WOKE WEDNESDAY: ESG is bad. Also, ESG is bad. ESG fired Tucker Carlson. Plus, ESG should be banned in insurance. Also, proxy votes are woke.

Live from where we are, it’s the ESG Industry’s ONLY weekly woke data podcast, featuring BS-Man Matt Moscardi. In today’s Extra SuperNerdy Gas called April 26, 2023: a nerdy ESG headline roundup, a nerdy look at over 20 recent AGM votes, and a nerdy Anti-ESG roundup from the anti ESG intelligentsia:

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

DAMION1

Random ESG Headlines

1. Can We Blame Stock Buybacks For Our Now Useless Pile Of Bed Bath & Beyond 20% Off Coupons?

1. The popular opinion is: couldn’t compete online

2. What about? $1.5 billion the chain spent on stock buybacks in 2021 and 2022, which left them with pretty much no money to spend on anything else

1. This was the genius of former chief merchandising officer at Target Mark Tritton

1. Who, we reported a  month ago, is suing BBBY for failing to honor his $6,765,000 severance agreement

2. ESG is Bad for a Company’s Share Value--David Henderson

1. In response to the observation that ESG  investing does not appear to hurt shareholder value based on the data that “annualized return was 0.02% higher for the S&P 500 ESG Index than the S&P 500.”

2. He said: “the evidence on shareholder returns is not evidence”

3. His theory is based on his understanding of “Event studies”

1. “I’m going from memory here about what I learned from dozens of financial economics presentations at the University of Rochester’s Graduate School of Management in the mid to late 1970s when I was an assistant professor, and also what I used to complete my Ph.D. dissertation in 1976. If the literature has changed substantially, I’m open to hearing about it.”

4. The theory being that if “firms decide, without warning, that they will go ESG”

1. it creates uncertainty about what steps the company will follow

2. And then the market value of those firms should fall relative to the market value of firms that haven’t made such an announcement but instead have announced that they won’t do ESG

3. S&P 500 CEO pay growth slows

1. new report from ISS Corporate Solutions, Inc. (ICS).

2. median pay increase was 3.1%, down from 13.2% last year

3. median base salary was US$1.3 million, up 2.9% from the previous year

4. bonus and annual incentive payouts were down 5.4%

5. stock and option awards to CEOs rose year over year

1. median stock award came in at US$8.5 million (up 9.5%)

2. median option award was US$3 million, which represented a median increase of 8.3%.

4. LGBTQ+ Board representation: identifying the barriers to entry

1. the Association of LGBTQ+ Corporate Directors surveyed existing and aspiring LGBTQ+ Directors to better understand their representation in the US boardrooms.

2. estimates that on average, 0.6% of all seats of publicly listed companies are occupied by out LGBTQ+ persons – although LGBTQ+ people are estimated to represent about 5.6% of the US population

1. Black directors at 11%, Asian directors at 6% and Latino directors at 5% in 2022.

3.  three clear causes of their exclusion

1. The Lost Generation: LGBTQ+ people were highly discriminated against and regarded as inferior until recently

2. Gendered Industries: skewed concentrations in certain industries

3. Network Gap: lack of access to informal networks which are the breeding ground for future directors

1. while only 3% of existing LGBTQ+ directors respondents serve on their nominating committee, 40% reported gaining their first seat because they knew someone there.

5. The Board’s Oversight of Employee Voice

1. State Street Global Advisors, Russell Reynolds Associates, and the Ford Foundation: board oversight of human capital management, with a specific focus on employee voice

2. C-suite survey: Top 3 stakeholder groups most impacting organizational strategy over next 5 years

1. Consumers/customers: 61% (70% last year)

2. Employees 51% (41%)

3. Investors 45% (37%)

AGM Meeting Votes

1. Bausch + Lomb: boring

2. Schneider National: boring

3. Carnival Corporation: basically boring

1. Weil and Weisenburger over 10%

1. STRIVE: Against Weisenburger

2. If you’re upset at somebody aim your vote at Micky Arison: 64% of the influence and a .125 TSR Batting Average (rest of board is .226)

1. STRIVE: FOR Micky!

4. Huntsman Corporation: boring

1. SHP shareholder ratification of excessive termination pay: flopped miserably

5. First Horizon: boring

6. Lucid Group: extra boring

1. Featuring only 0.00226665127% votes withheld from Chabi Nouri

7. Celanese Corporation: boring

8. Gaia: boring

9. Churchill Downs: boring

10. Commerce Bancshares: basically boring

1. David Kemper over 10%

11. KB Home: boring adjacent

1. Weaver 14%: BS data suggests no real reason for this

1. STRIVE: FOR Weaver

2. Say on Pay 19% NO

1. STRIVE: Against pay!

12. L3Harris Technologies: mostly boring

1. SHP Transparency in regard to Lobbying: 37% YES

1. STRIVE: FOR lobbying report!

13. Portland General Electric Company (PGE): boring

14. Huntington Bancshares: boring

15. The AES Corporation

1. SHP subject termination pay to stockholder approval: big fail (12% yes)

16. Adobe: nearly boring

1. Say on Pay: 12% NO

1. STRIVE: against pay

2. SHP  report on hiring of persons with arrest or incarceration records: 17% YES

1. STRIVE: FOR report on arrest hiring??

17. Silver Bull Resources: extra boring

18. Sonoco Products: boring

19. Citizens & Northern: boring

20. Sherwin-Williams: like watching paint dry (boring)

21. Humana: basically boring

1. D’Amelio over 10%

1. Kurt Hilzinger better choice?

1. same tenure

2. But career earnings average of a sad .094 (.445 for D’Amelio: 4th best on team)

1. .478 TSR (Cummings .795; rest of board: .699)

3. Opens up 11 influencer percentage points

2. STRIVE: FOR D’Amelio

22. CenterPoint Energy: basically boring

1. Cummings over 10%

1. Philip Smith a better choice: lower company average/lower earnings and TSR 

2. STRIVE: AGAINST Cummings

2. Say on Pay: 18% NO

1. STRIVE: Against pay

MATT1

Anti ESG roundup from the anti ESG intelligentsia: 

• RED HOT ANTI ESG TAKE: Rupert fired Tucker because he was hurting Fox’s ESG scores written by Jon McGowan, a “legal scholar” in ESG who routinely says ESG is all about being a good citizen, not returns

• From the article:

• First, set out how Carlson hated ESG: Carlson did numerous segments echoing Ramaswamy’s statements, railing against the concept and attributing many of our world’s problems to the concept

• Next, find a Jew to blame: In February 2023, BlackRock disclosed that its investments in Class A Fox Corporation stock had increased to 15%. That’s not a majority, but enough to get a seat at the table.

• Finally, say it was a conspiracy: While Carson may have been great for ratings on Fox News, it is possible his overall impact to the ESG scores of the parent company outweighed the ratings. He may have become an ESG liability.

• It’s a lovely trend we can repeat with subtle hints that he has no idea what he’s actually talking about.  From his Chicago Law article: 

• Suggest something as a passing thought without evidence: “In jurisdictions where fiduciary duty is extended only to shareholders, the justification of a tradeoff of profits for ESG priorities becomes less viable.”

• Make it scary after providing no evidence: “In the meantime, directors and managers who trade profits for ESG are doing so at their own peril.”

• From his hot take on Shell lawsuit in the UK:

• Turn that thing into a wider conspiracy: “Short of regulations clearly stating that climate change cannot be a factor in profit calculations, or studies refuting the threat to profits by climate change, there is not a lot that can be done to stop this theory if it takes hold.” 

• Also penned what, I think, is the greatest ESG thought piece off the greatest piece of potential ESG legislation ever: Is ESG Driving Florida’s Homeowners Insurance Crisis?

• Blame everything for it: Industry experts have stated that ESG is a natural fit for the insurance industry, as their calculations of risk already include environmental considerations. However, there is a question as to if those calculations are going beyond known risk and moving towards pushing environmental action onto consumers.

• Which brings me to the regulation I wish existed - an ESG ban in insurance

• Banning “E” in property insurance - BRILLIANT!

• Flood insurance was getting woke!

• Is fire an “E” issue?

• No more consideration of weather patterns

• Banning “S” in life insurance

• Obesity cannot be a factor for life insurance or health insurance

• Mental health - S or not?

• Banning “G” - G!!!!

• Texas bill prohibits any limitation on insurers insuring fossil fuel companies for the following reason: “solely because the risks are related to fossil fuel based energy”.

• The bill is ONE PAGE!