Last week I flew into Oklahoma City, a descent into flatness, a landscape so resolutely horizontal it makes you wonder if the earth gave up on drama somewhere around the 100th meridian. But the weather was beautiful, temperatures lingering in the mid-70s.
I stayed at the National Hotel, a Marriott Autograph Collection—a marvelous resurrection of an old bank, austere and awesome architecture, its solemn columns and marble interiors already decked out for Christmas, tinsel and twinkle working overtime to soften all that financial severity.
Prospr Aligned had invited me here to join a panel at its inaugural forum. I addressed what might charitably be called the corporate governance enthusiasms of our age, though “manias” would be more precise. The panel’s subject—“The State of ESG and DEI in Public Finance”—sounds anodyne enough. The reality is more alarming.
At the Heritage Foundation, where I serve as senior advisor in the Capital Markets Initiative, we filed 26 shareholder proposals in recent months, challenging egregious instances in which corporate America has subordinated sound management and shareholder interests to the latest radical trends.
Our targets range from regional banks—Birmingham’s Regions Financial among them—whose policies may serve constituencies other than their shareholders and clients; federal contractors still embedding DEI metrics in executive compensation packages, obligating taxpayers to subsidize discrimination; and companies boasting perfect scores from the Human Rights Campaign, an imprimatur of ideological conformity reserved for firms willing to provide puberty blockers to minors through employee health plans.
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We have also confronted firms that compensate executives based on ESG and DEI metrics rather than, say, profits; companies with dangerous exposure to Chinese interests; and—most recently and most disturbingly—corporations relying upon the Southern Poverty Law Center’s (SPLC) partisan taxonomy of “hate,” including its notorious “hate map.”
This last category of shareholder action followed the assassination of Charlie Kirk, whose organization, Turning Point USA, the SPLC harshly profiled.
Here, we have achieved measurable success. Salesforce, in response to our filing, ceased reliance on SPLC diagnostics and instructed Benevity, the platform that manages its corporate philanthropy, to discontinue using them. Starbucks, by contrast, initially denied any use, then performed the bureaucratic shuffle once confronted, promising to “take up the issue” with its benefits team.
Another insidious threat, I told our Oklahoma audience, comes not from Seattle or San Francisco but from Brussels. The European Union’s Corporate Sustainability Reporting Directive (CSRD) exemplifies extraterritorial regulation of breathtaking audacity. It purports to bind virtually all U.S. publicly traded companies—and many private firms—to European ESG dictates.
The CSRD demands “double materiality” reporting, forcing companies to disclose how ESG considerations affect not only their finances but also social and environmental conditions. It mandates audits for ESG compliance and emissions disclosures across three scopes: direct emissions, those from business partners, and, absurdly, the entire supply chain – requiring an automobile manufacturer, e.g., to account for the carbon footprint of sheep that supplied the wool for a car’s seat covers.
Let’s call this directive what it is: economic sanctions against the United States. When European governments approach us, hands extended, seeking aid or additional funds for Ukraine, we should politely note that one cannot simultaneously sanction and supplicate. We should demand the rescission of the directive as a precondition for further generosity.
There are, mercifully, signs of resistance. Last month, 16 Republican state attorneys general, including Alabama’s estimable Steve Marshall, warned Microsoft, Google and Meta that compliance with the CSRD could violate state laws prohibiting ESG and DEI mandates. This resistance represents federalism as the Founders intended: sovereign states, acting in concert, repelling foreign coercion.
The Alabama Legislature, however, has failed to match this backbone. While other red states have erected defenses against ESG overreach, Alabama lags conspicuously.
Oklahoma, by contrast, has passed sole fiduciary duty legislation, clarifying that pension fund managers must maximize financial returns for beneficiaries rather than pursue collateral social objectives. (Oklahoma State Treasurer Todd Russ is doing his part, too.)
Alabama should follow suit. A public employee contributing to a pension fund is not donating to environmental activism or social engineering; he is securing his retirement. Fund managers who forsake his financial interests for policy preferences commit a species of theft.
Our public employees’ retirement security should not be held hostage to the climate apocalypticism, racial obsessions, and sexual indoctrination that currently grip corporate boardrooms and, more disturbingly, European bureaucrats. It’s time our legislature demonstrated that Alabama, like Oklahoma, will not genuflect before the false gods of ESG.
If we heed Oklahoma’s example, we can reclaim control over our economic destiny, ensuring that public funds serve those for whom they exist: the workers and retirees who earned them. Oklahoma reminds us that steadfastness, not fashion, should govern the stewardship of capital.
This piece originally appeared on 1819 News
