaith Center on Corporate Responsibility (ICCR), United Church Funds (UCF), and Ceres.
ICCR is a “coalition of investors” that believes their faith and values should guide their investing decisions. They value advancing causes such as social justice and environmental sustainability, according to the ICCR website.
So they’re social justice warriors who feel corporations should support far-left causes rather than earn shareholders financial returns. No wonder they’re mad.
UCF provides investment services to the mainline denomination United Churches of Christ and partners with ICCR in similar values.
My parents were raised Church of Christ before drifting away. When granny dragged me there as a wee lad, I never got the impression that they were leftwing activists. Perhaps things have changed.
But anything with “Interfaith” in their title you have to assume are guilty of leftist capture until proven innocent. They’re always willing to render unto Caesar, as long as Caesar is wearing a Che Guevara t-shirt.
Ceres describes itself as “a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and resilient world.”
Translation: “Do the will of the far left, or else.”
In their lawsuit, the plaintiffs argue that the State of Texas, through SB 2337, compels them to speak in only one acceptable way about these investment-related positions.
They can speak however they want, they just have to disclose that they’re lefty tools.
They claim that SB 2337 divides proxy advising into two categories: the financial interests and non-financial interests of the investors. However, the law doesn’t define what the “financial interest” of a shareholder is, the lawsuit argues.
The plaintiffs also argue that, while the law defines non-financial factors to include “environmental, social, or governance (ESG)” goals and “diversity, equity, or inclusion (DEI),” it doesn’t recognize that those terms often have different meanings and applications within the investment community.
They really don’t. If you pursue either, you value radical leftwing activism over the interests of shareholders.
SB 2337, according to the lawsuit, imposes “burdensome disclosure requirements” on the plaintiffs because they base their proxy voting advice on “nonfinancial factors.” These disclosure requirements “mandate that [the plaintiffs] disclose detailed financial analyses and force them to report nonpublic communications with their clients to the companies being evaluated.”
If the firms are deemed to have violated SB 2337, they can be subject to penalties of $10,000 for each violation of the law.
While compelled speech is indeed illegal under the First Amendment, commercial disclosures tend to receive the lowest level of scrutiny for violating free speech rights. “The Court has applied less stringent standards of scrutiny when evaluating disclosures involving commercial speech. In the commercial context, courts generally apply a level of intermediate scrutiny that requires the regulation to directly advance a substantial interest. Certain commercial disclosure requirements are subject to an even more lenient standard that requires only a reasonable relationship between the means and ends.”
Americans for Prosperity Foundation v. Bonta was a case where disclosure laws were found unconstitutional, but that case was over revealing donor names to the government. Given SB 2337’s requirements are far less sweeping, and require no donor disclosure, it seems far more likely that the State of Texas will prevail.
Time and time again we see that wokeness infecting a company destroys profits, no matter the source of the infection. Shareholders need all the information they can get to inoculate against such infections.
Only you can prevent Bud Light.
