WOKE WEDNESDAY: Neumann's upfail, Activision deal, Ramaswamy buys ESG stocks, and ESG MONTH: roundup of 18 conservative law proposals on ESG!

Live from the ISS snacks closet, it’s the ESG Industry’s ONLY weekly woke data podcast, featuring BS-man Matt Moscardi! In today’s Edgy Soppy Glue called July 12, 2023: headlines, the alternative democracy, and ESG month!

Our show today is being sponsored by ESGauge, your ESG data solutions provider 

DAMION1

1. Headlines

1. Failing Up

1. Adam Neumann says his new company Flow, which raised $350 million from a16z, has only two choices: compete with WeWork or partner with it

1. The Flow founder hasn’t shared much about what the new company will actually do or look like as of yet. Neumann said Tuesday that the business model for Flow broadly is a “vertically-integrated system” of owning and operating the buildings as well as building technology and a community.

2. Adam Neumann shares 2 key lessons he learned from WeWork’s crash

1. Surround yourself with smart people who will tell you what they really think

2. Listening over talking

2. Microsoft-Activision deal moves closer as judge denies FTC injunction request

1. A federal judge in San Francisco ruled in favor of Microsoft and Activision Blizzard, which have been trying to complete their $68.7 billion deal by July 18.

2. The U.S. government can take the decision to the U.S. Court of Appeals for the 9th Circuit.

3. Clarity AI: ESG Controversies Led to a 2% to 5% Stock Underperformance after Six Months

1. The analysis indicates that controversial actions linked to ESG can have a significant negative effect on a company's value compared to peers, resulting in a delta in valuation ranging from -2% for less severe controversies to -5% for the most severe controversies after a period of six months.

2. The analysis covered over 10,000 controversial incidents for more than 1,500 corporations spanning over a four year period.

3. The largest deltas in stock performance were found for High severity cases and the topics of products and services mismanagement (-11.8% market value divergence on average) and negative environmental impact (-8.9% market value divergence on average).

4. The analysis also tested whether the impact of controversies on market value can be greater if the controversy is related to a topic that is material to the industry the company operates in - for example the environmental topic for the mining industry or corporate governance topics for the consumer finance industry.

5. Results confirm that the effects derived from a company’s involvement in such activities exceeds that of the average of all similar incidents for all companies. The difference is significant, being as large as twice as much for environmental cases and almost three times as much for bad corporate governance controversies.

4. United Airlines CEO Blames Climate Change For Flight Delays

1. United Airlines CEO Scott Kirby has blamed bad weather, reduced Federal Aviation Administration staffing, and the closure of Canadian airspace for United’s recent operational woes. Now he is adding climate change (which causes thunderstorms)to the list of reasons for why your next United flight might be delayed.

2. “I think irregular operations events are going to be more likely to occur as the climate warms. More heat in the atmosphere: thermodynamics 101. We’re going to have more thunderstorms.”

3. “There’s not much you can do with the thunderstorms. You’re going to cancel a lot of flights when a thunderstorm happens. If you can’t depart the airport, you can’t depart the airport. That’s not going to change. But what you can focus on is the recovery and making sure you divert those 100 airplanes, you know where everyone is, you have a better way to contact everyone.”

4. Kirby also took the opportunity to criticize the purchase of carbon offsets, which the claims most are “frankly are fraud.”

1. “They are either forests that were never going to be cut down or trees that were going to be planted anyway.”

2. He also noted that tax credits on Sustainable Aviation Fuel (SAF) had made this technology much more palatable, though it remains “uneconomic and expensive.”

5. Ramaswamy Investments Seem at Odds With His Position on ‘Woke’ Culture

1. The billionaire biotech mogul has railed against socially conscious companies. But his financial disclosure shows he has a stake in some of the leaders in the field.

2. But Mr. Ramaswamy himself owns valuable investments in many companies that have embraced environmental, social and governance principles, known as E.S.G. — the kinds of “woke” corporate practices he decries — according to a financial disclosure filed with the Federal Election Commission that was released on Friday.

3. While many of the companies in which Mr. Ramaswamy holds an interest are household names, they are also leaders in the corporate movement to address social and environmental issues.

4. Among the companies that Mr. Ramaswamy is invested in are Microsoft (his holdings are valued from $1 million to $5 million), Home Depot ($250,000 to $500,000), Lockheed Martin ($500,000 to $1 million) and Waste Management ($500,000 to $1 million). All adhere to various E.S.G. principles, according to reports posted on their websites.

5. Mr. Ramaswamy has argued that such goals are a distraction from earning a profit, and that social objectives should be left to elected officials.

6. Tricia McLaughlin, a senior adviser to Mr. Ramaswamy, said that he did not manage his own stock portfolio. “The first time Vivek learned of these positions was when he saw this financial disclosure report,” Ms. McLaughlin said on Friday. “Vivek’s stock portfolio is independently managed by a third party. The filer has authority to make trades and invest in stocks without his expressed consent or knowledge.”

7. The filing reported that Mr. Ramaswamy owned up to a $25 million investment in Rumble, the video platform that styles itself a refuge for right-wing commentators shunned elsewhere.

1. According to Rumble’s proxy, one of its board members identifies as LGBTQ+ and non-binary! Or maybe “did not disclose gender”?

2. CEO/Chair/Founder Chris Pavlovski owns approximately 85% of the outstanding voting power

1. Class D shares worth 11.2663 votes per share

2. $16.1M in pay last year (COO got $940k) despite owning 34.4M stock options with an option exercise price of 3 cents (current value is about $300M)

2. Alternative democracy

1. Kroger

1. Report on Recyclability of Packaging : 32% YES

1. As You Sow

2. Report on Racial and Gender Pay Gaps: 52% YES

1. Arujna Capital

3. EEO Policy Risks: 1.9% YES

1. National Center for Public Policy Research

2. “There is ample evidence that individuals with conservative viewpoints may face discrimination at Kroger.”

2. Carmax

1. Say on Pay= 31% NO

1. Pay Committee: Ronald E. Blaylock* (6%NO), Sona Chawla (2%NO), Mitchell D. Steenrod (4%NO)

3. Biogen

1. On June 13, Biogen announced that after speaking to shareholders 3 directors would step down: Alex Denner, William Jones, and that Susan Langer (Alex Denner’s girlfriend) would be nominated to the board

1. Langer brings “fresh perspective to the board,” a Biogen spokesperson said in a statement to Fierce Pharma, adding that she “knows the company and the biotech ecosystem very well.”

2. Ms. Langer was recommended as a director nominee to our Corporate Governance Committee by an independent director (DENNER).

2. Vote results are in

1. 54% said YES

2. 8,470,361 Abstentions

1. 7 other directors received total of 990,514 abstentions

MATT1

The House Financial Services subcommittee on Capital Markets is holding FOUR DAYS OF HEARINGS after releasing a slew of small and large amendment proposals to “reign in” the liberals in the stock market that the GOP has dubbed “ESG month”.

There are a staggering 18 proposals on which they are holding kabuki hearings, mostly populated by blowhard witnesses from places like the American Enterprise Institute and the Manhattan Project and other conservative think tanks. Here is your ESG month proposal roundup:

1. A “you can’t ask twice in 5 years” rule for proxy proposals

1. No “substantially similar” proxies for a five year period

2. A SECOND variation of the “you can’t ask twice” rule

3. A straight up ban on anything rule, if the issuer decides to ban it

1. exclusion of shareholder proposals from proxy or consent solicitation material if the subject matter of the shareholder proposal is environmental, social, or political.

4. A ban on any social policy issues in proxies “even if they’re significant”!

1. Here’s the whole text: “An issuer may exclude a shareholder proposal [...] without regard to whether such shareholder proposal relates to a significant social policy issue.”  That’s it!

5. A ban on the SEC’s ability to even ALLOW an proposal

1. The SEC may not “compel an issuer” to include “any shareholder proposal” or “any discussion” of a proposal (emphasis added)!

6. A study on ISS and Glass Lewis

7. A registration for proxy advisors, ostensibly to monitor all their behaviors

1. This includes details on the work experience of anyone researching proxies to make sure they’re qualified

8. Creating a liability for any advice that is a “material” misstatement (without mention of what’s material)

9. Making it a LAW that any investor USING a proxy advisor has to disclose the percentage of times they voted with them, how they thought about it, and all of their thoughts and feelings leading up to the vote

10. Proxies must be voted entirely by the will of the investors in passive funds

11. A total ban on “robovotes” - voting preferences using data

1. This one is brilliant, since they set it up so that the proxy advisors can’t be used, asset managers have to vote at the will of their investors, AND you can’t use data to automatically vote - every vote can be “abstain” from now on!

12. Another study, but this one on EUROPE’S mandatory disclosures!

13. A law mandating that no regulator can enter any agreement with international regulators without the express consent of Congress

14. No rule can be made by the SEC unless the ISSUER thinks its material!  

1. No more disclosure!

15. The SEC has to form an “advisory committee” made up only of issuers to lobby them directly!

16. A study showing whether/how municipal bond disclosures talk about climate

No bank discrimination against a business, no matter how terrible, and they must use only “empirical” data to determine it