How the Right sabotaged ‘responsible capitalism’

The sabotaging of 'responsible capitalism' takes us to America, where, as culture wars rage, businesses seen as socially and environmentally progressive are under attack.

Right-Wing Watch

“When Google does great things for the world, I applaud. When it goes to extraordinary lengths to avoid paying taxes, it’s wrong,” said Ed Miliband in 2013, as he argued the case for ‘responsible capitalism,’ in that the ‘right messages are sent out from the top.’ The then Labour leader had even set out a five-point plan for more responsible capitalism, calling for business ethic that empowers long-term shareholders and a finance system not based on short-term profits.

Today, the notion of ‘responsible capitalism’ broadly encompasses a company’s or investor’s environmental, social, and corporate governance (ESG) agenda. It is sometimes referred to as ‘clean capitalism,’ ‘conscious capitalism,’ and even ‘woke capitalism’ (the latter being used derogatively, mainly by conservatives who oppose it.)

You would think that everyone would applaud the move to make society fairer, workplaces more diverse, and emissions cut? But no, alas, there is a right-wing, anti-ESG backlash going on. And, as so often with the Right’s extreme agendas to curtail what’s good and progressive in society, the sabotaging of ‘responsible capitalism’ takes us to America, where, as culture wars rage, businesses seen as socially and environmentally progressive are under attack.

In 2020, BlackRock, the world’s largest asset manager, with $9.42 trillion in assets, announced it was squarely behind ‘purpose-driven’ investing. Sustainability will be at the “centre of our investment approach,” said BlackRock chief executive Larry Fink. Investors and corporate American quickly followed suit, launching ESG-focused plans, and signing up to Net Zero carbon schemes. But four years later, and BlackRock’s position on purpose-driven investing has shifted somewhat. In November 2023, Fink announced the decision to continue to work with big energy companies and described a $550m investment into one of the world’s largest carbon capture project as “an incredible investment opportunity,” rather than focusing on its environmental merits. Fink even said he was no longer using the term ESG because it had become ‘weaponised.’

While capitalism is always inevitably profit driven and there is a suspicion of ‘green washing’ in some recent corporate announcements, the current shift in focus and sentiment, has owed a good deal to US Republican politicians’ relentless pounding of big banks and investment managers for being ‘too woke’ or ‘hostile’ to fossil fuel.

In the first six months of 2023, Republican lawmakers in 37 states introduced an incredible 165 pieces of anti-ESG legislation, a report from Pleiades Strategy, the strategic research and advisory firm uncovered. The proposals sought to employ a range of tactics, including combatting federal investment rules and imposing limits on public contracts.

Connor Gibson, who co-authored the report, described the trend as ‘rampant.’

And, as so often when discussing the action of the Right, the war on responsible capitalism has associations with right-wing think-tanks. The report found that the majority of the anti-ESG legislative proposals bore strong resemblance to model bills created or circulated by four influential right-wing think-tanks – the Heritage Foundation, the American Legislative Exchange Council, the Foundation for Government Accountability, and the Heartland Institute.

Additionally, advocacy for many of the bills was led by groups with fossil fuel interests, including the Texas Public Policy Foundation (TPPF), which, since 2012, has reportedly accepted at least $8.8m from organisations linked to fossil fuel billionaires Charles and the late David Koch. The TPPF began its assault on ESG in 2020, and was behind an innovative anti-ESG bill passed in Texas in 2021, which sought to punish fossil fuel disinvestment.

Meanwhile in New Hampshire, Republican lawmakers have gone even further, seeking to make using ESG criteria in state funds a crime. A bill was introduced that would prohibit the state’s treasury, pension fund and executive branch from using investments that consider ESG factors. ‘Knowingly’ violating the law could lead to 20 years imprisonment. Yes really!

But despite their best efforts, just 22 of the 165 proposed anti-ESG bills progressed, and many that passed were watered down. Frances Sawyer, founder of Pleiades Strategy and co-author of the report, described how the ‘dark-money-funded attacks on the freedom  to invest responsibly’ had hit deep opposition from business, labour, and environmental advocates. “Our report shows that the effort to weaponise government funds, contracts and pensions to prevent companies and investors from considering real financial risks is not a winning platform,” she commented.

While their punitive anti-ESG proposals might not be securing the legislative support they might hope for, the right-wing Republican movement against ‘cleaner capitalism’ is having an impact. In 2023, the launch of funds citing ESG attributes plummeted. A report by the FT on how money managers are pulling back support on climate and social shareholder proposals revealed that just 3 percent of the 257 resolutions on environmental and social issues the advocacy group ShareAction examined in 2023 won majority support. This was down from 14 percent in 2022 and 21 percent in 2021.

The sector’s four largest players by assets managed – BlackRock, Fidelity, Vanguard, and State Street – were among the most reluctant to back environmental and social resolutions, one of which called for an assessment of workers’ rights at Amazon. Claudia Gray, head of financial sector research at ShareAction, described the findings as ‘deeply concerning.’ 

Concerningly, at this year’s World Economic Forum in Davos, ESG was barely heard. As Gillian Tett reports in the FT, even if companies are engaged in sustainability drives, most executives are reluctant to use the term ESG, especially if they are in America. ‘…anyone advocating for sustainability in a company now needs to present this to colleagues and shareholders as an initiative about resilience-building and reputation-building — rather than just doing good,’ writes Tett.

The US’s anti-ESG backlash is causing something of a transatlantic rift. In the UK and Europe, financial institutions are increasingly expected to disclose the environmental and social impacts of their investments, compared to the US, where Republican politicians criticise financial institutions for being too vocal on ESG issues.

Just this week, investors, including Europe’s largest asset management firm, Amundi, and the UK’s biggest pension scheme, the government-backed National Employment Savings Trust (Nest), backed a resolution filed by the Dutch shareholder activists at Follow This, which calls for the oil giant Shell to align its medium-term emissions reduction targets with the 2015 Paris agreement.

While the anti-responsible capitalism movement might not be so pronounced here in Britain as it is in the US, it has gained a footing, with the right-wing media, unsurprisingly, in the driving seat.

On January 14, the Daily Mail published a painfully anti-ESG story that could have come straight from Fox News, which loves to shout about companies advocating for ‘non-woke, anti-ESG’ proposals.

‘Millennials and Gen Zers ditch ‘woke capitalism’: Support plummets for socially-conscious ESG funds as TikTokers bash ‘scam’ diversity targets and ‘greenwashing,’ was the Mail’s  sensationalising headline

The report cites a US study (though it doesn’t exactly promote the fact it’s a US study) that shows younger generations had begun to allocate their money ‘more like baby boomers, who are keener on turning a profit than lofty principles.’

What the Mail’s story fails to touch on is that you would expect a drop-in support for responsible capitalism, after the Republican focused campaign to discredit and diminish it.

And, if we thought the war against responsible capitalism had yet to arrive in Britain, then we should cast our minds back to last summer when Nigel Farage’s blasted bank account dominated the news cycle, not just for days, but weeks. The former UKIP leader’s battle with Coutts Bank over the closure of his account, snowballed into an assault on ‘woke capitalism,’ driven, not just by Farage but by the national right-wing media.

 ‘…. Treatment of Nigel Farage is disgraceful – too many firms have let woke extremism become their official creed,’ splashed The Sun.

‘You don’t need to be a Nigel Farage fan to be outraged by him being stripped of his account by hyper-woke bank,’ was another headline in the Murdoch newspaper. 

One would hope, but not expect, there to have been some kind of acknowledgement of their misjudgement by the said media, when it was eventually confirmed in an official investigation, that the decision to close Farage’s bank account was lawful, that Coutts had a “contractual right” to shut the accounts, and had done so because the bank was losing money by keeping him as a client.

Naturally, that part of the story did not dominate the frontpages for weeks. In fact, it barely got a mention.

In his evaluation of whether the anti-ESG movement as seen in the US has made its way to the UK, Ben Carr, Associate Director of the MHP Group, sees the Farage/Coutts drama, and Sunak’s rolling back of climate policies, as evidence that such a backlash might have started in the UK. 

“Away from climate change and looking at the governance pillar within ESG, the recent Coutts debanking saga is further evidence that a broader ESG backlash may be emerging in the UK,” writes Carr.

In an episode discussing the Republican movement against environmental, social and governance investing, the Politico Energy podcast argues that the US is looking to take its message to the UK. Politico’s Jordan Wolman refers to a conference in London that took place November, where high-profile US conservatives known for pleading anti-ESG sentiment, spoke about what they determined to be their wins in the US in getting Wall Street to back off from their sustainability commitments and pledges. For Wolman, the fact that such Republicans are speaking at the UK conference, is testament that they want to push their agenda in Britain.

The climate journalist also spoke of how the UK defence secretary had warned that ESG could be undermining investment in the UK. In September, Grant Shapps criticised ESG for excluding companies and that ethical investing is harming Britain’s economy and risks undermining the defence sector.

‘Ethical investing is a threat to Britain’s defence industry, warns Shapps,’ The Telegraph splashed.

Wolman also noted how Rishi Sunak had rolled back on some key climate targets. “The backlash per se might not but as clear cut in the UK, but ‘the foundation could be there,” he warned.

Alongside government ministers criticising ESG investment, and Sunak’s decision to boost North Sea oil and gas production, as well as the rolling back of the 2030 ban on petrol and diesel cars to show the government is ‘on the side of motorists,’ the growing list of anti-green headlines in Britain has included the targeting of specific companies.

In April 2023, the Telegraphtook aim at John Lewis, which has long been considered a bastion of ‘responsible capitalism’ for its employee-owned business model. The John Lewis Partnership (JLP) model was introduced in 1929, when one of the founder’s sons realised that while himself, his brother, and father earned £26,000 a year, the rest of the staff shared £16k between them. The rationale was that such a model results in low staff morale, and it is “wrong to have millionaires before you have ceased to have slums.” Both would have a negative impact on business.

‘John Lewis’s happy-clappy partnership model has become a millstone,’ was the headline of financial columnist Matthew Lynn’s piece that argued, for all their virtues, worker-owned businesses have ‘fatal weaknesses.’ I won’t bore you with too much detail on the apparent weaknesses, but they comprised of the same-old ‘slow to embrace change,’ ‘no mechanism for ousting managers and replacing them with tougher executives,’ and so on.

Fortunately, the inference pedalled by the likes of Lynn that ‘responsible capitalism’ has met its demise and is no longer fit for purpose, doesn’t really translate into what’s actually happening.

While the real-world impact of the anti-ESG backlash is difficult to assess, the continued success of companies which embrace responsible capitalism cannot be ignored.

Just look at Timpson, the much-loved British cobbler. In 2022, the company’s chairman, Sir John Timpson, received the FIRST Responsible Capitalism Award for his record of helping those who have fallen victim to misfortune, and specialising in recruiting staff from marginalised groups. In 2023, Timpson announced its profits had surged ‘way beyond their expectations.’ So much for responsible capitalism not working.

Even in the US, the originator of the anti-ESG movement, businesses known for their conscious capitalism are going from strength to strength. The outdoor clothing company Patagonia, for example, won global admiration and headlines when it announced it was transferring ownership to a charitable foundation committed to saving the planet. This is despite the Republican drive to come after business over social issues.

It could be said that Ed Miliband was ahead of his time in his push for ‘responsible capitalism.’ And while we never got to see the benefits of his plan, fortunately the pillars of environmental, social and corporate governance are not being actively sabotaged by the political Right in Britain. That said, we should never underestimate the influence of right-wing Republicans on UK Conservatives, and there are worrying signs that the anti-ESG movement has taken a leap across the Pond.

Right-Wing Media Watch – The media jihad against Ed Davey

The right-wing media is holding no prisoners in its smear campaign to force the Liberal Democrat leader to resign.

‘Ed Davey has called on so many others to resign. Will he now take his own medicine?’ was The Telegraph’s headline this week.

The Evening Standard, owned by Russian-British businessman and Johnson appointee to the Lords in spite of a murky past, Evgeniy Lebedev, went even further. The newspaper devoted an entire frontpage to the smear campaign. ‘Sir Hypocrite’ the newspaper splashed.

GB News went further still, with the station’s biggest presenters, Nigel Farage, Jacob Rees-Mogg, and Lee Anderson, launching full-scale tirades against Davey. Such was the ‘biased’ coverage, that the Lib Dems have accused GB News of ‘misleading’ viewers over the minister’s involvement in the scandal.

Meanwhile, the Express took exception to the party’s complaint to Ofcom about the channel’s coverage of Davey’s ‘failure to grasp the Post Office scandal.’ The newspaper devoted an entire story to how Lee Anderson ‘brutally slapped down’ (the right-wing media love machismo interviews) the Liberal Democrats after they announced they had written to the media regulator demanding an investigation into GB News.

Davey’s ‘crime’? He was the minister responsible for the Post Office from 2010 to 2012, during the coalition government, and “he did nothing to address the plight of wrongly -accused sub-postmasters and sub-postmistresses…” as The Telegraph put it.

I was of the impression that the Post Office failings ran from 1999 to 2015, when over 700 sub-postmasters were wrongly prosecuted. From 1999 to the present day (when the most widespread injustice in British legal history has finally got the full-spectrum media fever coverage it deserves, thanks to an ITV drama) there has been a total 20 Post Office ministers – 8 Conservative, 8 Labour, and 4 Liberal Democrats.

Why then, is Ed Davey being singled out as the only offender?

Cynics might believe it has something to do with the fact that the Lib Dems have played a leading role in exposing the Murdoch empire’s wrongdoings.  The fevered calls for Ed Davey to resign seemed to be initiated by The Times.  

‘Ed Davey can make history – by resigning, was the newspaper’s headline on January 9.

In December, News Group Newspapers agreed a six-figure settlement with former Lib Dem minister Chris Huhne whose political career ended with a conviction for perverting the course of justice. The former Liberal Democrat minister had accused News Group Newspapers of ‘knowingly orchestrating unlawful information gathering in the UK.’

On the settlement, Huhne said he believed it, “vindicates my long-standing claim that News Corporation directors and managers targeted me to get rid of a political opponent.”

“They had two objectives: corporate espionage to help Murdoch’s bid for Sky, and bull-dozing pesky politicians out of the way.”

Huhne was not the only Lib Dem minister who claimed that News Corp had not hacked him just for tabloid titillation but as an attempt to remove him as a critic. Vince Cable and Norman Lamb made such claims.

Cable was removed from his position as business secretary by the then prime minister, David Cameron, after journalist and presenter Robert Peston was leaked a tape in which Cable had told a constituent that he had “declared war” on Murdoch and expected to win.

Could it be that history is repeating itself, and the Murdoch media is using the Post Office scandal to whip up furore against Ed Davey in a bid to get revenge on those ‘pesky’ Lib Dems?

I wouldn’t put it past them.

Woke bashing of the week – National Trust’s communications head hits back at media’s accusations of virtue signalling

The National Trust (NT), one of Britain’s best-loved institutions with over five million members, is a constant target of the woke bashers. For three years the self-styled ‘anti-woke’ insurgents, Restore Trust (RT), have ran a bitter campaign designed to infiltrate the charity, and rid it of what it describes as a ‘woke’ agenda, including policies on rewilding and social inclusion. 

Celia Richardson, director of communications, has had enough and is hitting back at the persistent slurs, which are heavily promoted by the right-wing press.

During her three years as comms head, Richardson says she has been forced to insist that NT has not been captured, as The Sun worded it, by “shrill, demented, wokery.”

Talking to Prospect Magazine, Richardson explained how when RT emerged following the publishing of an academic report into the Trust’s links with colonialism and slavery, the organisation met with Restore Trust, which began loudly arguing that the charity had lost its way. She continued how the group gained thousands of members and received a ‘huge amount of sympathetic media coverage.’ How it appointed paid staff and directors, including Neil Record, who chaired the climate change sceptic campaign group, Net Zero Watch, and the Institute of Economic Affairs.

Richardson spoke of how RT was ‘cherry-picking facts to create a story that wasn’t true,’ and that some of the outrage was based on misinformation. “They’ve often said that we have hidden objects because of their link to slavery, when in fact they’ve been on loan to another museum or gallery,” she said.

The Comms director continued how the accusations about being ‘woke’ were particularly difficult to deal with. “Journalists will always talk about wokery because it’s easy. The charity commission chairman has asked people not to complain to them about charities being ‘woke’ because it doesn’t mean anything. Charities are there to do virtuous things.”

She gave the example of the Right attacking the Royal National Lifeboat Institution for rescuing migrants in the English Channel.

“If you benefit this community, it’s good work, it’s charitable—but if you benefit this community, it’s woke virtue signalling. It’s the luck of the draw who decides what’s woke and what’s not,” she added.

Fortunately, the anti-woke zealots’ war on the NT has proven fruitless thus far, with three consecutive failures to wrest control of the charity’s council via getting their own candidates elected. After its third failure, the group’s director, 24-year-old Zewditu Gebreyohanes,  announced she was stepping down to focus on her work at Legatum Institute, a right-wing think-tank that pushes for a free-market pro-Brexit vision while enjoying privileged access to ministers and the media.

Perhaps Gebreyohanes finally realised that RT’s crass cries of anti-wokery, and failed bid to take over the NT were making her look foolish?

Gabrielle Pickard-Whitehead is author of Right-Wing Watch

Comments are closed.