Date: January 1, 2023
To: All Republican Politicians Who Are Concerned About ESG
From: Bob Eccles
Subject: Extending an Invitation to Meet with You
It is customary on New Year’s Day to make resolutions. Here is one of mine. It is an offer to meet with any GOP politician at the federal or state level to talk about ESG.
Before explaining my resolution, I want to sincerely wish all of you a Happy New Year and all the best for a great 2023. While I’m a Democrat, I am not a doctrinaire one. I live in Massachusetts and happily voted twice for Charlie Baker as Governor and contributed to his campaign. In admittedly modest amounts because I am only an academic. Thus, despite our political differences, I really do mean my New Year’s wishes.
Let me also acknowledge that you probably have no idea who I am since I don’t move in political circles. False modesty aside, I am a globally recognized figure in ESG. I’ve been studying it for a lot longer than any of you, like 30 years. With respect, I know a lot more about it than any of you do. And unlike you—and some of your counterparts on the left—I don’t view the topic through an ideological lens.
Lately I have been writing about the views some of you have about ESG. This has become quite a prominent topic in the GOP so you folks have been keeping me very busy! Here’s the current list with a few others discussed below:
I suspect very few, if any, of you have read any of these little pieces. If you did, I’m also sure you wouldn’t like them. Fair enough because we see this issue quite differently. In short, many of you define ESG as a Woke left-wing progressive political agenda interfering with America’s capital markets. As Mr. Pence pointedly put it in a May 26, 2022, letter to The Wall Street Journal, “ESG is a pernicious strategy, because it allows the left to accomplish what it could never hope to achieve at the ballot box or through competition in the free market.”
In contrast, and to show you how different our views are, I see ESG as an idea which is actually strengthening our free markets through better capital allocation. ESG is simply about the sensible management of material risk factors by both companies and investors.
Our capital markets are the deepest and most sophisticated in the world. We need to keep them that way. At the foundation of this are transparency, the rule of law, and sensible regulatory enforcement. Transparency includes reporting on material risk factors which matter to capital allocation and value creation. Like it or not, these include some environmental and social issues. The capital markets do not exist in a vacuum apart from the planet and society.
Under the rhetorical guise of “free markets” you are actually exercising political interference in a way that will hurt them by attempting to suppress the information investors need and companies are already reporting. Ironic, isn’t it, given your claims that this is what the dreaded “progressives” are doing? You also fail to understand that “fiduciary duty,” another term you sometimes invoke, actually requires that companies and investors take these material ESG risk factors into account.
I’m not the only one who sees it this way. So does my good friend Dan Crowley, a partner at K&L Gates and someone I’ve known for many years—and a staunch Republican. You can get a good sense of his views in a webinar we did together on November 29, 2022, titled “ESG Isn’t ‘Woke,’ It’s Capitalism.” It was brilliantly moderated by his K&L Gates partner Karishma Page.
You might also enjoy the story how this came about. I published a piece titled “Grift Capitalism: The GOP’s Brilliant Strategy For Ripping Off Ordinary Americans.” In true bipartisan spirit Dan sent me an e-mail saying he was unhappy with the piece and explained why. We had a very constructive conversation which led to us co-authoring “Turning Down the Heat on the ESG Debate: Separating Material Risk Disclosures from Salient Political Issues,” published by the Harvard Law School Forum on Corporate Governance. We note that, “Many Democrats see ESG as an opportunity to pursue desired social change through collective action in the form of democratic capitalism. Most Republicans view the ESG movement as an offshoot of the Green New Deal and therefore akin to thinly-veiled Marxism. While there may be some truth to both views, neither accurately reflects marketplace and regulatory developments over the past quarter century.” Which we then explain.
Our webinar was the next step in a little informal campaign to create a bipartisan discussion about ESG. It was followed by another webinar on December 12, 2022, “Where Does the ESG Debate Go from Here?,” hosted by the Bipartisan Policy Center (BPC). The panel consisted of Dan, Aron Szapiro of Morningstar, and me. It was expertly moderated by Michele Nellenbach of the BPC.
Rep. Bill Huizenga (R-MI-4) gave some excellent opening remarks in a Q&A he did with Tim Doyle (R), also of the BPC. Drawing on his real estate background, Mr. Huizenga emphasized that ESG is all about “materiality, materiality, materiality.” Not ideology. In his 15 minutes of constructive comments, he didn’t use the word “woke” once. I was the first person to speak after Mr. Huizenga and said that I couldn’t agree with him more. Which demonstrates that bipartisanship is not a fantasy of mine—but only you can make it real.
Which gets me to my New Year’s Resolution. I would be more than happy to meet with any of you who are interested in doing so to talk about ESG. We can do this in a private of public setting. Dan would be more than welcome to join me if he wants to.
I’m not kidding about this. As evidence, I have even suggested a topic on which we could have a common interest. The day after Christmas I published “Companies Should Pay And Report Their Taxes: A Bipartisan Proposal.” In it I point out that large corporations, a source of much of your concern, are paying a much lower tax rate than small and medium-sized enterprises. I don’t think this is right and I suspect you don’t either.
Going further, three days later I published “ESG Is Not About Ethical Standards And Ethical Values.” It is a critique of a discussion about ESG from your opposite end of the political spectrum. I don’t like ideological interpretations of ESG from the left any more than I like them from the right. ESG isn’t what some on the left hope it to be. It isn’t what you on the right fear it to be. It’s simply about managing material risk factors for shareholder value creation.
I decry the polarization that exists in this country, and I understand it’s coming from both the right and the left. I also acknowledge that the political sphere is above my paygrade. But I’m 71 years old and not naïve. The GOP now has control of the House and I’m sure there will be hearings on ESG. I’m actually pleased about this if it’s done in a bipartisan spirit (from both the left and the right) to answer these fundamental questions and not devolve into political theater. What is and isn’t ESG ? What can ESG do and what can’t it do? What can and should the private sector do and what should be in the domain of the political process?
I know we have a common interest in keeping America the great country that it is. We admittedly have different views on how best to do this. So how about we have a bipartisan discussion about ESG rather than using it as a rhetorical device furthering polarization in America?
Check me out. Ask around. Okay, I know you will have a staffer do this and the chances are remote this offer will even get to any of them. But if it does and they raise it with you and you want to engage, I’m easy to reach at email@example.com.