WOKE WEDNESDAY: Interview with House Rep. from Ill. Sean Casten of the House Financial Services Committee on ESG, wokeism, and having Republican friends
Live from the tail end of ESG Month, it’s the ESG Industry’s ONLY weekly woke data podcast, featuring BM-man Matt Moscardi! In today’s Egg-washed Speedo Gascan called July 26, 2023: a very special ESG Month guest, from the great state of Illinois (why are all the states so great?) U.S. House of Representatives member Sean Casten.
Our show today is being sponsored by ESGauge, your ESG data solutions provider
DAMION1
Our ESG Act protects investors, limits your financial risks from left-wing activism
ESG is liberal activisim masquerading as corporate responsibility – and it's bad for investors
Sen. Tom Cotton (AR), Rep. Andy Barr (KY)
The "E" in ESG presses investment funds to bankroll green energy boondoggles, while the "S" and "G" push companies to hire and promote employees based on diversity, race or other non-merit based factors, and to donate to radical left-wing groups. Unfortunately, your retirement account is likely bearing the financial risk of their social experimentation.
The ESG Act requires asset managers and ERISA plan sponsors to get written permission from their customers if they take non-financial interests into account when investing.
Unless the customer agrees to activist investing, the ESG Act will require that investment strategies are based on sound financial practices, or in other words, maximizing returns and minimizing risk.
Supposed free-market champions are limiting the freedom of investment managers, leading to lower returns and higher interest rates on bonds.
In Texas, anti-free market legislation could cost taxpayers up to $532 million in higher interest costs within a year.
In Indiana, a bill to limit ESG investing could cut state pension returns by $6.7 billion over the next 10 years.
The Arkansas Public Employees Retirement System estimated that it could lose $30 million to $40 million a year in potential investment returns due to a similar law.
Florida pensioners — first responders, firefighters and teachers — face potential losses of as much as $10 billion in returns.
Analysis by the economics consultant firm ESI for the Sunrise Project, an advocacy group, found that taxpayers in six states — Kentucky, Florida, Louisiana, Oklahoma, West Virginia and Missouri — could be on the hook for up to $700 million in excess interest payments if restrictions on sustainable investing are implemented.
Obstruction of responsible investment is starting to bite.
A Texas school district was forced to repurchase bonds at a higher interest rate due to the state's financial institutions blacklist.
Oklahoma, which banned state investment funds from working with companies that use ESG policies, lost its bid to land a major Volkswagen battery factory. The automaker is instead building in Canada, which has strong sustainability practices.
Stillwater, Oklahoma, is grappling with a $1.2 million interest hike for a loan to upgrade the city’s infrastructure.
SEAN CASTEN TRANSCRIPT
Matt: We're rockin' and rollin'. We are live. Welcome to Free Floats Business Pants Special Edition live show.
DR: Very special edition.
Matt: The specialist edition we've ever had. Today's show we have Representative Sean Casten from Illinois. Sean, thank you for coming and talking about ESG hearings, Kabuki theater, the bizarre nature of progressive human beings deeply defending Milton Friedman. Like I, some, I'm a little confused and we actually, we're gonna clear up some things hopefully.
DR:
Are we
Matt:
No, probably
DR:
in
Matt:
not.
DR:
less than 20 minutes?
Matt:
In 20 minutes we'll clear
DR:
Yeah,
Matt:
up every problem
DR:
great.
Matt:
we've had. I wanna actually start with one really quick question. Sean, have you ever heard of ESG before the hearings? I mean like was this a thing that was on anybody's radar? Because my mom didn't know what I did. for the last 10 years.
Sean Casten:
So weirdly I did, although I don't know that I'm a representative sample
DR:
Mm-hmm.
Sean Casten:
on this front. And before we start, thanks so much for having me. I'm especially excited that you picked me for your specialist show. I hope
DR:
I'm
Matt:
Hahahaha
Sean Casten:
that everybody gets to do that.
DR:
sorry.
Sean Casten:
Yeah, so. You know, before coming to Congress, I spent 20 years as the CEO, well, in the energy industry, 16 as a CEO running companies that had a mission to profitably reduce greenhouse gas emissions. And so we raised our money from people who had missions to do something more than just make money. We always understood that we had to make money as well, but that was sort of the wheelhouse that I lived in. And when I got to Congress, one of the first bills that I brought to financial services committee that I serve on, was to mandate climate disclosure rules from the SEC on all public companies. That, of course, is
Matt:
Mm.
Sean Casten:
now becoming a law. Because we passed it on the House floor, the Senate never took it up. The president never signed it. And then there was an executive order passed.
DR:
What year was this?
Sean Casten:
So we first passed that in the 116th and the 117th. I'm sorry, we didn't pass it in the House on the 116th. We passed it in the House on the 117th. SEC brought it forward at that point.
Matt:
Yeah, it was
Sean Casten:
And
Matt:
last year,
Sean Casten:
when
Matt:
I guess,
Sean Casten:
we
Matt:
yeah.
Sean Casten:
brought
DR:
Oh, okay.
Sean Casten:
it forward, it was brought together and stapled in a separate bill that Juan Vargas had from California to do a broader ESG mandate as well. Because as you guys know, there's... There's almost no correlation between how one rating agency rates a company and another. So he said, let's just come up with a standard set of rules.
DR:
Mm-hmm.
Sean Casten:
And so we had sort of been in that wheelhouse and Juan and I set up the Sustainable Investment Caucus at the end of last term because we felt like we just, we'd spent a couple of years deep in this space, had developed some knowledge, seemed like something that should be focused on and it was super nerdy. Our thought was like, let's create a nerdy caucus where we can bring in interesting speakers. And then wokeism happened.
DR:
Right.
Matt:
Yeah, the weirdest thing ever, yeah.
Sean Casten:
Yeah,
DR:
Yeah.
Sean Casten:
and so now, you know, the good news about having spent the time as we were able to, you know, pull together all the research we'd done and the speakers and the expertise and I think really arm our Democrats on the Financial Services Committee with a good set of talking points about
DR:
Mm-hmm.
Sean Casten:
what is this, what are the challenges, what are the opportunities, what are the objections, and I think we, well, I'll leave you guys to be the judge, but I think we handled
Matt:
I mean,
Sean Casten:
grateful
Matt:
honestly,
Sean Casten:
for
Matt:
the
Sean Casten:
the
Matt:
reason
Sean Casten:
work.
Matt:
why we reached out to you is because you're one of few people throwing heat, right? Like it does, it seems like you get it. Especially the fact that when we're talking about ESG at all, it's data, right? Which
Sean Casten:
Mm-hmm.
Matt:
it's already nerdy and wonky to begin with. And having sort of like a nuanced discussion in the form of a wokeism hearing is sort of anathema to progress.
DR:
Right.
Matt:
Which... So it's a when I was watching we watched the hearings and when I'm watching the hearings I'm listening to your questions and I'm like that guy Seems like he actually read something like it's very refreshing to have a rep that read a thing before Showing up here and understands at least the data. Yeah
DR:
How do you prepare your colleagues, for those colleagues who don't have a background and weren't CEOs at a company like yours, how do you prepare each other for hearings like this?
Sean Casten:
Well, look, I mean, the truth of DC is that every member of Congress has deep expertise in something.
DR:
Mm-hmm.
Sean Casten:
No members of Congress have deep expertise in everything. And
DR:
Right.
Sean Casten:
so you are as good as your staff, right, to
DR:
Sure.
Sean Casten:
fill in where your gaps are. And, you know, when we've... We've got some terrific staff who went through and sort of pulled all the research together, got it in some bullet points so that, you know, we've now, so now every members have got their bullet points in front of them and they can choose like, okay, what are the issues here that I'd like to really follow up on and dig into? And they go from there. But it's, you know, it's at some level it's not that different from doing a book report in college, right? You take a lot of notes and then you decide,
DR:
Right.
Sean Casten:
you decide what's going to go, you know, in your five-page essay.
DR:
Do you see hearings like this as an opportunity to speak to the people, like the electorate, like us, or do you see it as an opportunity to debate the other side? How do you position yourself?
Sean Casten:
Well. Let's sort of step back from the hearings
DR:
Mm-hmm.
Sean Casten:
for a little bit. I represent a district that is a very swingy district. I flipped it in 2018. It had been Republican for 50 years. I've never won by anything outside of the single digits. I'm
DR:
Oh wow,
Sean Casten:
sorry.
DR:
okay.
Sean Casten:
which is to say that like, if this was a winning issue, I would
DR:
Yeah.
Sean Casten:
have heard about it in my district.
DR:
Right.
Sean Casten:
Nobody
Matt:
Yeah
Sean Casten:
gives a damn, right?
DR:
No.
Sean Casten:
And so a
DR:
Yeah.
Sean Casten:
part of what we're trying to do, I don't wanna, let me not be so crass. There's
DR:
Yeah.
Sean Casten:
8.4 trillion dollars of money that wants to invest in the SGS. That's a lot of people who give a lot of dams.
DR:
Sure.
Sean Casten:
But politically, there
Matt:
Right.
Sean Casten:
is
Matt:
Right,
Sean Casten:
no
Matt:
right.
Sean Casten:
sort of like squishy centrist voter waiting to hear
DR:
No.
Sean Casten:
what your position is on woke investment
DR:
It's
Sean Casten:
philosophy.
DR:
an extremely niche subject area, extremely
Sean Casten:
Yeah,
DR:
niche.
Sean Casten:
and my view is that the way we got here, and this informs how we've been trying to think about it on committee, is that there has been a huge capital flight over the last 15 years away from bad things and into good things. And I say that, like, you look at the multiple that a first solar is getting versus an ExxonMobil.
Matt:
Yeah,
DR:
Mm-hmm.
Matt:
right.
Sean Casten:
The fastest growing vehicle segment is EVs. Coal has now went from being 50% of the US grid to 16, 17%. We make more power from renewables than from coal on any given day right now. And that's been fantastic for getting cleaner energy out, for getting, you know, and I'm focusing on the E of ESG. you know, as our state treasurer Mike Frerichs in Illinois points out, you know, people don't like to invest in drug dealers. That's why Purdue Pharma does not get, you know, a big,
Matt:
Right.
Sean Casten:
that's an ESG question. As that capital flight has happened, it's not that this has become a political issue, but that people who suddenly find themselves unable to compete in a free market are going to members of Congress and saying, can you please help me
DR:
Oh,
Sean Casten:
because I don't
Matt:
Yeah.
Sean Casten:
know how to compete. And
DR:
interesting.
Sean Casten:
so, so a part of what we've tried to do with this is saying, and look, I think there's a lot of warts on Milton Friedman. I'm no Milton Friedman apologist, but. But the fact that the party that is ostensibly all about, you know, companies that exist solely to satisfy
DR:
Right.
Sean Casten:
the needs of their shareholders is now saying, I don't like the fact that shareholders are not investing in my preferred company. And I wanna try to put some guardrails to limit the
DR:
Yeah.
Sean Casten:
flow of capital. That's a real problem. And we can talk about that politically in how to use five minutes, but I think at a larger level, if we decide we hate capitalism, Let's at least have that conversation before throwing
DR:
Well...
Sean Casten:
it out.
DR:
W-w-w-w-
Sean Casten:
Let's not just pretend we love capitalism while destroying it.
DR:
Let me ask you something about that. I mean, that's certainly our perspective from say the side of the left side, let's just call it. But do you think your colleagues are all aware of that, of that reputation of the Republican Party, or are we putting that on them? I don't know a lot of your colleagues think in those terms.
Sean Casten:
Um.
DR:
And what I'm trying to ask too, as an aside is, do your... colleagues from across the aisle when you're speaking to them off the record, do they refer to this as a bunch of nonsense too? Do they like, do you chuckle about that? Like how ridiculous this is that the modern day Republican party is doing this or do you not have those kinds of conversations?
Sean Casten:
There are issues where I find people agree off camera and disagree on camera. This is one where, you know, Andy Barr, who is like the poster child on the other side of this issue,
DR:
Okay.
Sean Casten:
he and I are actually really good friends. Like I like him a lot. He's a nice guy. We get along well. I think he really believes this stuff.
DR:
Okay.
Sean Casten:
And I, you know, in some ways that's why I'm friends with him, but I don't think he's lying.
DR:
Mm-hmm.
Sean Casten:
I just think he's misguided.
Matt:
Yeah, that makes it more authentic.
DR:
Yeah, that's true.
Sean Casten:
The, you know, and I think there's a view, and I don't wanna make this about Andy Barb, but so like, I think there's a general view on that side of the aisle, that they see all this capital flight away from bad things. And... view that by saying, well, that's only happening because government intervened.
DR:
Okay.
Sean Casten:
I perceive myself as a capitalist. And so the Clean Air Act is an anti-capitalist thing because
DR:
I
Sean Casten:
it
DR:
see.
Sean Casten:
is government making it harder to do this. Now, that's a slippery slope, right? Because child labor laws are anti-capitalist. You know, minimum
Matt:
What?
Sean Casten:
wage laws are anti-capitalist. OSHA is anti-capitalist, right? And there are all sorts of things.
DR:
Yeah.
Matt:
Yeah, that's what I was gonna ask.
Sean Casten:
I think there's a confusion about like, you know, the opposite of regulation is not anarchy.
DR:
Not to mention the irony of a democratically elected official like being against the institution at which they were elected to represent. That's
Matt:
Well,
DR:
another level of irony. But yeah, go ahead, Matt.
Matt:
I mean, I'm curious, like, if this is basically the death throes of the oil and gas industry, right, and the coal industry, fossil fuel writ large, we're at the beginning of those death throes in a way, right? Like, we still need it for the foreseeable future, but it's a deep wane, let's call it. I get, like, how that lobby would affect, you know, you know, these hearings or Andy Barr or anybody else on that side that the aisles deeply held beliefs and you could look at something like the EPA but you mentioned like OSHA. What I don't get is the lumping in of S and G of ESG. What we're talking about like DEI. I don't know how do we I guess what's really confusing to me is how we end up in a place where it's like I would get it if you just said you know, this environmental thing is killing our markets. But hiring people of color is killing our markets? Or like,
Sean Casten:
Well,
Matt:
that part lumping
DR:
Well, that's
Matt:
in,
DR:
the woke,
Matt:
I don't
DR:
but
Matt:
get.
DR:
that's the woke element of this,
Sean Casten:
no,
DR:
right?
Matt:
I don't get.
Sean Casten:
it's the same thing, right? I mean, I had an African-American friend from college who, after the Tea Party wave, but before Trump, he said to me that he felt like there was just a lot of bad stuff going on in the country. And I said, all right, what are you seeing that I'm not? And I forget how exactly he put this, but he basically said the... A country that is on a path to realize Martin Luther King's dream is a huge threat to white men of low character.
DR:
Right.
Sean Casten:
Right? And I
Matt:
That's... yeah.
Sean Casten:
think that pushback in the same way that you have, you know, if you're ex on mobile and you can't find your way to more than seven times multiple on earnings. Like the investment community is saying, I don't trust you with my money. I don't trust you with a specific position of power. Well, the flip side of that is if you're, if you're Don Trump Jr., nobody would hire you if you had to be evaluated just on the content of your character. I
DR:
Merit
Sean Casten:
didn't
DR:
based tire,
Sean Casten:
see, there's
DR:
yeah.
Sean Casten:
a
Matt:
Yeah,
Sean Casten:
pushback,
Matt:
excellence.
Sean Casten:
there's a pushback from a lot of folks like that who are saying, well, wait a minute, like I had a certain understanding of what opportunities I had in my life and what
DR:
Right.
Sean Casten:
I had to do in order to effect, to realize those opportunities. And that understanding is not really there anymore. And it's scrambling my definitions
DR:
I
Sean Casten:
a little bit.
DR:
mean, I could be sympathetic
Sean Casten:
And I'm
DR:
to that
Sean Casten:
trying
DR:
idea.
Sean Casten:
to be as sympathetic to that as
DR:
No,
Sean Casten:
possible.
DR:
I
Sean Casten:
But I think
Matt:
Yeah.
Sean Casten:
that's
DR:
think that's
Sean Casten:
a good point.
DR:
actually a great
Matt:
Except...
DR:
observation because they are the originators of benefiting on a non merit-based society, right? So
Sean Casten:
Yeah, and I'd
DR:
they don't wanna
Sean Casten:
try
DR:
transfer
Sean Casten:
to say it in
DR:
that
Sean Casten:
a non-judgmental
DR:
idea.
Sean Casten:
way, but if you were told for the first half of your life, if you do X, Y, and Z, good things will happen.
DR:
Mm-hmm.
Sean Casten:
You did X, Y, and Z, and now you're not getting the things that you expected.
DR:
Mm-hmm.
Sean Casten:
I think we can empathize that that's disorienting. Whether or not it's fair that somebody else had to do X, Y, Z, A, B, and C,
DR:
Mm-hmm.
Sean Casten:
right, and you only had to do X, Y, but I think we can still empathize in some of that sort of frustration and pain is what's happening there.
Matt:
I get it and like and I also think like Vivek is out there on he was on the show He was but he's out there on the you know GOP campaign trail hammering away woke ism and DEI and when he was on the show he actually used CRT like which was the boogeyman what two three years ago as His the reason why we don't see as many female executives in the Fortune 500 as male executives. He uses it, it's like an explanation for what is, but also it's the enemy. And that dichotomy is the one I don't get. You can explain the sort of systemic barriers and the really obvious in sort of publicly traded corporate world, right? Our data, the stuff that we do. is board data and we look at like gender diversity on boards. We have data on every company in the world and we can see the power gaps. Women have less power even when they're highly represented and people of color have less power even when they're represented. We have the data to show it and it's also like, it's not enough, like it's the threat. It feels metaphysical is what it feels like more than it feels like actual.
DR:
Like a turf, yeah like a turf war essentially.
Sean Casten:
Yeah, I mean, I don't know, this gets philosophical, but I suppose it's, you know, any time that our economy has advanced in great leaps, you know, through some great technological innovation or because women entered the workforce, we have always created more than we've destroyed in those transitions. But also in every one of those transitions. people who were sort of aware of the destruction saw the world as this is going to be a zero-sum competition, right?
Matt:
Mm.
Sean Casten:
You know, I mean, I have too many times in my own experience where, you know, I remember we had a, I hired a woman to be my head of government affairs in my last job and she took off her maternity leave and came back and said, I totally understand if, like, you're going to replace me when I'm gone. I said, why would I do that? And It was, it was a, I wasn't saying this because I was woke. It was just seemed like the decent thing to say. And you ended up, you ended up getting loyalty, not because I did something, anything special, but because there was this recognition of like, these are not the ways that someone like me gets treated in a lot of other environments.
DR:
Yeah.
Matt:
Yeah,
Sean Casten:
And that
Matt:
right.
Sean Casten:
made our company better. Like out of pure greed, I should do that because it allowed us to keep and retain talent. But I think there's a view from a lot of folks that, well, if... you know, if you hired a gay black woman to be on your board,
DR:
Mm-hmm.
Sean Casten:
it must have displaced someone of equal talent, right?
DR:
Right.
Matt:
Right.
Sean Casten:
Not like that person actually had to like be really good to get into
DR:
Of course.
Sean Casten:
that position, right? And that's gonna work better.
DR:
In fact, we had the evidence to support that she was, in fact, even better than her colleagues
Matt:
she was
DR:
to get
Matt:
likely
DR:
that far.
Matt:
better. Yeah,
DR:
Yeah, yeah.
Matt:
the data suggests that like, they're academically, experientially
DR:
Everything.
Matt:
a lot better because the bars are all held higher
Sean Casten:
Yeah,
Matt:
to even get into those roles.
Sean Casten:
there was a wonderful, and this was like a dozen years ago, it was this analysis of one of the Scandinavian parliaments that mandated equal gender participation, and it was about how the caliber of the parliament got better, like the number
DR:
Mm-hmm.
Sean Casten:
of bills passed, the bipartisanship of the bills passed, any metric you wanted improved, and the paper was called The Tragedy of the Mediocre Man. because they said that the challenge, it wasn't that it got better because women were better. It was that when you mandated the inclusion of underrepresented groups, you cherry picked the best members of those groups and you displaced the worst on the other side.
DR:
Interesting.
Matt:
Yeah,
DR:
Yeah.
Matt:
yeah, it's
Sean Casten:
And
Matt:
like
Sean Casten:
they call
Matt:
Jack
Sean Casten:
it the
Matt:
Welsh.
Sean Casten:
tragedy of the mediocre man because they said you're going to see a backlash
DR:
Right.
Sean Casten:
from people who were not necessarily misogynist, but the only thing they know is they lost their job because of this gender inclusion angle.
Matt:
Yeah.
DR:
Hmm.
Sean Casten:
You know,
Matt:
Well, I mean
Sean Casten:
and
Matt:
like...
Sean Casten:
I always describe to people saying like, who broke the color barrier in baseball? You know the answer to that question. Who lost their job because Jackie Robinson on the team?
DR:
Right.
Sean Casten:
No idea. I don't know. Right?
Matt:
Right,
DR:
Yeah.
Matt:
right, no, that's true. So it's interesting to me, you live this, you're sitting in the hearings, right? You're one of very few ex-CEOs in a political hearing asking questions about capitalism. Like in part of taking part of this Kabuki theater. What is it like to sit sort of there and know, you experienced a lot of this, as in as a CEO, you- dealt with climate issues, you dealt with diversity, like the conversation around diversity and hiring and talent and things like that, you had to think about them. Do you get frustrated sitting there, like thinking to yourself, you guys, what are you talking about? Like I did it. You have no experience in this except like the three bullet points that you got from Heritage Foundation this morning.
Sean Casten:
Look, like all of us, I get frustrated every day that my wisdom is not celebrated and people don't just come bowing before me and
DR:
Hey, we're celebrating
Sean Casten:
ask
DR:
it
Sean Casten:
me
DR:
today.
Sean Casten:
what to do.
Matt:
Yeah, I mean
DR:
That's
Matt:
like
DR:
why
Matt:
when
DR:
you're
Matt:
we
DR:
here.
Matt:
put this up there's gonna be cheers in the background when we put this
DR:
Yeah.
Matt:
up on the internet
Sean Casten:
No, I mean, I think... I don't get frustrated by it, except in the sense that the most people who get into Congress get into Congress by some background in the law, which is fine. It's totally appropriate if you're going to write laws. It's useful to have a law degree. Many a day I wish I would have taken a constitutional law class at some point in my life before I was tasked with taking off the defendant. But at the same point, a background in law is something where you are trained to represent your client, not to represent the truth, to figure out what to elevate, what to suppress in order to get a desired outcome. a background in business or a background in the sciences, you are taught that there are certain laws that are inviolable, right?
Matt:
Hmm.
Sean Casten:
You can use your marketing department to get around the corners, but the laws of economics, the laws of physics, like you can't really debate those. And what's frustrating is that when you have folks who have never dealt with a law except in the context of one that could be negotiated and modified. you end up having conversations about can we just modify the laws of economics, can we modify the laws of physics. And no you can't, except that in Congress if, you know, if 51, if 218 members of the House vote that gravity isn't real, gravity isn't real. Like
DR:
Right.
Sean Casten:
would not encourage you to jump off a building, but you can vote, you can pass a law that says gravity isn't real.
DR:
Mm-hmm.
Matt:
Well, it isn't that you pointed this out in the hearing. Some of your quotes in the hearings are fire. You pointed out in the hearing, you said, you mentioned like Indiana and their ESG ban, Kentucky and their ESG ban, and the expected costs of that, right? Which is basically, isn't that the same thing is basically saying gravity is not real, let's jump off this cliff.
Sean Casten:
Yeah, well, I think those aren't just expected costs. Those are real costs, right? Because they took supply out of their market. They said, OK, we used to have all these funds that were available to pension funds. We're going to take them out. And basic supply and demand, turns out, fees go up, right? Because
DR:
Yeah.
Sean Casten:
you get less
Matt:
Yeah.
Sean Casten:
competition. And so they are actually now paying billions of dollars they didn't have to pay just in higher deal fees. Setting aside, like, do you get a better return? Do you get a worse return? I don't know. It's a market. Like,
DR:
But that's
Sean Casten:
you know.
DR:
not really what this is about. Because when we talk about ESG data that Matt, you alluded to, is that all our industry really offers is like hundreds of more data points to analyze the market, right? To analyze a company, whatever, which I think most people would be thrilled by. So I don't know that this is the money, that the losses, the returns, it's not really what this is about. The language is kind of more of a holy war kind of language, or as you were alluding to, some kind of a turf war or something else. This is a cultural war. This is not about the bottom line, I don't think.
Sean Casten:
Yeah, no,
Matt:
Except...
Sean Casten:
and there is also, I think there's a, there has always been a schism in financial regulation between do
DR:
worse.
Sean Casten:
you prioritize the interests of investors or the democratization of access to markets, right? Push too far on one line, and you've got a bunch of people losing their shirt because they don't understand what they're investing in. Push too far the other way, and you know, only the uber wealthy can even participate in these wealth opportunities. And so there's some balance that's there. It has become very partisan, at least of late, that there are very few Republicans who will advocate for investor protections. And so when you have something like ESG that says, investors want the following information disclosed in a consistent format on the 10Ks, that's an investor protection angle. And in the current Congress, standing up for investors has become a very partisan thing, if that
DR:
Right.
Sean Casten:
makes
Matt:
Which
Sean Casten:
sense.
Matt:
honestly, and part of it is probably because anyone who's passing the laws doesn't bear the necessarily bear the brunt of the cost. So we see this in like, when we look at board members and irony is for a decade, we were talking about how companies were the opposite of woke we were the problem was the
DR:
course.
Matt:
data suggested it was all the opposite. And we would say things like, you know, company XYZ set a 2050 net zero target. And they're The average bore age is 68 years old, and just by mortality rates, you're all dead, right? Like by the time 2050
DR:
Right.
Matt:
hits, there's no incentive.
DR:
Or how about that Black Rock just kind of invariably supports management, right?
Matt:
Every 96%
DR:
They were never
Matt:
average
DR:
a woke
Matt:
vote
DR:
entity
Matt:
for
DR:
in our world. They
Matt:
in
DR:
were
Matt:
our
DR:
never
Matt:
world.
DR:
a woke thing, right?
Matt:
So there is a incentive gap, right? Like pass a law in Indiana
Sean Casten:
Yeah.
Matt:
that says ban ESG, but you don't bear the brunt of the raised taxes 10 years from now to cover the costs of limiting supply
Sean Casten:
Mm-hmm.
Matt:
to your point.
Sean Casten:
Yeah.
Matt:
I wanna, we have two minutes left of your time and I wanna waste it doing a stupid game. Are you up for a, like,
DR:
I still have to be fast.
Matt:
yeah,
Sean Casten:
Yeah.
Matt:
we'll do like a speed round. These are sort of yes, no questions. And they are wonky governance questions for the most part. Are you game for a really short game?
Sean Casten:
Yes, yes, bring it
Matt:
I
Sean Casten:
on.
Matt:
love it.
DR:
Hesitantly,
Matt:
Yeah, it's
DR:
yeah.
Matt:
like, yeah, I'm here now. I guess I'm pot
DR:
I don't
Matt:
committed.
DR:
even know if we're a game for the game, yeah.
Matt:
All right, Damien, take the game away. Go ahead.
DR:
All right, the game really is are you in or are you out? Right, are you with this potential corporate governance change or are you out? And you have even more expertise than we were hoping for. So,
Matt:
Yeah, honestly, I feel stupid
DR:
yeah.
Matt:
now.
DR:
How about this first one? I won't get to all of these. Eliminate all multiple class stock structures. One share, one vote. Let's let the alternative democracy that is voting on public corporations, let that. equate to the normal democracy. Are you in on that idea?
Sean Casten:
for public companies.
DR:
For public
Matt:
Public
DR:
companies.
Sean Casten:
Yeah,
Matt:
companies.
Sean Casten:
yeah, sure.
Matt:
Yeah,
DR:
Okay,
Matt:
in.
DR:
that's an endorsement. All
Sean Casten:
Yeah, I'm gonna
DR:
right.
Matt:
I like
Sean Casten:
check.
Matt:
that.
DR:
How about like, some of our countries in Europe, some of our colleagues, Denmark, France, Germany, how about requiring US boards to have at least one employee representative on the board?
Sean Casten:
Oh, I love it. Then we can finally, finally undo the ghost of Milton Friedman who keeps haunting
Matt:
Yeah,
Sean Casten:
us.
DR:
Okay,
Matt:
that's
DR:
that's a
Matt:
an
DR:
yes.
Matt:
end.
DR:
Okay, this is the big one. Nell Minow, who is one of your experts, is actually one of the co-founders of the original company that I worked for here in Portland, Maine. So
Sean Casten:
She was fantastic.
DR:
she was
Matt:
She's
DR:
fantastic.
Matt:
awesome.
DR:
How about make all the votes at the meetings, all the say-on-pay votes, votes against directors, share the proposal, make them all binding. If the shareholders pass the vote, it's a binding vote. Oh, I like
Sean Casten:
I think
DR:
this
Sean Casten:
I'm a
DR:
one.
Matt:
Ooh.
Sean Casten:
no on that one. I'm
Matt:
Oh, wow.
DR:
Tell us why.
Sean Casten:
having worked in environments where I was the king, but got the input of everybody before making a decision,
DR:
Yeah
Sean Casten:
and worked in environments that were purely parliamentary democracy. I think it's important to have a king. I think
DR:
Okay.
Sean Casten:
those votes should be loud, and they should be listened to, and there should be accountability. But I don't know that you want just a pure vote on them.
Matt:
I
DR:
What,
Matt:
can respect
DR:
well.
Matt:
that. I'm the CEO of our company. I respect
DR:
Yeah,
Matt:
that.
DR:
let me ask you this. Were you also the chair of your board, Sean, at your company?
Sean Casten:
No, it wasn't.
DR:
Okay, intentionally, or was that part of your guidelines, or why weren't you the chair?
Sean Casten:
Well, that's probably a longer story.
DR:
Okay, okay.
Sean Casten:
It's somewhere in between, but...
DR:
That,
Matt:
Let's do one more and we're a minute over and we'll let you go free.
DR:
I'll leave it at that. How about the last one being eliminate all combined CEO chair roles at public corporations. The CEO should not set the agenda of the board that is supposed to provide
Matt:
hire
DR:
oversight.
Matt:
and fire the CEO.
DR:
Yeah, how
Sean Casten:
Yeah,
DR:
about that one?
Sean Casten: I think maybe even go a step farther. I think the chair probably shouldn't have an executive role.
DR: Okay.
Matt: I love it. I love
DR: Alright.
Matt: Representative Sean Caston, thank you so much for
DR: Thanks so much, Sean.
Matt: I know we're a minute over. Actually, honestly, we I could do this for another like five hours. So we may go back to your comms department and ask for more of your time at some point in the future. This is an awesome conversation. Thanks so much. And we'll be in touch again.
Sean Casten: All right, thanks for staying woke.
DR: Thank you.
Matt: Thanks, Sean.
