Live from Music Row Tuesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed 2nd Vote Advisors Dan Grant in studio to explain how banks, Congress, and Democrats are colluding to create a barrier for new competition through legal legislation.
Leahy: We are joined in studio by our good friend Andy Ogles, mayor of Maury County, and also Dan Grant, head of 2nd vote Advisors. Andy, I just want to bring you in here for a second. What do you think of all this stuff he’s talking about here?
Ogles: Well, it’s amazing because I think people do want options. They want choices because so many of these corporations are going woke and you’ve got your banks now that are leveraging their resources to work against We the People.
Leahy: It’s crazy. They’re trying to crush small businesses by putting all these regulations, all these ESG regulations that cost money. And it’s a barrier to entry to new competition. And it’s anti-American. And that’s what Larry Fink and BlackRock and all these Democrats running in Congress and the regulators are trying to do Dan.
Grant: And that’s the goal. So let me tell you a little bit about how they’re trying to do it. So the banks are all announcing that they’re joining the Partnership for Carbon Financial Accounting right now.
Leahy: I got a headache already. Carbon accounting? Is that a new kind of accounting?
Grant: Is that going to impact Tennesseeans? And I’m here to tell you that it is absolutely going to do it. And this is how they’re doing it. So 110 of the largest banks in the world have joined this.
The third had their press release a couple of months ago. And basically what they’re doing is they are reporting the carbon footprint of their customers, of their loan portfolios.
Leahy: Of their customers.
Grant: Of their customers.
Leahy: It’s none their business.
Grant: So what they’re doing as an industry group is they’re saying, okay, this customers carbon footprint we do not like. They are going to raise the pricing of those loans. And ultimately what they’re going to do is…
Leahy: Is that legal?
Grant: It’s legal. And they’re doing it. And ultimately, what they’re going to do is they are going to throw these companies out of the bank. Well, you can sit there and hear that and say there are 4,500 banks in this country, big deal.
They’re going to go to a smaller, medium-sized bank. And I would say, au contraire mon frere. That is not going to happen. Because what they’re doing is these ESG regulations.
Leahy: ESG. Environmental, social governance. Translation, left-wing junk.
Grant: Right. So the Partnership for Carbon Financial Accounting, this industry group is voluntary for these large banks.
Leahy: Like we’re talking Bank of America, we’re talking Wells Fargo. We’re talking to all these big banks where most people do their banking.
Grant: So what they’re doing is they are doing the societal good. They’re raising loan pricing on bad companies with high carbon footprints and throwing them out of the bank.
Leahy: This is anti-free market! Didn’t Adam Smith talked about the invisible hand of the market and it’s that invisible hand that ends up in the best good for all the economy. Andy, I see you wanted to jump in here on this. You’re a free-market guy, right?
Grant: That’s not what they’re saying to Congress. I can promise you, these banks are not going to Congress saying exactly what you said. What they’re saying to Congress is we are doing this for the good of society.
These customers we’ve thrown out of the bank are going to small and mid-sized banks now. Those money-grubbing midsized companies are not looking out for the greater good of society.
They need to be regulated. So what is voluntary at the large corporate level is regulatory at the small and mid-size companies.
Leahy: Are those regulations in effect now?
Grant: The House just passed the Corporate Governance Improvement and Investor Protection Act.
Leahy: Okay, let me just say whenever the Democrats pass a law that says X, you can be sure that it’s actually going to accomplish not X. That’s an example.
Grant: No, no, no. Maxine Waters was out there last week disagreeing with you, Michael. And she said, “It is surprising that to this day, there are no explicit ESG requirements and our investors are left to piece together the story of a company’s material risk with insufficient information.”
And I will tell you, if there is a material risk to any publicly traded company, it must be disclosed. I’ve been doing nothing but working with the SEC and attorneys for years on these ETS’s.
And if there’s a material risk, it needs to be in writing. But Maxine Waters, she’s here to help. She’s from the government. And she’s going to tell you that there is a whole new risk cloud out there that you need to be aware of.
Leahy: And the government needs to regulate it.
Grant: That’s right.
Leahy: And in other words, crush small businesses, small banks. That’s the plan. This is scary. Now for those listeners who want to do something about it, one of the things they can do is they can buy your ETFs.
Grant: Right.
Leahy: Exchange-traded funds. Now walk me through it. We talked about one, which is like the Second Amendment. Let’s talk about the pro-Second Amendment fund. Describe what that fund invests in.
Grant: There’s a corporate scale of one to 5, 1 and two Liberal, 3 neutral, four or 5 conservatives. And what we’ve done, we’ve rated all publicly traded companies, and we stick to mid and large-caps. So larger U.S. companies, nothing small-cap for now.
Leahy: When you say a mid-cap company, that would be a company with maybe half a billion in sales?
Grant: It’s more market cap driven.
Leahy: Market value?
Grant: So it would probably be 2 billion and up.
Leahy: In value. That’s a mid-cap. So anything 2 billion and up is something that we would consider.
Leahy: So my company Star News Digital Media would not be a mid-cap company.
Grant: You’d probably be a large-cap. (Laughter) A 100 billion and up.
Leahy: We will be a mid-cap company someday. (Laughs)
Grant: It’s mostly intangible unfortunately for you but highly valued nonetheless. We’ve rated these companies on a scale of one to five. And we’ve done that on issues that conservatives care about.
The First Amendment, Second Amendment, and life. And that is how we issue our security. We have a Second Amendment fund and it’s not necessarily companies that are out there supporting the Second Amendment.
Leahy: It’s companies that aren’t hurting it.
Grant: Aren’t hurting it.
Leahy: The rating would be either three neutral?
Grant: Three or four or five are going to be eligible.
Leahy: Now, there are 1500 companies that you look at?
Grant: So the S&P 500 is a large-cap. There are 400 that are mid-cap. So we look at the S&P 900 for our funds.
Leahy: Of those 900 how many are three, four, or five on the ratings?
Grant: I would say about 600, probably.
Leahy: That many? I’m surprised.
Grant: 90 percent of those are neutral.
Leahy: A three.
Grant: So there are very few companies that would rate a four or five to give you a sense.
Leahy: Do you invest in three, four, and fives?
Grant: We invest in three, four, and five.
Leahy: So I want to buy this. So what do I do?
Grant: Let’s say you have an E-Trade account or a Robin Hood Account You put in the ticker symbol EGIS.
Leahy: So I go to EGIS.
Grant: That’s right.
Leahy: I want to buy it because I like what you’re doing. How much does it cost?
Grant: So the share price today is probably about $30 a share.
Leahy: So I could buy one share for $30.
Grant: And if you didn’t like it the next day, you could sell it. It is a very liquid stock. You’re not buying it and you’re stuck with it.
Leahy: So I could buy today.
Grant: You can buy it today.
Leahy: One share for 30 bucks or more. And it’s liquid.
Grant: That’s right.
Leahy: But it’s liquid. It’s improved, hasn’t it? If I would have bought this when you started this, where was it?
Grant: So we launched the two funds publicly on November 18. By the end of the first quarter, Egis was up 20.8 percent compared to the S&P 500 at 10.7. And the other fund, LYFE which is a fund that supports life, obviously pro-life. The ticker LYFE, it was up the point versus the S&P 500 at 10.7 points, I think.
Leahy: And you got more of these coming, right?
Grant: We do. We’re launching more funds.
Leahy: When you launch the next one, tell us. But I think what I’m gonna do, I think I’m going to go after the show and I’m going to go buy myself some EGIS.
Grant: That would be great.
Leahy: That’s what I think I’m going to do. And we’ll track it. I think it’s going to do well personally.
Grant: We don’t have to be the size of Larry Fink to be effective. A guy like me can call a lot of these companies and say, hey, we are an owner.
Leahy: You know, one thing that I don’t like that’s going on in Congress right now is the efforts that a lot of these companies that are influenced by Larry Fink’s ESG left-wing junk are then sending letters to Congress.
Andy, we saw this story at The Tennessee Star today. Over 70 companies signed a progressive groups letter supporting the ‘For the People Act.’ Tell us why that struck a nerve with you.
Ogles: This For the People Act has to do with voting.
Leahy: By the way, let me just say they name it the For the People Act. But the real name is the Political Corruption Act.
Ogles: That’s right. They stole an election, and now we have all these audits going on. And so what’s plan B what’s plan C? How else can we try to influence elections? And so what these 70 companies are trying to remove, you have to be able to prove who you are to vote.
And it names race as an issue. But it says, working-class people. They say this in their press release are barriers to voting. Now, wait a second. If you’re working class, I’m assuming that you have a job. In order to get open a bank account, you need identification.
To have utilities, you need identification. All the basic things that we have to do day in and day out require a Photo ID. So why wouldn’t when you go vote, you’d be required to have a photo ID. Because you know what?
I want to make sure that my vote as Andy is cast by me. And so if someone just shows up at the ballot box and says, well, I’m Andy, and I want to vote, I want to be able to them to turn them away.
And so this idea that this is a barrier to voting is nothing more than more this virtue signaling and PC have gone awry.
Leahy: Dan Grant, head of 2ndvoteadvisers.com with these ETS. Electronic exchange-traded funds.
Leahy: See this is the guy that’s been doing this for a while. I stumbled through exchange-traded funds. Okay, so that’s one thing you do.
Listen to the third hour here:
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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Live from Music Row Tuesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Co-Founder and CEO Daniel Grant of 2nd Vote Advisers to the studio to discuss his recent talks with red-state treasurers and the potential to divest in corporations that do not promote American values.
Leahy: In studio with our good friend Mayor of Maury County Andy Ogles and Dan Grant, another good friend with 2ndvoteadvisers.com. I’m so excited about this. I’m so excited. Now you’re talking to some red-state treasurers, right?
Grant: Yes.
Leahy: Tell us why. What is it that the red state treasurers have?
Grant: Well, it’s pretty interesting, actually. So actually, we were just in the Australian Financial Review, which is The Wall Street Journal in Australia. And the reason we resonate with red-state treasurers and Australia is they’re heavily reliant on fossil fuels.
Leahy: Yeah. Fossil fuels have created the energy of America that’s cost-effective energy.
Grant: Right.
Leahy: And they’ve made a lot of improvements on environmental issues. But the Larry Fink’s of the world who want to tell everybody else what to do and what’s virtuous or not have declared fossil fuels are not virtuous.
Grant: Which is a problem if you are a red state treasurer and your state’s economy is dependent on fossil fuels. The main companies in the state are dependent on it. The main industries in your state are dependent on it.
I had lunch with a red state treasure a week and a half ago, and this gentleman controls over $70 billion in assets. And he was telling me exactly what I just said. They are under attack.
That week alone, Exxon lost three board seats to a small hedge fund called Engine No. 1. Engine No. 1 really didn’t know much stock, but they put a slate of directors out there. And then Engine No. 1 went to Vanguard, BlackRock, and some of the other large ones.
Leahy: Vanguard is like the number two.
Grant: Number two. And got enough votes to actually put three activists on the board.
Leahy: Now they like solar, solar, solar. Fossil fuel bad.
Grant: They are not saying, let’s go pump more oil out of the Gulf. (Leahy laughs) I can promise you that.
Leahy: I say bring that all on. Bring it on. Bring it on. (Chuckles)
Grant: Exxon is under attack. That same week, Shell lost a very important case in a Dutch court, which basically is making Shell diversify out of 45 percent of its fossil fuel business.
Leahy: Shell is a Dutch company?
Grant: Shell is a Dutch company.
Leahy: Nothing says free markets like I don’t know, a European quasi-socialist government like the Netherlands.
Grant: Let’s follow that example.
Leahy: Because it’s working so well.
Grant: What could go wrong?
Leahy: (Laughs) You are very good. That was good.
Grant: And then lastly, the same week, Moody’s came out with a report saying 40 percent of companies represent an environmental threat. 40 percent of companies in the United States represent a threat.
Leahy: What are they talking about?
Grant: Well, what they’re talking about is regulations. They’re talking about what Maxine Waters is talking about.
Ogles: A point that we kind of danced around earlier is this idea that these large corporations are putting in these layers and layers of regulations to stifle competition.
Leahy: Exactly.
Ogles: Because they don’t want you and me to start a business. They don’t want the small guy to become a big guy or gal for that matter or a mid-size company that becomes larger.
And so this has nothing to do with the environment. This has nothing to do with carbon footprints or whatever. They are literally trying to put other people out of business.
Grant: You’re right Andy. The government can’t control small businesses so what they want to do is regulate it. They can control large businesses. If large businesses can then make small businesses less competitive by piling on taxes through regulations, that’s what they’re going to do.
And that is exactly what they are doing. You don’t think Maxine Waters really cares about the Investor Protection Act, do you?
Leahy: So in terms of the red states, I think we’re talking. You don’t have to name any, but I will. So red States that have heavily in their portfolio, the fossil fuel companies. Obviously, Texas would be the big dog that would be there.
But Oklahoma would have them. And the Dakotas. North Dakota and South Dakota, New Mexico, and Arizona. All of those. New Mexico is not exactly a red state. Andy?
Ogles: One of the things that when Facebook was censoring the president, I sent a letter to the governor of the Speaker of the House and Lieutenant governor saying that the state of Tennessee should divest itself of any shares of Facebook and Twitter.
Why? Because these are big companies that have become social activists. They don’t represent Tennessee values. By the way, I never got a response to that letter. But that’s something that Florida has done.
Again, what would Ron DeSantis do? Florida has taken the steps to divest itself. And these huge investment funds States control red states and all states. They control a lot of money. If I dump my few shares of Facebook, it has zero impact.
If I cancel my Facebook account, it has zero impact. But if you have a state that has $50 or $60 billion under management and they say, you know what, Twitter? We don’t like what you’re doing to Conservatives on your platform that moves the needle. So I applaud 2nd Vote for what you’re doing.
Leahy: And Dan Grant, last minute of the program, you got 30 seconds. Sum up, 2nd Vote Advisers. Why should you go there?
Grant: Because we believe companies should be inspired by the First Amendment. Companies should not be trying to over-regulate and trying to stifle the First Amendment. Jack Dorsey of Twitter should not be dumping Trump because he can do it.
The First Amendment protects individuals from the government only, not from corporations. But corporations should be inspired because that is what makes our society great.
Listen to the full third hour here:
– – –
Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Live from Music Row Tuesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Co-Founder and CEO Daniel Grant of 2nd Vote Advisers to the studio to discuss their alternative for Fortune 500 corporations who want stay out of the politically correct ideology promoted by left-wing asset management firms.
Leahy: I’m just so excited about our guest today because you’re going to learn something about how to fix America right now. And one of the problems with America is embodied by a guy you’ve never heard of folks.
Listen to this guy’s name. He’s aptly named. His name is Larry Fink. F-I-N-K. And he’s very aptly named. He’s a very powerful guy, really powerful guy. He’s ahead of a group, the biggest money manager in the country, BlackRock. They manage, what, $9 trillion?
Grant: $9 trillion.
Leahy: $9 trillion. And he’s pushing all this leftist claptrap. There’s a claptrap that he’s pushing. And he wants in his mind, there are good sources of virtuous energy. And then there’s evil. And so in his mind, natural gas, oil, coal, that’s evil.
But solar wind, that’s virtuous. And he’s created all sorts of incentives for CEOs who just want to keep their jobs and get paid $10 million, $20 million a year to kind of be figureheads, moving along with the left.
There are all sorts of pressures with his regular messages to them about what he wants to see. This guy is running the policy of many Fortune 500 companies today, and it is, in my view, Dan Grant, a disgrace. What do you think?
Grant: I think, Larry, he’s a representative of the asset management industry as a whole. BlackRock is the largest. But if you look at all of the leading banks, all of the leading asset managers, investment managers, they’re following this philosophy. And if you went to the BlackRock website, you would find what they call their stewardship team. And that sounds great.
Leahy: Well, there’s a biblical concept, stewardship.
Grant: Sure. They adopted the term. And what they will brag about on the website is last quarter, the stewardship team from BlackRock visited 482 companies and their boards, their management teams, and said, hey, listen, guys, we’re owners were big owners of your company. And if you don’t start making acceptable progress towards hitting these ESG metrics that we have laid out,
Leahy: ESG. Environmental social governance. And some of these metrics are ridiculous, right? They basically, take bad leftist policies, they are the metrics.
Grant: So they’re the largest asset manager in the world. They go to these management teams and say, you need to start doing more to implement our definition of good. You need to start forcing that definition on your suppliers, your vendors, and ultimately, your customers. And if you don’t, we will start voting you out. And they are doing it.
Leahy: They’re voting them out. And basically, you got to accept their version of diversity, equity, and inclusion. You got to embrace Critical Race Theory in the workplace which is perhaps one of the most divisive things that are out there.
Now, people listening to us, you work for a large company, they’ve got diversity, equity, and inclusion. And if you go in, you’re forced to sit through the training. They’re telling you stuff that you know is wrong.
But what are you going to do? Are you going to say you’re violating my rights and lose your job? That’s what’s going on.
Grant: My company from a practical perspective, 2nd Vote Advisers, we’re looking at what they’re doing and we’re saying, what is the cost to these companies at the end of the day?
What is the cost of a diversity and inclusion program? I mean, it sounds great. But JP Morgan, for example, a couple of months ago announced a 30 billion dollar capital commitment to diversity and inclusion and closing the racial gap.
Leahy: (i.e. dividing people). That’s what those programs do.
Grant: You read the press release and you look at it and it’s like, okay, their funding, additional mortgages, small business loans, and that all sounds great. And the top 10 banks all have very similar programs, multi-billion dollar programs.
But nowhere in that press release is the actual cost. They’re not talking about the underwriting criteria for these types of loans and for these types of mortgages? A friend of mine was seriously being considered to be the CEO of Fannie Mae back in the Great Recession.
Leahy: Tell people what Fannie Mae is and why it matters.
Grant: It’s one of the government-sponsored entities that will essentially buy up mortgages.
Leahy: It’s the Federal National Mortgage Associations Administration. It’s a quasi-public organization.
Grant: Back in the Great Recession, both of the GSEs were about to fail. And the reason they were about to fail is they allocated 10 percent of their capital to subprime loans. But that 10 percent represented about well over 50 percent of at-risk.
Leahy: Why did they allocate those 10 percent of subprime loans?
Grant: Because they wanted to do something for the social good.
Leahy: Because it would be good.
Grant: It would be good.
Leahy: Virtue signaling.
Grant: So to bring it back to JP Morgan and this 30 billion and the top 10 banks, what they’re doing, what is the actual cost? Nobody knows. Third Bank just announced a $2.8 billion program, and they’re investing in a bank in Detroit, which doesn’t have the best background.
And yet they’re going to allocate a lot of capital to this bank in Detroit. And that bank in Detroit is going to be putting that money to work. Well, how successful is that going to be?
Leahy: I guess we’ll find out.
Grant: Right.
Leahy: But let me come back and say, okay, so these big money managers like Larry Fink. F-I-N-K. Big Larry Fink, that guy. They’re forcing companies to do all this politically correct stuff that’s costing a lot of money.
Let’s say you have some assets that are currently under management. What can 2nd Vote Advisers do to help out?
Grant: The first thing I would tell you is we are not going to do what BlackRock is doing. We are not going to be visiting companies and their boards and saying, hey, guys, we want you to implement our definition of good.
Leahy: Threatening them basically, you must do our version of lacking good or we’re going to whack you and we’re going to get rid of you.
Grant: That’s right. So what we’re doing is we are actually voting our shares with our beliefs. Companies should not be into social justice engineering. So we are telling CEOs to do that.
And I feel like we’re actually giving CEOs a reason to say no to Larry. Larry, right now, and all the big banks, all the asset managers, as I mentioned, are behind it.
Leahy: He’s kind of a tyrant when it comes to dealing with CEOs who are just quivering when his stewardship team walks in, they start to wonder, what can we do? What can we do? How can we not make them upset? How can I keep my job?
Grant: So what I hope to do is give these CEOs a reason to say no to Larry. I want them to say, Larry, listen, I hear what you want, but I got Dan Grant from 2nd Vote Advisers, and he wants us to do something completely different.
We’ve gone to our board, and we’ve decided to just stay out of the whole thing altogether and focus on our company and profits and let the individual decide where they want to put their philanthropy and charity.
Leahy: This Larry Fink guy at BlackRock manages 9 trillion dollars of money. Where does that money come from, by the way?
Grant: It comes from you and me.
Leahy: Private individuals.
Grant: Private individuals. If you’re in a pension plan if you’re a teacher if you’re a policeman if you’re an individual investor. These guys have hundreds upon hundreds of exchange-traded funds and mutual funds.
Leahy: So they’ve got 9 trillion under management. So 2nd Vote Advisers, what do you have under management?
Grant: Well, we started only a few months ago, and unfortunately, it takes a company like ours, a startup, to do what we’re doing. So I mentioned we started in 2000.
Leahy: You started with zero.
Grant: We started with zero. We now have two publicly traded exchange-traded funds.
Leahy: Tell us what an exchange-traded fund is.
Grant: It’s very much like a mutual fund. So you can go on, you can put the ticker symbol in. And one of our tickers is EGIS and it’s a Second Amendment fund.
Leahy: Which ticker do I go to?
Grant: If you are with a Morgan Stanley or any broker and you want to buy a stock, you put the ticker symbol in and you hit buy. So it is a liquid stock.
Leahy: Can I do it online myself?
Grant: Absolutely.
Leahy: Where would you go?
Grant: I have an E-Trade account.
Leahy: Put in EGIS I could do it right now if I wanted to buy. And what’s the fund do? Investing in gun companies?
Grant: Well, no. So what we’ve done is we have rated the S&P 1500. And we have different issues that Conservatives care about. One of the issues that Conservatives care about is the Second Amendment.
Listen to the third hour here:
– – –
Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Live from Music Row Tuesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Co-Founder and CEO Daniel Grant of 2nd Vote Advisers to the studio to discuss his background, their mission and the threats of stakeholder capitalism and environmental social governance.
Leahy: Batten down the hatches because we’re about to light it up in studio. With us, Dan Grant with the 2nd Vote Advisers and we’re going to learn all about them. I am very excited about this.
If you are frustrated and you want to do something to stop the wokeness in Fortune 500 companies, you got to talk to Dan Grant. Dan Grant has an option for you. In-studio with us also, our good friend from that bastion of freedom in Maury County, Mayor Andy Ogles. Good morning, Andy.
Ogles: Good morning. Yeah, I’m intrigued as well. When you have Coke, Coca-Cola getting woke and you have all these companies. Look, if you make 10 issues…
Leahy: You mean Woka-Cola?
Ogles: It’s like I don’t give a crap what you think about my politics. Just make good sneakers, right? Just make good running shoes, right? And stay out of my politics.
Leahy: Don’t lecture to me about how bad America is because it’s not bad it is great. Dan Grant, where have you been? Why has it taken so long to get 2nd Vote Advisers up and running?
And Let’s get you going. Tell us about 2nd Advisers on the web at 2ndvoteadvisers.com. What’s the idea, who is behind it, and what are you doing?
Grant: Sure. Great to be here. Thanks for having me, Michael. The research part of the company started in 2012. My partners in the business, Dave and Diane Black. Diane was in Congress for many years.
Leahy: Ran for governor.
Grant: Ran for governor, ran the budget committee. Dave, her husband then started a very successful drug testing company. I met Dave over 10 years ago when I was a banker at JP Morgan. We got to know each other fairly well.
And Dave being a prominent conservative, one day he was checking out at the grocery store and the clerk asked him, do you want to donate to a charity? Which he did. And they walked out and Diane looked at him and said, why did you do that?
That charity you just donates a lot of money to Plan Parenthood. And they’re very strong pro-life supporters. And Dave said, I had no idea. And that got him thinking, what else don’t I know?
And this was back in 2012 before a lot of this corporate activism really came to the public forefront. So he started a research company called 2nd Vote. And they score companies and they’ve been doing it now for nine years. And the scale is one through five.
So one means you’re liberal, two is leaning liberal, three is neutral for conservative, and five conservative. They’ve scored the S&P 1500. And you look at it today, and we now realize he’s really scoring companies on this stakeholder capitalism, Michael, is what they’re doing.
Leahy: It used to be in the olden days when people really understood capitalism, it was all about maximizing shareholder value.
Grant: Right.
Leahy: Now, you got to be politically correct, because if you’re not some left wing Liberal who’s running a big investment bank or a hedge fund like BlackRock, they’ve sent you a note and said, you got to bow the knee to critical race theory and global warming. You got to do all this stuff that’s stupid or else we’re gonna kick out.
Grant: Well, it’s unfortunate, right? I think this country, the economy that’s driven or wealth and success under attack and it’s under attack by what is called stakeholder capitalism.
So you ask, where have we been? I’ve been in the financial services industry my entire career. I have been around, but it really does take a small startup company like ours to do what we’re doing because the big banks I worked for, Wells Fargo, JP Morgan.
Leahy: They’re lefties aren’t they?
Grant: They are.
Leahy: They’re very much far left.
Grant: Well, they’re all fully vested in this theme.
Leahy: I blame the business schools. Because I graduated from the top business school many years ago in 1981 at Stanford Business school.
And they were talking about the concept of corporate governance and stakeholder capitalism there. But it was just their sort of advisory. Now you’ve got these guys at BlackRock sending out these missives on. They call it ESG. Environmental social governance.
Grant: Which is the largest investment theme in the world. There are trillions of dollars behind it. So your listeners know there’s shareholder capitalism, which is a corporation that should be run for the benefit of shareholders.
Leahy: The owners.
Grant: Right. The owners, which I would agree with. But we are not sticks in the mud. If you’re a shareholder capitalist, corporations for many, many years have supported traditional charity. Helping the needy, the sick, and the poor. That is something that corporations have done for a long, long time. But now you have the World Economic Forum, Claus Schwab the stakeholder capitalists.
Leahy: The Davos crowd.
Grant: The Davos. And guess what? Their definition of good, they’re saying corporations should no longer be run solely for the benefit of shareholders, but for the good of all stakeholders.
Leahy: And the good is defined by these elitist leftists who are running these big hedge funds. And they don’t think the same way you and I do.
Grant: What’s a stakeholder?
Leahy: It’s somebody that exists. That’s it.
Listen to the third hour here:
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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Photo “Daniel Grant” by 2nd Vote Advisers.
Live from Music Row Friday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Senior Fellow at the Real Clear Foundation, Rupert Darwall to the newsmakers line to discuss his recent article and defines the design of ESG.
Leahy: We are delighted to welcome to our newsmaker line from across the pond, Rupert Darwell, a senior fellow at the Real Clear Foundation. He just released a study on capitalism, socialism, and a thing called ESG. And if you haven’t heard about it, you got to listen up. It’s very important what he’s written. Rupert, thanks so much for joining us this morning.
Darwall: It’s my pleasure, Michael.
Leahy: ESG, it sounds like a food additive, but it’s much more dangerous. Tell us, what does ESG mean? And why should we care about it?
Darwall: ESG is environmental, social, and government. It’s a form of investing. It’s meant to be for the clean, moral, pure types that want to make the world a better place. And it’s a bit of a con, really, because what it says on the outside is ESG investing, you’re doing well by doing good.
So you’re going to make more money by doing the things that are going to make the world a better place. But actually, it’s all about that at all. It’s politics by other means. It’s the politicization of business and investing. And you’ll say goodbye to those higher returns because that’s just sales chatter.
But fundamentally, it’s about turning capitalism into something very, very different. And it’s also about political power. It’s about giving financial oligarchs on Wall Street and in the big state pension funds like CalPERS in Sacramento and the Neivers New York pension funds, enormous amounts of political power of business.
Leahy: Yeah, that’s exactly it. We’ve noticed, of course, I guess the publicly traded corporations, I don’t know, 90 percent of them seem woke beyond repair. They’re always preening about some moral issue, and it’s just highly destructive it seems to me. When did this really start being a thing?
Darwall: Well, there was a phase of it, I think, in the 1970s because Milton Friedman wrote a fantastic article saying the role of business is judged by how much money it makes for shareholders. It’s about profit. Because if you’re a good business creating and innovating things in the market that customers want, you’ll do well and that kind of thing.
It kind of then went through the 80s and 90s and then receeded. But it’s really come back with a vengeance now. And you may remember, a couple of years ago, the Business Roundtable issued that 181 CEOs signed the Business Round Table statement on stakeholderism.
The businesses are meant to serve a wide variety of interests and demoting the stockholder. So it’s really come in very powerfully. And, of course, the so-called climate crisis, this existential threat to life on earth kind of thing, businesses have got to emit zero. So it’s really kind of taken business and particularly financed by storm might say.
Leahy: I don’t know what your background is other than your finance guy in London and you write about it. I’m a graduate of Stanford Business School. I have an MBA from Stanford way back when. And what I’ve noticed is the ideas that are taught in business schools today seem much more socialist at the highest level than they were when I was in school.
Tell me what you think about this. You have a generation of left-wing socialists now that are influencing these hedge funds like Black Rock and are serving on corporate boards and are in the marketing departments and the finance departments of Fortune 500 companies and they’re forcing that ideology that they’ve grown up with upon these publicly traded companies. Do I have that right or is there another element to it?
Darwall: I think that’s a very important aspect of it. I would also point to there’s also kind of a revolving door between the corporate affairs department of large corporations. At the end of the Obama administration, you saw a load of Obama administration officials exiting the federal bureaucracy and jumping into the C-suites of corporations.
For example, you mentioned Black Rock. One of the Black Rock guys is now a very senior economic advisor in the Biden administration. So it’s kind of this revolving door. It’s this intertwining of business and politics. And in my view, the business of business, the business of business is business. It’s not politics. It’s not politics by other means.
But what we’re seeing is polity of businesses becoming armed tools of political agendas, which I think is very dangerous for democracy, because these questions should be decided through the ballot box and through the Constitution.
The United States has a brilliant, perfect Constitution, if you like, of representative democracy. And the second danger to capitalism because as businesses become woke, they become less innovative and doing less of driving the things that make living standards rise and which makes capitalism the greatest economic system there’s ever been.
Leahy: The title of your study is Capitalism, Socialism, and ESG. But I look at this interconnection between the very large, publicly-traded corporations and government and politics. And to me, the ism that comes to mind is more a form of fascism. What’s your thought about that?
Darwall: Corporatism, because both socialism in its extreme form and fascism, but they both see that the political ideology must trump everything and every aspect of society. And particularly economic ones should be the tools of the state.
Yes, there is. You are absolutely right. It’s a form of corporatism. It’s very nasty. It’s unrepresentative, as I say, it’s about usurping, the Democratic prerogatives of the people through the ballot box.
Leahy: The other element of this to me, for free markets and capitalism to work, the capital markets have to work for all sizes of companies. Large companies and small companies. And of course, startup companies, small companies, entrepreneurial companies, that’s where most innovation does occur.
It seems to me that the rise of ESG, environmental, social, and governance standards among larger corporations has kind of made the capital markets much more difficult for small businesses and those that are providing innovations. Do you see that as well, or am I just looking at it from a small business lens?
Darwall: No. I think what happens is that large businesses call for large woke businesses if you like. When they embrace this agenda they say, well, our business model could be under threat from startups, therefore, because we’re doing what the politicians want and because what Democrats in Washington want, we need protection from startups.
Inevitably you get distortions in markets. You have you know what economists call rent-seeking behavior and businesses trying to protect themselves from businesses that are unencumbered by ESG and are free to perform as they want. I think you’re absolutely right. It’s a big threat to the layer of new businesses which really have driven growth and innovation.
Leahy: The other thing is to look at alternatives to ESG. Is this just a huge group think among hedge funds and Fortune 500 companies? Is there anybody in that world that you see right now that is not embracing ESG? And what consequences are they facing?
Darwall: I would say corporate CEOs are very exposed to proxy battles. If they put their head above the parapet, they’re likely to have a shareholder and stockholder revolt at the next annual general meeting. So they’re quite nervous individuals.
They have to go with the flow. The greatest economist of capitalism was Schumpeter. He wrote that an incredible book, Capitalism, Socialism, and Democracy. And in that, he described the publicly traded corporation as capitalism’s vulnerable fortresses for exactly this reason in that you have a split between ownership and control.
But I think the ESG thing because it’s such a distortion of the capital markets, there will be people who come in and contrarian investors who can make lots of money out of the fools who follow the ESG sales pattern. Because when you have people investing for non-financial reasons, they make mistakes.
They’re the easy ones you can pick off. I think there’s an aspect of it that this is set up so that more savvy investors at some point will make a great deal of money from the investors chasing the fools gold of ESG investing on the basis that they’re going to do well by doing good, which is, as I say, is complete junk.
(Commercial break)
Leahy: Rupert, you mentioned before that ESG actually doesn’t perform well financially, and it’s a bit of salesmanship, if you will, for the left. And you mentioned that perhaps some more savvy investors will come up with contrarian views.
I just sent you an email that includes some information about just such a group based here in Nashville, as it turns out, called 2nd Vote Advisors. And basically, they manage funds and they have private funds that are exchange-traded funds.
One is focused on pro-life. The other is focused on Second Amendment-type issues. They say that without 2nd Vote Advisors as a counterweight to existing asset managers, a progressive ESG agenda will continue when investors can rest assured that we will never vote proxies in support of ESG shareholder initiatives. I don’t know if you’ve heard of 2nd Vote Advisors, but it’s almost as if you predicted they would come into existence.
Darwall: It does sound like that. The smart investors will. When I say smart investors, investors that have got their feet on the ground, and they’re the best ones will see this as an opportunity. Because what will happen is that they will dump lowly rated ESG stocks, which means that they’re cheaper for others to buy.
There’s that thing that Ben Graham, the Warren Buffett guru, said, in the short term, a stock market is a voting machine, and in the long term, it’s a weighing machine. And at the end of the day, what will happen is it will be the cash flows that companies generate. The ESG investing movement is creating a massive investment opportunity for smart investors.
Leahy: But besides 2nd Vote Advisors, is there anybody promoting these contrarian options to ESG investments?
Darwall: That’s one of the things that’s needed to happen because what you’ve got is the big three index providers, ETF index providers led by Black Rock. You’ve got State Street and Vanguard. Those big three, which Black Rock is the largest asset manager in the world have gone woke.
Larry Fink is leading the charge on ESG, climate, and on stakeholderism. He has threatened encumbered management to vote against them if they don’t bow to the God of ESG. That means that if you don’t subscribe to that view of politics and that is what it is, it is essentially politics and ideology, you need to find the ETF provider who will vote your proxies the way that you want and not the way Larry Fink wants.
I think in time you will see alternative providers. The market should respond in the way that people who want politically free investing can have that demand satisfied. But as yet, I haven’t seen those ETF providers come over the horizon. America is still the most dynamic economy in the world, the freest economy in the world, and that over time that will happen. There will be a market reaction against this.
Leahy: How is it that a guy like Larry Fink, who is, in essence, a financially sophisticated left-wing ideologue, how is it that we have so many guys like that now?
Darwall: He was a bond trader who correctly spotted the diverse portfolio and index investing. These are both low costs and over time give very good performance. And he’s ridden that. And now he’s made as much money as he can ever hope to.
And he’s got the whiff of political power in his nostrils. And sitting in as chairman and CEO of Black Rock, he has the best of both worlds of having immense financial power on Wall Street and also access to every political leader he ever wants. So there is a lot of that.
There’s something that he said. Every year he writes to corporate CEOs just telling them what to think. And last year he wrote to them and said all this disclosure stuff, ESG and climate disclosure, and so forth. He says the goal cannot be transparency for transparency’s sake.
They normally say, well, the market needs more transparency and more data. Then he went on to say disclosure should be a means to achieving more sustainable and inclusive capitalism. Now, that is politics. That is pure politics and nothing to do with boosting investor returns or anything like that.
This is the guy acting as a politician wielding political power. The proxy votes that are embedded in ETF index funds, he’s stripping the proxies out of them, and he’s casting them according to his ideological prejudices.
Leahy: The founders, Alexander Hamilton, James Madison, Thomas Jefferson, didn’t agree on a lot. But one thing they did agree on that if an aristocratic manufacturing class ever arose in America, it would be bad for the constitutional Republic.
We have now this aristocratic leftwing financial class, and they have no constraints. I think what has arisen here with guys like Larry Fink is exactly the kind of aristocratic modern feudalism that Jefferson, Hamilton, and Madison would have absolutely loathed.
Darwall: I absolutely agree with that. These Wall Street oligarchs are essentially usurping, the prerogatives of the Democratic and constitutional political state. That’s exactly what’s going on. This is a parallel government that is not really accountable to anyone and certainly not accountable to voters. When Larry Fink talks about inclusive capitalism, he’s actually talking about exclusive capitalism, insider capitalism.
Leahy: Exactly.
Listen to the full interview here:
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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
