REPORT: Big Labor’s Push to Force Investment Managers to Ignore Fiduciary Duty and Promote Unions

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REPORT:  “The Next President Will Face an Emerging ESG Threat; Big Labor’s Push to Force Investment Managers and Publicly Traded Companies to Ignore Fiduciary Duty and Promote Unions”

by Sam Adolphsen and F. Vincent Vernuccio

President Biden has been focused on becoming the most pro-Environmental, Social, and Governance (ESG) president in history. He used his first veto to protect his administration’s rule that allows investment professionals to consider ESG factors in their decisions, replacing the longstanding rule that financial returns were paramount.

The veto was viewed primarily as showing his support for “Green New Deal”-style policies related to the environment. But it was also connected directly to his promise to be pro-union because Big Labor adopted ESG practices to promote its own interests.

Big Labor is replicating the ESG strategies used by environmentalists and other activists. These groups aim to cajole fossil fuel-producing companies and other businesses they consider socially unacceptable into abandoning profitable business ventures. The tactics of the Big Labor plan call for hijacking the shareholder resolution process through proxy voting and shareholder activism to force pro-union policies.

Unlike typical shareholder proposals, those supported by Big Labor do not seek to advance shareholder value. Instead, they seek to increase union membership and strengthen Big Labor’s power.

Read more in “The Next President Will Face an Emerging ESG Threat; Big Labor’s Push to Force Investment Managers and Publicly Traded Companies to Ignore Fiduciary Duty and Promote Unions” by Sam Adolphsen and F. Vincent Vernuccio

Inside the Report

• Introduction
• Definitions
• The present landscape and recent changes to investment law
• Financial performance of ESG investing
• The fiduciary duty yo-yo: ESG is not allowed in ERISA plans, then it is
  ESG investing portends a bleak future for free enterprise and democracy
  What can the next president do?
• Advancing Big Labor through Biden’s “whole of government” approach and
  shareholder activism
• Using the Federal Trade Commission (FTC) to advance organized labor’s goals
  Demands for “neutrality” and “noninterference” by management are a
  mechanism to deprive workers of the secret ballot
• Demands that management engage in “neutrality” and “noninterference” are a
  mechanism to stymie employee education on the drawbacks of unionization
  The PRO Act’s additional support for organized labor
• Project Labor Agreements (PLAs) and prevailing wage protections for
  government-funded projects
• Union pension plan bailouts—just the start?
  -The American Rescue Plan (passed in March 2021)
  -The Inflation Reduction Act (enacted August 2022)
  -The White House Task Force on Worker Organizing and Empowerment
• Shareholder resolutions proposed by Big Labor, asset managers, shareholder
  activists, and Big Government
• Proxy voting empowering shareholder activism and the Big Labor agenda
• Case Studies
  -Freedom of association and non-interference
  -The Big Battle Brewed at Starbucks
  -Other Key Cases
• Workplace harassment, discrimination, equity, and safety audits
  Backdoor advancement of unionization: ILO standards and paid leave
  What should the next president do?