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Speaker 1: In the past few years, there's been a major backlash

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Speaker 1: to what's called ESG investing. Those letters stand for Environmental, Social,

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Speaker 1: and governance, and they refer to looking at particular risks

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Speaker 1: that a company might have, so not just their short

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Speaker 1: term financial performance, but also how they're looking at environmental

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Speaker 1: risks to their supply chain, for example, or social risks

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Speaker 1: in terms of whether or not they're tracking diversity in

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Speaker 1: their workforce, things like that. ESG has been around for

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Speaker 1: a really long time, and it's mostly been pretty non

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Speaker 1: controversial up until a few years ago. Now there's this

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Speaker 1: huge backlash. People are calling it quote unquote woke capital,

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Speaker 1: all those kinds of things, and that's been driven by

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Speaker 1: a couple of factors. First, this increase in the last

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Speaker 1: ten years or so of what's called sharehold activism, so

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Speaker 1: when people who hold shares in a particular company put

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Speaker 1: forth resolutions aimed at improving that company's environmental or social performance.

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Speaker 1: And the second is a move by the Securities and

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Speaker 1: Exchange Commission in the US that started a few years

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Speaker 1: ago to try to provide some kind of consistency in

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Speaker 1: the way that companies report on climate risk. In particular,

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Speaker 1: it's always been a little bit loosey goosey, a little

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Speaker 1: bit inconsistent, kind of changing from company to company depending

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Speaker 1: on what industry they're in, or maybe who's auditing their reports,

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Speaker 1: those kinds of things. So whenever the SEC sees inconsistencies

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Speaker 1: like that in a space around investment, they see that

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Speaker 1: as their job to provide the sort of consistency and

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Speaker 1: stability that investors are looking for. That's why they started

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Speaker 1: to tackle this in the first place. And when they

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Speaker 1: first announced that they were going to put out some

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Speaker 1: kind of climate risk disclosure guidance, initially they talked about

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Speaker 1: including what are called scope three emissions. Those are the

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Speaker 1: emissions associated with the entire supply chain, so it's the

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Speaker 1: inputs up top and the way that your product is

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Speaker 1: used and the emissions associated with that. So you can

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Speaker 1: imagine lots of companies had an issue with this, from

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Speaker 1: animal agg companies to oil and gas companies too, big

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Speaker 1: tech companies whose data centers are responsible for a whole

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Speaker 1: lot of emissions and emissions that are growing every day.

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Speaker 1: We've covered this before in the podcast, but a lot

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Speaker 1: of companies fought really hard against the inclusion of scope

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Speaker 1: three emissions. Today's guest Andrew Beahar, president of the As

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Speaker 1: You Sow Foundation, which focuses on shareholder activism, traces the

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Speaker 1: backlash back even a little earlier, to a twenty nineteen

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Speaker 1: decision by a group of companies known as the Business Roundtable.

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Speaker 1: These are guys that, for the record, were very involved

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Speaker 1: in pushing climate science denial and generally obstructing climate policy

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Speaker 1: for years. So not big tree hugging liberals by any

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Speaker 1: stretch of the imagination. They's some of the largest companies

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Speaker 1: in the world. But they sat down in twenty nineteen

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Speaker 1: and decided that the way the companies had been operating,

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Speaker 1: with this laser focus on short term profits being the

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Speaker 1: only thing that mattered, was actually not working, that it

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Speaker 1: was ultimately harming their own bottom lines. So they agreed

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Speaker 1: to adopt an approach that they called shareholder capitalism. Behar

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Speaker 1: says that's what really kicked off a big right wing

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Speaker 1: fight against shareholder activism, and esg We've been talking about

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Speaker 1: a sort of activism in this series. That's probably one

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Speaker 1: that comes to mind more often when people hear the

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Speaker 1: word activism getting out in the streets, civil disobedience, protest,

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Speaker 1: But this is also a type of activism and it's

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Speaker 1: also fasing a big backlash right now, so I wanted

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Speaker 1: to talk about it as part of this Real Free

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Speaker 1: Speech Threat series. A lot of the recent fight against

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Speaker 1: shareholder activism has been led by a guy named Leonard Leo,

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Speaker 1: whose name you might recognize if you're a regular listener

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Speaker 1: of this podcast. He ran the Federalist Society for a

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Speaker 1: long time. He's also often the guy who's pulling the

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Speaker 1: strings behind the Republican Attorney's General Association or RAGA, and

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Speaker 1: in the last couple of years he's been a recipient

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Speaker 1: of billions of dollars of right wing money to continue

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Speaker 1: his crusade against any kind of regulation on industry, especially

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Speaker 1: regulation on pollution. And it just so happens that he's

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Speaker 1: not a big fan of basic civil rights either, so

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Speaker 1: going after ESG and shareholder activism fits squarely in his wheelhouse.

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Speaker 1: One of the latest battles in this whole anti ESG

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Speaker 1: anti shareholder activism fight has been a string of lawsuits

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Speaker 1: that are trying to make it effectively illegal for shareholders

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Speaker 1: to put forth resolutions around social justice or environmental concerns.

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Speaker 1: Excellons filed one of these suits. The National Association of

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Speaker 1: manufacturers as filed one American Airlines. These are starting to

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Speaker 1: pick up, and again it's all in the context of

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Speaker 1: this interconnected fight against really looking at any environmental or

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Speaker 1: social justice issues, really trying to separate business interest from that,

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Speaker 1: to block any sort of regulation that would in any

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Speaker 1: way curtail a business's ability to just focus on profit.

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Speaker 1: And of course, again it's a weird fight because in

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Speaker 1: a lot of ways the things they're doing to fight

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Speaker 1: against looking at these factors are actually harming profit. I

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Speaker 1: had a super interesting conversation with Behar about all of

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Speaker 1: this that's coming up after this quick break. This is

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Speaker 1: drilled the real free speech threat. And I'm Amy Westerbelt.

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Speaker 1: So I want to start with the Exon lawsuit if

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Speaker 1: you could just walk me through what happened there.

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Speaker 2: The excellent lawsuit against our Juna Capital was in response

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Speaker 2: to a shareholder resolution that they filed that was basically

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Speaker 2: asking for climate disclosure and reduction of emissions. It was

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Speaker 2: not an exceptionally out of the ordinary resolution, but Exxon,

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Speaker 2: rather than going to a no action, going to the

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Speaker 2: SEC and saying we want to take no action on

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Speaker 2: this resolution, which is very standard practice if a company

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Speaker 2: gets a resolution that they feel as ordinary business is micromanagement.

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Speaker 2: It has already had substantial implementation. They go to the

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Speaker 2: SEC and in fact, Exon is famous as being the

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Speaker 2: only company or maybe one of a few, it files

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Speaker 2: a no action on every resolution, as you say, has

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Speaker 2: fob no no historically, as you saw, has fouled twenty

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Speaker 2: seven resolutions at Exon since twenty ten, and we've had

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Speaker 2: twenty seven no actions, so we know Exon knows how

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Speaker 2: to file no actions. But rather than filing a no action,

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Speaker 2: which we expected, they went to litigation, and once the

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Speaker 2: litigation got going, our junis said, you know what, will

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Speaker 2: withdraw the resolution. So essentially gave Exon the win. That's

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Speaker 2: all I was asking for. We want you to withdraw

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Speaker 2: the resolution so don't have to put it on our

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Speaker 2: proxy statement. But rather than saying okay, we won, great,

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Speaker 2: they said, we want to continue. We want to essentially

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Speaker 2: punish this shareholder and we want to make sure that

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Speaker 2: they can never file a shareholder resolution again. They want

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Speaker 2: to essentially classify that there's two of shareholders, like real

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Speaker 2: shareholders and shareholders whore just owned shares to file resolutions.

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Speaker 2: So essentially what they're trying to do is to rewrite

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Speaker 2: property law. When you buy a share of stock, you

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Speaker 2: have property rights that say that you get to decide

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Speaker 2: who's on the board of directors, you get to file

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Speaker 2: shareholder resolutions, you get dividends, there's basic rules. It's your

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Speaker 2: property rights associated with that piece of property. And what

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Speaker 2: Excellent's trying to do is to not only newter the

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Speaker 2: SEC's power, but also to rewrite this whole idea of

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Speaker 2: what rights to shareholders have. And this is part of

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Speaker 2: a much bigger crusade that's been going on that we

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Speaker 2: generally refer to as the anti ESG crusade that's been

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Speaker 2: led for most part by a fellow named Leonard Leo,

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Speaker 2: who you might recognize as being the co chair of

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Speaker 2: the Federalist Society. He was given one point six billion

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Speaker 2: dollars in twenty twenty two mid twenty twenty two essentially

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Speaker 2: to try to stop shareholders' rights, to stop shareholders from

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Speaker 2: doing what they are allowed by law to do. And

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Speaker 2: I can go down that path and tell you exactly

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Speaker 2: how he's been doing it because a three tiered strategy

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Speaker 2: that they're using, and this is just one part of

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Speaker 2: the strategy. So this is a much bigger question, and

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Speaker 2: it involves the House Judiciary Committee. It involves filing literally

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Speaker 2: hundreds of bills at the state level to make sustainable

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Speaker 2: investing illegal, to make assessing and addressing risk illegal at

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Speaker 2: the state level. And what the ramifications of this have

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Speaker 2: been because it's been a financial disaster for the states

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Speaker 2: that have adopted these laws. So it's much bigger piece

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Speaker 2: of work. And the excellent lawsuit is just one piece

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Speaker 2: of it. There's also several other lawsuits, the National Association

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Speaker 2: Manufacturer's lawsuit, the American Airlines lawsuit, Chevron deference. It's all

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Speaker 2: one thing, which is take away share holder's basic rights.

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Speaker 1: Interesting to place it in the context of all that stuff.

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Speaker 1: I guess the anti ESG stuff in general feels like

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Speaker 1: an attack on shareholder activism.

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Speaker 2: More than a little one. No, that's the centerpiece of it.

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Speaker 2: I mean, really, what it is is in twenty nineteen,

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Speaker 2: there was a major decision made by every corporation essentially

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Speaker 2: in the world that the ideas of Milton Friedman that

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Speaker 2: shareholder premiscy no longer were working. It was just not

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Speaker 2: working out. I mean, if you think about it, shareholder primacy,

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Speaker 2: which was put forth in the nineteen seventies by Milton

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Speaker 2: Friedman says, you can dump in the commons, you can

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Speaker 2: have slavery in your supply chain, you can poison your customers.

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Speaker 2: That's all okay, so long as you maximize short term

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Speaker 2: profit and for well. Back then in the nineteen seventies,

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Speaker 2: the holding capacity of the atmosphere to hold carbon was

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Speaker 2: much greater, the capacity of the ocean to hold play

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Speaker 2: sticks was much greater. So you could be dumping in

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Speaker 2: the commons, but it wasn't going to come back and

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Speaker 2: bite you. Like right now, what's happening with corporations is

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Speaker 2: their supply chains. They can't get raw commodities because well

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Speaker 2: just about everything that grows is being harmed by climate change.

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Speaker 2: You know, cotton production massively down, I mean, olive oil

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Speaker 2: Spain and Southern Europe lost their entire harvest. Coca is

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Speaker 2: now the commodity price for coco doubled in the last year.

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Speaker 2: So everybody who's seeing all these inflation at the grocery store,

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Speaker 2: it's because of climate This is climate inflation, but it's

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Speaker 2: also affecting supply chain. So dumping in the commons is

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Speaker 2: going to harm the corporation that's doing the dumping. That's

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Speaker 2: why in twenty nineteen, one hundred and eighty one companies

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Speaker 2: that make up the Business Roundtable said, these ideas no

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Speaker 2: longer work. This is not good for us, it's not

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Speaker 2: good for our shareholders. It's not good for all of

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Speaker 2: our stakeholders to adopt this new idea called stakeholder capitalism.

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Speaker 2: You take care of your employees. You want to be

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Speaker 2: able to, you know, to really retain to attract the

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Speaker 2: best and the brightest. Customer loyalty very important. You don't

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Speaker 2: want to poison your customers, want to take care of them.

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Speaker 2: Your supply chain incredibly important. You've got to get that

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Speaker 2: material in order to bring products to market, you know.

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Speaker 2: And of course the communities where you operate, which that

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Speaker 2: community could be not only like local community, but also

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Speaker 2: the broader the planetary community, because dumping into the atmosphere

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Speaker 2: is going to come back to bite you. And I

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Speaker 2: mean we saw an example of this just just like

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Speaker 2: a couple of weeks ago, Coke and pepsi. They were

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Speaker 2: saving a penny on a pound of sugar, and well

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Speaker 2: that's Milton Friedman like, okay, great, but they were using

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Speaker 2: slavery in their supply chain. And an expos in the

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Speaker 2: New York Times came out showing what's going on, and

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Speaker 2: so now their brand is associated with it's just horrific

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Speaker 2: treatment of laborers. It's going to cost them hundreds of

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Speaker 2: millions of dollars to rehabilitate their brand, and so it's

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Speaker 2: just it's shifting the time horizon from looking at the

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Speaker 2: next quarter to looking much broader. And the interesting thing

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Speaker 2: is that most investors are actually much more long term

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Speaker 2: now that the vast majority about eighty percent of most

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Speaker 2: companies investors are sovereign wealth funds, pension funds, borrowin k plans.

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Speaker 2: But people have this mythology that you should be making

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Speaker 2: these decisions, like really structural decisions for the companies based

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Speaker 2: on essentially the fifteen percent of day traders, and that

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Speaker 2: idea has shifted. So again mid twenty nineteen, Business Roundtable

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Speaker 2: comes out with it and the World Economic Forum endorses

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Speaker 2: it as the Fourth Manifesto. This manifesto the Fourth Industrial

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Speaker 2: Age that we're moving away from an extract of economy

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Speaker 2: to a regenerative economy that's one that's based on justice

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Speaker 2: and sustainability. So we're about five years into the implementation

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Speaker 2: of that. Now when that decision was made that was

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Speaker 2: a real disruption, and that is what the anti ESG

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Speaker 2: crusade is about. It's trying to stop this transition that's

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Speaker 2: already happening. The market forces are already decided, and they're

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Speaker 2: trying to use the heavy hand of big government. There's

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Speaker 2: really literally one hundred and forty seven bills in twenty

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Speaker 2: five states right now that are trying to suppress freedom

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Speaker 2: to invest, that are trying to tell us how to think.

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Speaker 2: And the ramifications of those I can tell you the

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Speaker 2: eighteen states that have adopted anti ESG legislation, all of

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Speaker 2: their pension funds are underperforming versus the rest of the country,

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Speaker 2: and significantly because they can't assess an address risk, their

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Speaker 2: treasurers are unable to float municipal bud because all the

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Speaker 2: banks have been banned. So Texas spend next to five

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Speaker 2: hundred million dollars in the first eight months after SB

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Speaker 2: thirteen was put in place just to get their municipal bonds.

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Speaker 2: The Texas Chamber of Commerce, this is Exxon and Chevron,

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Speaker 2: Conico Phillips are part of that. They reported that Texas

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Speaker 2: has wasted six hundred and sixty eight million dollars and

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Speaker 2: lost three thousand jobs directly resulting from SB thirteen. So

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Speaker 2: these red states are harming their firefighters, their teachers, their

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Speaker 2: police officers, their pension funds, they're harming all the citizens,

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Speaker 2: wasting all these the tax money in these states, and

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Speaker 2: yet it continues. And that's that's why about eighty percent

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Speaker 2: of these bills get killed because they're so financially just

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Speaker 2: disastrous for the states. But it's political theater, and these

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Speaker 2: folks think that they're scoring points for passing this legislation.

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Speaker 1: What have you seen in the wake of the SEC

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Speaker 1: finally finalizing its climate risk disclosure guidelines and ultimately leaving

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Speaker 1: Scope three out, which I think a lot of people

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Speaker 1: characterized as them caving to pressure and this kind of

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Speaker 1: relentless anti ESG campaign. So now that that's been chalked

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Speaker 1: up as a win for the anti ESG folks, are

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Speaker 1: you still seeing as much of a push at the

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Speaker 1: state level to pass these laws and or these sorts

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Speaker 1: of lawsuits against shareholders or do you think they're satisfied now?

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Speaker 2: Oh, no, they're they're insatiable, They're they're just getting revved up.

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Speaker 2: In fact, Leonard Leo just recently said we need to

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Speaker 2: flood the zone with litigation. They're planning hundreds of lawsuits

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Speaker 2: against corporations. These guys are anti business, anti freedom, anti capitalists.

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Speaker 2: That was part of phase one. Now phase two is

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Speaker 2: going to be this massive litigation. And also Leonard Leo's

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Speaker 2: calling for more white men on boards. The number of

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Speaker 2: white men on boards dropped from eighty two percent twenty

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Speaker 2: twenty to seventy seven percent in twenty twenty four, and

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Speaker 2: that five percentage loss only have a super majority is

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Speaker 2: considered undertennable.

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Speaker 1: When you say that he's talking about flooding the zone

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Speaker 1: with litigation, Is it more of these kinds of lawsuits

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Speaker 1: like what Exxon filed against our Juna.

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Speaker 2: No, it's more like filing suits against corporations, for instance,

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Speaker 2: corporations that have diversity on their board or diversity in

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Speaker 2: their workforce.

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Speaker 1: So like a lack of fiduciary responsibility kind of thing

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Speaker 1: where they're like not supposedly not making enough money because

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Speaker 1: they're too worried about wokeness. And that sort of argument

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Speaker 1: is that, well.

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Speaker 2: There's a k named ed Blum, Edward Blum who filed

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Speaker 2: the action the Supreme Court, who's.

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Speaker 1: Now very familiar, very familiar.

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Speaker 2: Yes, what they're asserting is that that if a company

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Speaker 2: has a diversity, equity and Inclusion department, if they have

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Speaker 2: a diverse workforce, that they're going to be suing them

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Speaker 2: because they say that is not in that's not for

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Speaker 2: short term profit maximization. Now, as you, SAI did a study.

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Speaker 2: We looked at the EEO one reports. That's the Equal

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Speaker 2: Employment Opportunity reports of You looked at six thousand EO

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Speaker 2: one reports, so sixteen hundred companies over five years. These

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Speaker 2: are the reports that every company puts out to the

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Speaker 2: federal government about their diversity. It's by each you know,

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Speaker 2: you have management, and you've got all the different groups

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Speaker 2: within the company, and then you've got all the protected classes.

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Speaker 2: And what we found is a statistically significant correlation showing

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Speaker 2: that greater diversity leads to financial outperformance on eight key

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Speaker 2: financial metrics, including ten year stock return, return on capital,

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Speaker 2: return on investment, basically every way that you would judge finance.

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Speaker 2: So if a company does not have diversity, they're actually

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Speaker 2: in breach of their fiduciary duty. Now they're going to

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Speaker 2: try to lip it, and that's why they've been doing

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Speaker 2: all these webinars about don't believe data. There's actually a

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Speaker 2: whole thing around. It's called DEI lies and at you

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Speaker 2: should not believe. I mean they have a guy from

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Speaker 2: the London School of Economics. Literally he's I've now seen

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Speaker 2: two of his webinars saying don't trust any data that

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Speaker 2: there's yeah, that there's that it's all biased. That don't

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Speaker 2: like basically, don't trust math, don't trust statistics. Just don't

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Speaker 2: trust data because there's what they call confirmation bias. Now,

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Speaker 2: I know my team that analyzed these one point three

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Speaker 2: million data points over took over a year. There are

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Speaker 2: two PhDs statisticians and I can tell you this data

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Speaker 2: is real and if you do not have a diverse

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Speaker 2: management team, you are not going to be You're going

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Speaker 2: to be underperforming. In fact, we actually found that all

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Speaker 2: white management teams underperform. So if you want to increase

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Speaker 2: the output of your financial investments, look for diverse management

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Speaker 2: teams that overweight them underweight the all white management teams

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Speaker 2: and you will outperform the BENU. We've seen this now,

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Speaker 2: it's clear, it's over five years and statistically significant.

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Speaker 1: I know you know Ed Bloom is a fan of

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Speaker 1: these cases, arguing that any kind of diversity approach is

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Speaker 1: violating the equal protection clause of the fourteenth Amendment. Are

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Speaker 1: they taking that kind of an approach here as well,

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Speaker 1: or just saying that the short term financial gains don't

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Speaker 1: just don't take any approach.

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Speaker 2: They have no principles, They are just trying to achieve

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Speaker 2: an end. And also it's also you know what was

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Speaker 2: his name, Stephen Miller? Who?

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Speaker 3: Right?

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Speaker 2: Yeah, he just and he just got a grant of

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Speaker 2: I believe twenty seven million dollars from one of these

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Speaker 2: right wing billionaires. I mean, this is all funded by

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Speaker 2: just a handful like three or four right wing billionaires

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Speaker 2: and oil barons. And they're funding Leonard Leo, They're funding

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Speaker 2: the Federal Society, American Enterprise, Heritage Foundation, ALEC. All these

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Speaker 2: groups are all funded together. So it's really a coord

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Speaker 2: and needed, concerted effort. But getting back to the SEC,

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Speaker 2: because it's really important, an important point. You have to

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Speaker 2: take the SEC climate disclosure rule in context of why

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Speaker 2: was the SEC created in nineteen thirty four, Well, there

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Speaker 2: was no financial information available and that's when the stock

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Speaker 2: market crashed and the Great Depression happened, and they said,

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Speaker 2: you know what, we need standardized financial metrics, we need

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Speaker 2: every company to report in the same way. We needed

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Speaker 2: verified by a third party, and we needed in a

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Speaker 2: standardized format so we have comparability, like you can look

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Speaker 2: at a financial report from any two companies and since

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Speaker 2: same format. Well ninety years later, twenty twenty four, they've

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Speaker 2: come to realize that these financial statements are not the

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Speaker 2: only information you need to determine if a company is

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Speaker 2: going to be outperforming, if it's going to be successful,

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Speaker 2: and how to compare it to its peers. There's other

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Speaker 2: things like I just mentioned. Do they have diversity, that's

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Speaker 2: definitely a big one. What do they do about their

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Speaker 2: supply chains, how do they treat their employees? All these things.

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Speaker 2: You know, companies that treat their employees well have much

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Speaker 2: better retention, they spend less money on training and on recruitment,

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Speaker 2: They will outperform, and so investors need to know these things.

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Speaker 2: So what the Climate Disclosure Rule said is that these

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Speaker 2: material risk factors need to be disclosed accurately, need to

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Speaker 2: be verified by a third party in a standardized format. Now,

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Speaker 2: the first one of these factors was carbon emissions. So overall,

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Speaker 2: the big takeaway here is, Okay, you've got the financial metrics,

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Speaker 2: and now you've got all of the material metrics. That's

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Speaker 2: a big again philosophical shift that investors need more information

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Speaker 2: to make to do their fiduciary duty and make good

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Speaker 2: informed decisions. That's the real takeaway. Now. The fact that

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Speaker 2: they don't use Scope three means well, we only get

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Speaker 2: to look at twenty percent of the emissions instead of

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Speaker 2: one hundred percent. Be much better look at one hundred percent. Also,

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Speaker 2: they gave the companies the ability to decide what is material,

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Speaker 2: even though the Supreme Court defines materiality as what a

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Speaker 2: shareholder needs to make a buy, hold or sell decision.

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Speaker 2: So those are the problematic parts of the new rule,

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Speaker 2: But the fact that the rule exists, that we're now

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Speaker 2: going to start to see standardized disclosure rules particually important

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Speaker 2: because ultimately, right now, companies are just disclosing information that

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Speaker 2: could be completely misleading, and you know companies Sustanalytics MSCAW,

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Speaker 2: they scrape them up and they put them in a

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Speaker 2: database and everybody thinks there's truth behind them when there isn't.

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Speaker 2: But here's the other good news. In Europe, they've got

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Speaker 2: CSRD and companies are going to have to be disclosing

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Speaker 2: accurately for that so any multinationals already going to be

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Speaker 2: starting to disclose in the next eighteen months. That is

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Speaker 2: pretty much going to help investors to make the right decisions.

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Speaker 2: And also companies that do disclose voluntarily, accurately have it

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Speaker 2: verified in a sandrised format are going to get a

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Speaker 2: lot more investors because well, if you're an investor, you're

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Speaker 2: going to say, oh, well, this company doesn't have anything

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Speaker 2: to hide, and we have an honest relationship, that there

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Speaker 2: is trust between the company and its shareholders. Now, remember,

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Speaker 2: the board reports to the shareholders. The shareholders are the

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Speaker 2: ultimate owners of these companies, and that is a critical

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Speaker 2: thing that people don't realize, or maybe they realize it

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Speaker 2: in the background, but that that is the core of

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Speaker 2: the property rights associated with owning a shareff stock. So

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Speaker 2: while we're disappointed that they don't have Scope three, and

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Speaker 2: we're very disappointed that they gave the companies the right

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Speaker 2: to decide what is material, and also the fact that

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Speaker 2: that's not lea to do that that Supreme Court says

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Speaker 2: it's up to shareholders to decide that there is this

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Speaker 2: new structure that says disclose accurately, verified by a third

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Speaker 2: party and in a standardized format means, oh, now we've

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Speaker 2: got audited financials and soon we will have audited sustainability

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Speaker 2: and materiality, and that is a critical shift.

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Speaker 1: Yeah. I won't ask you to speak for the entire

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Speaker 1: climate movement, but how is that as you so responding

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Speaker 1: to this campaign, this onslaught.

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Speaker 2: We just keep doing what we do. We're trying not

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Speaker 2: let it distract us. We filed eighty nine shareholder resolutions

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Speaker 2: this year, which is down a little bit. We filed

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Speaker 2: one hundred and eleven last year. We're having continued having

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Speaker 2: good relationships with all the companies we engage. So here's

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Speaker 2: the thing. We do a lot of research and then

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Speaker 2: we bring the research to the companies and we sit

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Speaker 2: down and have these engagements. We say, hey, look, you

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Speaker 2: know you scored a seven on racial justice. You're competitors

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Speaker 2: scored an eleven. Here's here's a better business plan of

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Speaker 2: how you can outperform. And most of the time, I

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Speaker 2: mean most of the companies say thank you. You guys

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Speaker 2: are like amazing, You're like McKinsey for free. Let's go

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Speaker 2: become better businesses. And last year we had two hundred

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Speaker 2: and ten engagements. Ninety nine companies said thank you. One

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Speaker 2: hundred and eleven. We filed resolutions to escalate it, and

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Speaker 2: once we did that, fifty six said, you know what,

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Speaker 2: if you withdraw, we'll agree to certain terms. We'll agree

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Speaker 2: to start to implement this stuff. It's only about thirty

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Speaker 2: percent go to a vote, and when you go to

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Speaker 2: a vote, those are non binding, and then you sit

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Speaker 2: down and go, hey, thirty percent of your shareholders think

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Speaker 2: this is important, and the companies generally do unless they're

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Speaker 2: an oil company, and then they just basically ignore their shareholders.

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Speaker 2: So we're just doing business as usual. The companies are

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Speaker 2: adopting better business practices because they can see that it's

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Speaker 2: better for their businesses. Now the litigation, let's getting back

432
00:26:54,880 --> 00:26:59,760
Speaker 2: to Exon against our JUNA. First of all, the judge

433
00:26:59,760 --> 00:27:03,320
Speaker 2: to just dismiss it because Exon already won. Exon said,

434
00:27:03,680 --> 00:27:05,920
Speaker 2: what we want in this lawsuit is for our junior

435
00:27:05,960 --> 00:27:08,720
Speaker 2: to withdraw their resolution and for us to not put

436
00:27:08,720 --> 00:27:11,119
Speaker 2: it on our proxy statement. Okay, done, It wasn't on

437
00:27:11,160 --> 00:27:14,880
Speaker 2: their proxy statement. What was on their proxy statement though,

438
00:27:14,920 --> 00:27:18,560
Speaker 2: is that they mentioned, as you said thirteen times, referencing

439
00:27:18,640 --> 00:27:23,280
Speaker 2: that shareholders should not have these rights. So they are

440
00:27:23,480 --> 00:27:30,160
Speaker 2: fundamentally attacking this idea of property rights, which is such

441
00:27:30,200 --> 00:27:33,480
Speaker 2: a fundamental thing for libertarians and for the conservatives. I mean,

442
00:27:33,920 --> 00:27:35,919
Speaker 2: it's kind of amazing to me that any of them

443
00:27:35,920 --> 00:27:39,880
Speaker 2: would even you know, sanction this. But there they are

444
00:27:39,920 --> 00:27:43,800
Speaker 2: doing it. So you know, we're continuing business as usual.

445
00:27:43,880 --> 00:27:48,280
Speaker 2: Companies are quietly adopting the good business practices that we're suggesting.

446
00:27:48,800 --> 00:27:51,199
Speaker 2: And you know, some people call it green hushing. It

447
00:27:51,320 --> 00:27:54,120
Speaker 2: used to be that companies would take a victory lap

448
00:27:54,480 --> 00:27:57,400
Speaker 2: say hey, you know what, we're adopting this new DEI

449
00:27:57,440 --> 00:27:59,879
Speaker 2: policy or this new climate policy because they wanted to

450
00:28:00,520 --> 00:28:05,440
Speaker 2: see we're outperforming our competitors in terms of reducing risk

451
00:28:05,520 --> 00:28:09,840
Speaker 2: for all stakeholders and opening up creating opportunity. Now they're

452
00:28:09,920 --> 00:28:14,119
Speaker 2: much more quiet about it, but they're still getting it

453
00:28:14,160 --> 00:28:19,439
Speaker 2: done because that's what good management does. And I mean,

454
00:28:19,480 --> 00:28:25,240
Speaker 2: here's the thing. Good managers assess and address risk. Good

455
00:28:25,240 --> 00:28:31,040
Speaker 2: investors address an assess risk. The eighteen states where it's

456
00:28:31,040 --> 00:28:35,160
Speaker 2: illegal to assess an address risk, they are suffering and

457
00:28:36,119 --> 00:28:39,840
Speaker 2: because they are not, it's ill literally illegal. So you

458
00:28:40,160 --> 00:28:42,800
Speaker 2: think about it, why are their pension funds underperforming? Well,

459
00:28:44,520 --> 00:28:46,800
Speaker 2: they're not allowed to assess an address risk. They're not

460
00:28:46,880 --> 00:28:49,880
Speaker 2: allowed to invest in companies that have a climate transition plan,

461
00:28:50,320 --> 00:28:52,880
Speaker 2: which are generally the most profitable companies in the world.

462
00:28:53,480 --> 00:28:57,360
Speaker 2: I recently had a debate in Arizona and the Treasurer

463
00:28:57,360 --> 00:29:02,320
Speaker 2: of the Arizona Kimberly Yee, was debating anti ESG. I

464
00:29:02,360 --> 00:29:05,640
Speaker 2: was debating pro ESG, and I asked her about SB

465
00:29:05,720 --> 00:29:09,800
Speaker 2: eleven ninety five in Arizona. Now, if it goes into effect,

466
00:29:10,120 --> 00:29:14,240
Speaker 2: literally the state cannot do any business with any company

467
00:29:14,240 --> 00:29:17,040
Speaker 2: with a climate transition plan. And I pointed out to

468
00:29:17,080 --> 00:29:20,240
Speaker 2: her that half of her portfolio was companies that have

469
00:29:20,240 --> 00:29:22,880
Speaker 2: a climate transition plan and that she would have to

470
00:29:22,880 --> 00:29:25,360
Speaker 2: sell half of her portfolio, and I asked her what's

471
00:29:25,400 --> 00:29:28,880
Speaker 2: her plan. I also pointed out that all the banks

472
00:29:28,920 --> 00:29:32,560
Speaker 2: that are currently funding their bonds, she won't be able

473
00:29:32,600 --> 00:29:35,240
Speaker 2: to do business with them. They'll all be banned. What's

474
00:29:35,280 --> 00:29:37,240
Speaker 2: she going to do and how much more interest is

475
00:29:37,240 --> 00:29:39,880
Speaker 2: she going to be paying because you can't get a

476
00:29:39,920 --> 00:29:42,560
Speaker 2: lot of banks to bid on the bonds. I also

477
00:29:42,640 --> 00:29:47,080
Speaker 2: pointed out that all of her bonds have risk assessment

478
00:29:47,120 --> 00:29:50,320
Speaker 2: for climate, for water, for air, that she would have

479
00:29:50,400 --> 00:29:54,960
Speaker 2: to take out of those bond issuances, which means very

480
00:29:55,000 --> 00:30:00,560
Speaker 2: few people like reinsurers will not allow anyone to to

481
00:30:00,600 --> 00:30:02,480
Speaker 2: bid and to fund these bonds. And I said, what's

482
00:30:02,520 --> 00:30:07,560
Speaker 2: your plan? And she didn't have an answer. She said that, oh,

483
00:30:07,640 --> 00:30:11,160
Speaker 2: you know, it's about freedom and ESG is taking away

484
00:30:11,160 --> 00:30:14,400
Speaker 2: our freedom. And I was like, no, actually, anti ESG

485
00:30:14,480 --> 00:30:16,760
Speaker 2: is saying that we can't assess and address risk. You're

486
00:30:16,800 --> 00:30:21,000
Speaker 2: taking away our freedom to invest. And so it was

487
00:30:21,000 --> 00:30:23,800
Speaker 2: a very interesting just to hear her like she hadn't

488
00:30:23,840 --> 00:30:27,600
Speaker 2: actually done the homework and the Arizona State Legislature. I said,

489
00:30:27,760 --> 00:30:29,880
Speaker 2: you must have prepared a report for the Arizona State

490
00:30:29,960 --> 00:30:34,520
Speaker 2: Legislature showing them all these financial risks. She no, she

491
00:30:34,560 --> 00:30:36,680
Speaker 2: had not in r did she was she even aware

492
00:30:36,720 --> 00:30:38,080
Speaker 2: that there were these financial risks.

493
00:30:38,080 --> 00:30:43,200
Speaker 1: So it's political fear and she's super involved in the

494
00:30:43,560 --> 00:30:46,920
Speaker 1: State Financial Officers Foundation to write.

495
00:30:46,800 --> 00:30:52,160
Speaker 2: Yeah, she's the treasurer and she's very vocal and yeah. Yeah.

496
00:30:52,360 --> 00:30:54,640
Speaker 2: One other thing we haven't mentioned is the fact that

497
00:30:54,840 --> 00:30:58,000
Speaker 2: the House Judiciary Committee is investigating, as you sew in

498
00:30:58,080 --> 00:31:01,240
Speaker 2: thirteen other organizations for anti trust activities.

499
00:31:01,520 --> 00:31:02,880
Speaker 1: Right, I saw this, So.

500
00:31:03,200 --> 00:31:04,840
Speaker 2: We'll tell you a little bit about that if you like.

501
00:31:05,120 --> 00:31:08,680
Speaker 1: Yeah, please, I know that I did a story last

502
00:31:08,760 --> 00:31:12,360
Speaker 1: year on just on the Texas Public Policy Foundation and

503
00:31:12,400 --> 00:31:15,560
Speaker 1: the stuff that they were doing to try to push

504
00:31:15,600 --> 00:31:19,840
Speaker 1: that whole legal theory forward that ESG in general is

505
00:31:20,120 --> 00:31:23,280
Speaker 1: anti trust in some way, which every lawyer I talked

506
00:31:23,320 --> 00:31:26,719
Speaker 1: to said was bunk. But you know that doesn't stopped

507
00:31:26,720 --> 00:31:29,600
Speaker 1: them from moving forward with it to.

508
00:31:29,560 --> 00:31:33,760
Speaker 2: The House because the House could frame it as we're

509
00:31:33,800 --> 00:31:37,000
Speaker 2: writing new law, and therefore we need to do discovery

510
00:31:37,440 --> 00:31:40,040
Speaker 2: to write this new law. Right, So we got a

511
00:31:40,080 --> 00:31:43,280
Speaker 2: letter at last August saying that, as you say, is

512
00:31:43,320 --> 00:31:48,960
Speaker 2: being investigated along with you know, other groups including Black Rock, Vanguard,

513
00:31:49,080 --> 00:31:53,840
Speaker 2: State Street, ISS, Glass Lewis, CalPERS, the largest pension fund

514
00:31:53,840 --> 00:31:57,160
Speaker 2: in the country, g FANS, which is five hundred of

515
00:31:57,160 --> 00:32:00,440
Speaker 2: the world's biggest banks in forty five countries, ENZA, which

516
00:32:00,480 --> 00:32:04,920
Speaker 2: is the net zero asset managers. I'm all told the

517
00:32:05,040 --> 00:32:09,400
Speaker 2: fourteen groups that are being investigated have a total assets

518
00:32:09,480 --> 00:32:12,640
Speaker 2: under management of one hundred and fifty trillion dollars. We're

519
00:32:12,640 --> 00:32:15,840
Speaker 2: talking about five times the GDP of the United States.

520
00:32:16,080 --> 00:32:18,840
Speaker 2: We're talking about one and a half times global GDP.

521
00:32:19,400 --> 00:32:23,200
Speaker 2: So basically the entire global economy is being investigated by

522
00:32:23,200 --> 00:32:28,840
Speaker 2: the House Judiciary Committee for Anti trust Activities, saying that

523
00:32:28,840 --> 00:32:33,640
Speaker 2: that shareholders having a conversation is collusion, and that by

524
00:32:33,880 --> 00:32:37,040
Speaker 2: getting companies to reduce their carbon emissions, we're infringing on

525
00:32:37,080 --> 00:32:40,280
Speaker 2: the freedom of all Americans. So that's what they put

526
00:32:40,360 --> 00:32:43,800
Speaker 2: forward to as their legislative purpose, and so well, we

527
00:32:43,840 --> 00:32:45,280
Speaker 2: had a lot of questions about it. First of all,

528
00:32:45,320 --> 00:32:48,480
Speaker 2: we're in nonprofit, so how could we be doing anti

529
00:32:48,480 --> 00:32:51,160
Speaker 2: trust activity. We don't have a product. I'm not fixing

530
00:32:51,200 --> 00:32:55,000
Speaker 2: any prices because we don't have any prices. And so

531
00:32:55,040 --> 00:32:58,440
Speaker 2: we wrote them a letter saying could you clarify? They

532
00:32:58,440 --> 00:33:00,280
Speaker 2: sent us a subpoena and said, just turn over all

533
00:33:00,280 --> 00:33:05,040
Speaker 2: your documents anything to do with carbon or with net zero,

534
00:33:06,320 --> 00:33:09,240
Speaker 2: all your documents from twenty sixteen. So you know, we

535
00:33:09,280 --> 00:33:13,520
Speaker 2: gave them twelve thousand pages of documents that we're mostly

536
00:33:13,600 --> 00:33:18,800
Speaker 2: our our shareholder resolutions, our exemp solicitations, our reports that

537
00:33:18,880 --> 00:33:23,680
Speaker 2: we felt satisfied their legislative purpose, that we're pertinent to

538
00:33:23,760 --> 00:33:27,800
Speaker 2: their legislative purpose. They said, not enough, We need to

539
00:33:27,960 --> 00:33:31,040
Speaker 2: hear from you. We come on in to we want

540
00:33:31,080 --> 00:33:35,360
Speaker 2: to have an interview. So we sent our chief counsel

541
00:33:35,400 --> 00:33:36,720
Speaker 2: and she went in and had eight and a half

542
00:33:36,800 --> 00:33:40,680
Speaker 2: hours of being interviewed and answer all their questions, they

543
00:33:40,720 --> 00:33:42,960
Speaker 2: said not enough. So I said, okay, I'll come in

544
00:33:43,040 --> 00:33:48,040
Speaker 2: voluntarily at the end of March. And so within a

545
00:33:48,080 --> 00:33:50,080
Speaker 2: couple of days they sent us a letter saying we're

546
00:33:50,080 --> 00:33:53,480
Speaker 2: going to hold you in contempt of Congress. So our

547
00:33:53,560 --> 00:33:56,000
Speaker 2: lawyers said, well, if you're going to hold them in contempt,

548
00:33:56,720 --> 00:34:00,360
Speaker 2: then we can't answer questions around document production because that's

549
00:34:00,360 --> 00:34:02,000
Speaker 2: what they were saying. That was the contempt that we

550
00:34:02,040 --> 00:34:05,360
Speaker 2: hadn't given them enough documents, So we can't answer answer

551
00:34:05,400 --> 00:34:08,719
Speaker 2: questions around that because that would be self incrimination. So

552
00:34:08,760 --> 00:34:11,560
Speaker 2: they immediately sent a subpoena that said show up on

553
00:34:11,600 --> 00:34:16,400
Speaker 2: the same day you've already said you're coming. Odd. So

554
00:34:16,480 --> 00:34:17,840
Speaker 2: I showed up on the day that I said I

555
00:34:17,880 --> 00:34:22,000
Speaker 2: was coming, and they proceeded to ask me five and

556
00:34:22,040 --> 00:34:24,359
Speaker 2: a half hours of questions. Most of it was really

557
00:34:24,480 --> 00:34:27,040
Speaker 2: kind of explaining to them how capitalism worked. They didn't

558
00:34:27,120 --> 00:34:30,680
Speaker 2: quite understand that the boards of directors report to their

559
00:34:30,719 --> 00:34:36,719
Speaker 2: shareholders that when three new directors were added to the

560
00:34:36,719 --> 00:34:39,040
Speaker 2: Exon board or were replaced on the ex On board

561
00:34:39,040 --> 00:34:41,399
Speaker 2: in twenty twenty one, it was because Excell had been

562
00:34:41,600 --> 00:34:44,520
Speaker 2: losing money. Their stock had been dropping for ten years

563
00:34:44,920 --> 00:34:48,160
Speaker 2: they'd been thrown off the Dow, and what's a shareholder

564
00:34:48,160 --> 00:34:50,879
Speaker 2: to do, like, of course you're going to replace an

565
00:34:50,880 --> 00:34:54,440
Speaker 2: incompetent board, a board that had no capital discipline, Like,

566
00:34:54,600 --> 00:34:57,799
Speaker 2: of course you would do that, and that's just that's

567
00:34:57,800 --> 00:35:00,160
Speaker 2: our right. They did not like that at all. So

568
00:35:00,320 --> 00:35:02,399
Speaker 2: it was mostly talking about that kind of thing where

569
00:35:02,440 --> 00:35:05,760
Speaker 2: I just kept having to explain how the power structure

570
00:35:05,800 --> 00:35:09,719
Speaker 2: of capitalism worked. And so now they keep telling us

571
00:35:09,719 --> 00:35:11,759
Speaker 2: that they're going to be holding us a contempt. We

572
00:35:11,840 --> 00:35:14,640
Speaker 2: keep saying, we've given you all the pertinent documents, we

573
00:35:14,840 --> 00:35:19,080
Speaker 2: cooperated completely with the committee, and we'll see what happens.

574
00:35:19,080 --> 00:35:23,040
Speaker 2: Now it's in their court. What's interesting is just how

575
00:35:23,080 --> 00:35:28,560
Speaker 2: they are essentially trying to intimidate shareholders from essentially doing

576
00:35:28,880 --> 00:35:33,040
Speaker 2: what is not only our legal rights, but our fiduciary

577
00:35:33,080 --> 00:35:37,959
Speaker 2: obligation to get the companies that we own to perform better,

578
00:35:38,040 --> 00:35:40,680
Speaker 2: to have less risk. That's really interesting.

579
00:35:41,160 --> 00:35:44,160
Speaker 1: I know we talked about some of the state laws.

580
00:35:44,520 --> 00:35:47,040
Speaker 1: Can you talk a little bit about the haggard Y

581
00:35:47,280 --> 00:35:49,879
Speaker 1: Bill and what that is aiming to do and where

582
00:35:49,920 --> 00:35:53,440
Speaker 1: it's at at the moment. He introduced it in February

583
00:35:53,560 --> 00:35:55,480
Speaker 1: February first, twenty twenty four.

584
00:35:56,200 --> 00:36:00,799
Speaker 3: And there's a companion bill in the how it's called

585
00:36:00,800 --> 00:36:04,400
Speaker 3: the Respite for Businesses Act, and its respite stands for

586
00:36:04,520 --> 00:36:10,439
Speaker 3: rejecting extremist shareholder proposals that inhibit andport enterprise.

587
00:36:11,360 --> 00:36:13,440
Speaker 2: Right. Look, as you said, it's been doing this for

588
00:36:13,480 --> 00:36:17,200
Speaker 2: thirty two years, and we work with groups like all

589
00:36:17,200 --> 00:36:19,200
Speaker 2: the faith based groups that have been doing it for

590
00:36:19,239 --> 00:36:24,080
Speaker 2: fifty years. And every shareholder resolution that we file is

591
00:36:24,120 --> 00:36:26,920
Speaker 2: about helping a company to reduce material risk for all

592
00:36:26,960 --> 00:36:31,440
Speaker 2: stakeholders and to create opportunities. It's helping them assess and

593
00:36:31,520 --> 00:36:35,680
Speaker 2: address risk that they might not see. And the fact

594
00:36:35,719 --> 00:36:38,160
Speaker 2: that they see this as some sort of a threat.

595
00:36:38,239 --> 00:36:42,480
Speaker 2: When seventy percent of the companies we engage say thank you,

596
00:36:42,960 --> 00:36:45,760
Speaker 2: thank you for caring enough to bring us good data

597
00:36:45,800 --> 00:36:49,080
Speaker 2: and good ideas, and thirty percent go to a vote,

598
00:36:49,080 --> 00:36:52,000
Speaker 2: and then almost all of those then after the vote

599
00:36:52,040 --> 00:36:54,480
Speaker 2: say thank you for bringing us good ideas. You're making

600
00:36:54,560 --> 00:36:58,319
Speaker 2: us a better company. So it shows just how out

601
00:36:58,320 --> 00:37:01,080
Speaker 2: of touch they are and how much this is just

602
00:37:01,200 --> 00:37:03,799
Speaker 2: political theater. What they're trying to do here is trying

603
00:37:03,840 --> 00:37:08,440
Speaker 2: to take away shareholders' property rights. This is about participatory democracy.

604
00:37:09,080 --> 00:37:12,440
Speaker 2: This is about capitalism. And this is about freedom. And

605
00:37:13,160 --> 00:37:16,600
Speaker 2: it seems like mister Haggerty does not like those things

606
00:37:16,800 --> 00:37:21,560
Speaker 2: and doesn't quite understand that that is how the system works,

607
00:37:21,680 --> 00:37:23,879
Speaker 2: and it works quite well. I got to say, these

608
00:37:23,880 --> 00:37:27,080
Speaker 2: are non binding resolutions. I mean, we have ninety six

609
00:37:27,080 --> 00:37:30,360
Speaker 2: percent votes in the company doesn't have to do it now.

610
00:37:31,040 --> 00:37:33,000
Speaker 2: In those cases and the company says, no, we're not

611
00:37:33,000 --> 00:37:36,319
Speaker 2: going to do anything, well, then the shareholders go, you're

612
00:37:36,320 --> 00:37:39,120
Speaker 2: not listening to us, and therefore we're going to vote

613
00:37:39,560 --> 00:37:42,160
Speaker 2: against this board. We don't have confidence in this board.

614
00:37:42,160 --> 00:37:45,880
Speaker 2: We're going to vote and no confidence vote, and oftentimes

615
00:37:45,880 --> 00:37:50,360
Speaker 2: that leads to running new board candidates, often much more competent.

616
00:37:50,400 --> 00:37:54,720
Speaker 2: I mean. Interesting thing about the Engine one directors at Exxon.

617
00:37:55,480 --> 00:37:58,319
Speaker 2: There was no one on the Exxon board in twenty

618
00:37:58,360 --> 00:38:03,080
Speaker 2: twenty one that had any energy experience, none of them. Wow. Okay,

619
00:38:03,120 --> 00:38:07,120
Speaker 2: two of the four Engine I directors had experience working

620
00:38:07,360 --> 00:38:10,280
Speaker 2: with an energy company, and there's a lot of outside influence.

621
00:38:10,320 --> 00:38:13,759
Speaker 2: But since the day, since May of twenty twenty one,

622
00:38:13,960 --> 00:38:16,640
Speaker 2: Excellon stock has done pretty much nothing but go up

623
00:38:16,719 --> 00:38:19,920
Speaker 2: after a ten year decline. So anyone who says these

624
00:38:19,920 --> 00:38:23,359
Speaker 2: directors harmed the company, well, first of all, ninety one

625
00:38:23,360 --> 00:38:26,960
Speaker 2: percent of the shareholders voted for some of them and

626
00:38:27,640 --> 00:38:31,080
Speaker 2: been re elected every year after, and the company has

627
00:38:31,080 --> 00:38:35,160
Speaker 2: done much better financially since then. They're just not looking

628
00:38:35,239 --> 00:38:39,480
Speaker 2: at the data. But again they don't necessarily like data either.

629
00:38:40,280 --> 00:38:42,880
Speaker 2: And what's interesting is, you know I talked about in

630
00:38:42,920 --> 00:38:45,719
Speaker 2: twenty nineteen there was this big decision on a new philosophy.

631
00:38:46,120 --> 00:38:49,040
Speaker 2: Well right after that, the Catholic Church they came up

632
00:38:49,239 --> 00:38:53,479
Speaker 2: and said, you know what, this papal law that gave

633
00:38:54,560 --> 00:38:58,480
Speaker 2: basically all the explorer ships would put a priest in it,

634
00:38:58,880 --> 00:39:01,440
Speaker 2: and it was called the doc of Discovery. You get

635
00:39:01,480 --> 00:39:04,400
Speaker 2: to a new land and you claim it for for

636
00:39:04,480 --> 00:39:06,240
Speaker 2: the church, and then you could do anything. The people

637
00:39:06,280 --> 00:39:10,320
Speaker 2: there were, could be subjugated, could be enslaved, et cetera.

638
00:39:12,320 --> 00:39:15,400
Speaker 2: Just kind of quietly, the Catholic Church said, you know,

639
00:39:15,400 --> 00:39:17,320
Speaker 2: by the way, that law is no longer in force.

640
00:39:17,920 --> 00:39:19,960
Speaker 2: I saw that he'd got no attention in the press.

641
00:39:20,000 --> 00:39:23,359
Speaker 2: But that is a major philosophical shift. That is like

642
00:39:23,520 --> 00:39:26,479
Speaker 2: literally they just announced on it was March twenty third,

643
00:39:26,560 --> 00:39:31,160
Speaker 2: twenty twenty, that colonialism is no longer law. It's no

644
00:39:31,200 --> 00:39:35,719
Speaker 2: longer legal, you know, And kind of no one noticed it,

645
00:39:36,280 --> 00:39:41,120
Speaker 2: but we're seeing this level of a philosophical shift. Now,

646
00:39:41,120 --> 00:39:43,239
Speaker 2: we've got a long way to go to get to

647
00:39:43,880 --> 00:39:47,360
Speaker 2: a glide path into this new paradigm, and there's a

648
00:39:47,400 --> 00:39:51,440
Speaker 2: lot of reparations that have to happen to rebalance. But

649
00:39:52,080 --> 00:39:54,520
Speaker 2: the folks who have been in power for all of

650
00:39:54,560 --> 00:39:58,120
Speaker 2: this time, they're not liking it. And his thing. You know,

651
00:39:58,160 --> 00:40:00,440
Speaker 2: when you have all this power and you see it

652
00:40:00,520 --> 00:40:03,920
Speaker 2: potentially going away, like the eighty percent of white males

653
00:40:03,920 --> 00:40:06,720
Speaker 2: on boards to seventy seven, that little bit of change

654
00:40:08,000 --> 00:40:11,880
Speaker 2: is seen as outrageous and it's a massive attack on

655
00:40:12,840 --> 00:40:15,920
Speaker 2: the structure that we know and love and have for

656
00:40:16,880 --> 00:40:20,640
Speaker 2: you know, for centuries. Whereas the people who haven't had

657
00:40:20,680 --> 00:40:23,000
Speaker 2: any power are seeing like, oh, I'm having a little

658
00:40:23,000 --> 00:40:26,120
Speaker 2: bit more power there. So the pushback is very intense.

659
00:40:26,960 --> 00:40:30,239
Speaker 2: But you know what, you cannot stop market forces. You

660
00:40:30,239 --> 00:40:34,200
Speaker 2: can try. It's a ripple that's become a wave and

661
00:40:34,320 --> 00:40:37,000
Speaker 2: is soon to be a tsunami, and they can stand

662
00:40:37,040 --> 00:40:39,400
Speaker 2: out there and hold their hand up against the tsunami,

663
00:40:39,640 --> 00:40:42,480
Speaker 2: but they will just be swept away by it. And

664
00:40:42,520 --> 00:40:46,480
Speaker 2: that is what Leonard Leo knows. That is what they

665
00:40:46,480 --> 00:40:51,080
Speaker 2: are desperately trying to slow down. They know they can't

666
00:40:51,120 --> 00:40:53,080
Speaker 2: stop it, but they're trying to slow it down as

667
00:40:53,120 --> 00:40:55,360
Speaker 2: much as possible. And it has to do with the

668
00:40:55,400 --> 00:40:58,360
Speaker 2: way the oil companies control well, you know, all the

669
00:40:58,400 --> 00:41:04,200
Speaker 2: governments and that right, everyone is beholden to them. Well,

670
00:41:04,440 --> 00:41:07,280
Speaker 2: guess what the internal combustion engine is going obsolete.

671
00:41:07,840 --> 00:41:10,520
Speaker 1: Interesting data point this week. I think it was just

672
00:41:10,520 --> 00:41:14,200
Speaker 1: today or yesterday the Wall Street Journal called oil and

673
00:41:14,239 --> 00:41:16,319
Speaker 1: gas a sunsetting industry.

674
00:41:16,640 --> 00:41:19,359
Speaker 2: Well it is. I mean it's the Kodac and I

675
00:41:19,400 --> 00:41:23,399
Speaker 2: often say, you know, shareholders went to Kodak and said, hey,

676
00:41:23,480 --> 00:41:26,160
Speaker 2: we got to think about think about our business model.

677
00:41:26,160 --> 00:41:28,319
Speaker 2: We got to think about digital photography and they said, no,

678
00:41:28,560 --> 00:41:32,480
Speaker 2: we make films. And we went to blockbustering. We said,

679
00:41:32,520 --> 00:41:34,520
Speaker 2: you know, this internet thing, it's not just a fad.

680
00:41:34,840 --> 00:41:37,160
Speaker 2: Really look at Netflix and they go, no, you know,

681
00:41:37,200 --> 00:41:41,360
Speaker 2: we have brick and mortar and we have these vhs. Right,

682
00:41:41,960 --> 00:41:45,520
Speaker 2: same thing with Excellon. It's been again twenty seven resolutions

683
00:41:45,520 --> 00:41:47,799
Speaker 2: over ten years saying let's think of ourselves as an

684
00:41:47,920 --> 00:41:50,759
Speaker 2: energy company, not an oil company. I mean we've come

685
00:41:50,840 --> 00:41:55,760
Speaker 2: up with really innovative resolutions that were trying to reward

686
00:41:55,800 --> 00:41:59,960
Speaker 2: give bonuses to executives that actually started to transition the company.

687
00:42:00,040 --> 00:42:04,160
Speaker 2: We had this idea that rather than base bonuses for

688
00:42:04,280 --> 00:42:09,400
Speaker 2: executives on what's called barrel replacement. You sell a barrel,

689
00:42:09,440 --> 00:42:12,239
Speaker 2: you got to go discover a new barrel, but rather

690
00:42:12,360 --> 00:42:16,840
Speaker 2: on BTUs on British thermal units or energy. So if

691
00:42:17,000 --> 00:42:20,960
Speaker 2: in each barrel of oil or each unit of gas,

692
00:42:22,400 --> 00:42:26,680
Speaker 2: all the fossil fuels have BTU equivalents, So you just

693
00:42:26,719 --> 00:42:29,680
Speaker 2: do the math and you just go oh and so,

694
00:42:30,000 --> 00:42:33,600
Speaker 2: and you report to the SEC both your barrel replacement

695
00:42:33,680 --> 00:42:37,160
Speaker 2: and your energy replacement, and then you can see, oh,

696
00:42:37,160 --> 00:42:41,000
Speaker 2: look they replace seventy percent of their barrels, but thirty

697
00:42:41,080 --> 00:42:45,120
Speaker 2: percent is but they have one hundred percent energy replacement.

698
00:42:45,280 --> 00:42:47,600
Speaker 2: That's a company that's transitioning. I want to overweight them

699
00:42:47,600 --> 00:42:51,440
Speaker 2: in my portfolio. And we actually talked. It was interesting.

700
00:42:51,840 --> 00:42:54,080
Speaker 2: We have these meetings with chevrons. We fold this resolution.

701
00:42:54,880 --> 00:42:57,080
Speaker 2: I remember sitting in this meeting and we explained it

702
00:42:57,080 --> 00:43:00,520
Speaker 2: to them, and these executives at a high level people said,

703
00:43:00,760 --> 00:43:03,840
Speaker 2: like CFO level people said, you know, we're going to

704
00:43:03,880 --> 00:43:05,600
Speaker 2: make a lot of money, like I'm going to get

705
00:43:05,600 --> 00:43:09,160
Speaker 2: really rich doing this, and we're like, yeah, exactly, you

706
00:43:09,200 --> 00:43:13,440
Speaker 2: guys should get rich transitioning this company. They were like, Okay,

707
00:43:13,920 --> 00:43:16,520
Speaker 2: let's maybe let's go together to the SEC and talk

708
00:43:16,520 --> 00:43:19,080
Speaker 2: about this. We're like, that's cool, we'll do that anyway,

709
00:43:19,120 --> 00:43:23,080
Speaker 2: Then they invited ex on Alan and somehow by the

710
00:43:23,239 --> 00:43:26,000
Speaker 2: end of that week the whole thing was put the

711
00:43:26,040 --> 00:43:30,719
Speaker 2: kabash on it. Interesting again, we're a shareholders trying to

712
00:43:30,719 --> 00:43:33,279
Speaker 2: figure out how do we make this company viable in

713
00:43:33,280 --> 00:43:37,160
Speaker 2: the long term because we don't think they are long term.

714
00:43:37,440 --> 00:43:42,120
Speaker 2: Their viability is seriously compromised in the long term.

715
00:43:42,360 --> 00:43:46,759
Speaker 1: So, yeah, is there any kind of either legislative or

716
00:43:47,120 --> 00:43:51,360
Speaker 1: judicial approach to batting back some of this stuff? Is

717
00:43:51,520 --> 00:43:55,000
Speaker 1: suing them back or trying to propose policy that would

718
00:43:55,320 --> 00:43:59,040
Speaker 1: tamp down on some of this anti ESG fervor, or

719
00:43:59,160 --> 00:44:01,600
Speaker 1: people just kind of trying to ignore it and get

720
00:44:01,600 --> 00:44:02,359
Speaker 1: on with their day.

721
00:44:03,640 --> 00:44:05,759
Speaker 2: Well, people aren't ignoring it, which you're seeing at the

722
00:44:05,800 --> 00:44:09,160
Speaker 2: state level, like in South Dakota, for instance, they're anti ESG.

723
00:44:09,280 --> 00:44:12,799
Speaker 2: Bill lost I think it was ninety to three. That's

724
00:44:12,840 --> 00:44:15,200
Speaker 2: because the South Dakota bankers got in and said this

725
00:44:15,239 --> 00:44:17,160
Speaker 2: is going to crush our state, this is going to

726
00:44:17,239 --> 00:44:19,919
Speaker 2: just harm us. So you're seeing at the state level

727
00:44:19,920 --> 00:44:23,399
Speaker 2: they're realizing the economic harm, which is why about eighty

728
00:44:23,440 --> 00:44:25,840
Speaker 2: percent of these bills don't make it. And then the

729
00:44:25,840 --> 00:44:30,920
Speaker 2: ones that do, some of them are specifically illegal, and

730
00:44:31,040 --> 00:44:33,360
Speaker 2: it's been very hard to find plaintiffs willing to stand

731
00:44:33,400 --> 00:44:37,880
Speaker 2: up to them. So right now it's a work in

732
00:44:38,000 --> 00:44:41,799
Speaker 2: process to actually push back in terms of suing. Edward Blum.

733
00:44:42,280 --> 00:44:44,319
Speaker 1: Yeah, is he actually the one that's bringing some of

734
00:44:44,360 --> 00:44:48,279
Speaker 1: these cases, the Leonard leode ones? Is it Blum and

735
00:44:48,360 --> 00:44:49,200
Speaker 1: his crew?

736
00:44:49,960 --> 00:44:54,279
Speaker 2: Well, he brought the case against Fearless Fund. Okay, so

737
00:44:54,320 --> 00:44:57,720
Speaker 2: that's the fun you know, that gives grants to black

738
00:44:57,719 --> 00:45:02,440
Speaker 2: women entrepreneurs and you know, and as a VC. So

739
00:45:02,480 --> 00:45:04,440
Speaker 2: he's doing that. And then there's Miller who's doing his

740
00:45:04,480 --> 00:45:07,960
Speaker 2: stuff at Target, you know where he'll basically, you know,

741
00:45:08,080 --> 00:45:13,319
Speaker 2: create a hate mob against LGBTQ and then he'll sue

742
00:45:13,360 --> 00:45:17,680
Speaker 2: the company for having a hate mob. So there's those troublemakers.

743
00:45:17,719 --> 00:45:19,920
Speaker 2: And again Miller just got twenty seven million dollars to

744
00:45:20,080 --> 00:45:23,880
Speaker 2: run more litigation from I think it's the Bradley Fund,

745
00:45:24,160 --> 00:45:24,560
Speaker 2: which is.

746
00:45:24,960 --> 00:45:28,439
Speaker 1: The Bradley Foundation. Okay, this is wild because I did

747
00:45:28,440 --> 00:45:32,520
Speaker 1: a two year project looking at the all the anti

748
00:45:32,600 --> 00:45:37,080
Speaker 1: IQUA cases, the anti Indian Child Welfare Act cases that

749
00:45:38,520 --> 00:45:41,239
Speaker 1: were mostly being they were being argued by Gibson Dunn,

750
00:45:41,280 --> 00:45:43,359
Speaker 1: which is why I got interested in it because I

751
00:45:43,400 --> 00:45:46,719
Speaker 1: was like, wait a minute, that's Chevron's law firm. Why

752
00:45:46,719 --> 00:45:49,759
Speaker 1: are they involved in this child welfare case? And the

753
00:45:49,800 --> 00:45:51,920
Speaker 1: more we looked at it, it was it was a

754
00:45:51,960 --> 00:45:54,880
Speaker 1: whole thing that had been started by the Bradley Foundation,

755
00:45:55,000 --> 00:45:58,680
Speaker 1: who have also like funded Bloom for years too. Those

756
00:45:58,719 --> 00:46:00,920
Speaker 1: guys don't get as much attention and as they deserve.

757
00:46:01,560 --> 00:46:04,160
Speaker 2: No, no they don't. But I mean this is the

758
00:46:04,320 --> 00:46:06,600
Speaker 2: you know, I call them the oil barons and right

759
00:46:06,600 --> 00:46:07,480
Speaker 2: wing billionaires.

760
00:46:07,880 --> 00:46:10,000
Speaker 1: Yeah, it's a pretty small group, but they.

761
00:46:09,840 --> 00:46:13,160
Speaker 2: Have a very small, very small group. This is the

762
00:46:13,200 --> 00:46:15,560
Speaker 2: regressive elites, if you will, And they just want to

763
00:46:15,640 --> 00:46:17,279
Speaker 2: kind of go back to I mean, look what's going

764
00:46:17,320 --> 00:46:19,960
Speaker 2: on in Arizona eighteen sixty four. That was a pretty

765
00:46:19,960 --> 00:46:20,359
Speaker 2: good year.

766
00:46:21,120 --> 00:46:23,279
Speaker 1: That's seriously what they want. I mean, I feel like

767
00:46:23,360 --> 00:46:26,880
Speaker 1: Leonard Leo has basically said that at various points, like

768
00:46:27,160 --> 00:46:32,280
Speaker 1: you know, pre Lockner and Industrial Revolution kind of days.

769
00:46:32,400 --> 00:46:35,680
Speaker 2: I don't know, well, certainly certainly back to the nineteen

770
00:46:35,760 --> 00:46:40,840
Speaker 2: seventies and Milton Friedman. But yeah, here's the thing. The

771
00:46:40,920 --> 00:46:44,160
Speaker 2: University of Chicago I think it's the Freedman Becker School,

772
00:46:44,360 --> 00:46:47,720
Speaker 2: which was, by the way, was renamed because the universe

773
00:46:47,760 --> 00:46:49,840
Speaker 2: of Chicago professors did not want to have it just

774
00:46:49,880 --> 00:46:53,880
Speaker 2: be the Milton Friedman School because they disagree with his theories.

775
00:46:54,640 --> 00:47:00,200
Speaker 2: They're teaching stakeholder capitalism. Why, because it works, because your

776
00:47:00,239 --> 00:47:03,960
Speaker 2: companies out perform because you take care of your employees,

777
00:47:04,040 --> 00:47:07,880
Speaker 2: When you take care of your customers, you know the

778
00:47:07,920 --> 00:47:10,239
Speaker 2: communities where you operate and your supply chain, you are

779
00:47:10,280 --> 00:47:12,239
Speaker 2: going to be a better company that's going to have

780
00:47:13,520 --> 00:47:16,000
Speaker 2: long term sustainable growth that it's going to be good

781
00:47:16,000 --> 00:47:21,319
Speaker 2: for all your shareholders. So there's just no question about that.

782
00:47:21,480 --> 00:47:24,799
Speaker 2: I often cite an example of if you've got a

783
00:47:24,840 --> 00:47:28,000
Speaker 2: company and it's dumping toxic waste into the local river

784
00:47:28,160 --> 00:47:30,839
Speaker 2: from your factory. Yeah, okay, you don't have to pay

785
00:47:30,880 --> 00:47:33,319
Speaker 2: for water treatment and you've saved a little bit of

786
00:47:33,320 --> 00:47:36,120
Speaker 2: money there. That looks good the first month, But then

787
00:47:36,400 --> 00:47:38,879
Speaker 2: your own employees are drinking the water and they're sick,

788
00:47:38,960 --> 00:47:41,239
Speaker 2: they're not showing up at work, and then you get

789
00:47:41,280 --> 00:47:45,879
Speaker 2: sued and your brand is now tainted. Okay, you've got

790
00:47:45,920 --> 00:47:48,160
Speaker 2: such a deep economic problems it's going to last you

791
00:47:48,200 --> 00:47:52,400
Speaker 2: for years. That the trade off is not worth it. Again,

792
00:47:52,800 --> 00:47:57,440
Speaker 2: short term ism long term, and people are just thinking

793
00:47:57,560 --> 00:48:01,680
Speaker 2: much longer term now because the investors in their companies

794
00:48:01,680 --> 00:48:04,080
Speaker 2: are much longer term. When somebody pass a law that

795
00:48:04,160 --> 00:48:07,240
Speaker 2: says it's illegal to look at risk, then you really

796
00:48:07,280 --> 00:48:09,400
Speaker 2: want to look at the risk and say, what are

797
00:48:09,440 --> 00:48:12,479
Speaker 2: they hiding? Now? What they're hiding is that the oil

798
00:48:12,520 --> 00:48:15,480
Speaker 2: companies are no longer viable. That is what they're hiding,

799
00:48:15,600 --> 00:48:19,760
Speaker 2: and it's in plain sight and everyone knows it. But frankly,

800
00:48:19,760 --> 00:48:22,719
Speaker 2: the Saudis keep it pumped up and people don't realize this.

801
00:48:23,760 --> 00:48:26,560
Speaker 2: There's one hundred million people with ten trillion dollars of

802
00:48:26,600 --> 00:48:29,280
Speaker 2: assets in four to one K plans that are invested

803
00:48:29,360 --> 00:48:32,880
Speaker 2: in the entire extract of economy. If you're invested in Blackrock,

804
00:48:33,000 --> 00:48:37,040
Speaker 2: you own Saudia Ramco. Saudia Ramco CEO is on their board.

805
00:48:37,320 --> 00:48:40,400
Speaker 2: People don't know this. Now. Not only are you invested

806
00:48:40,480 --> 00:48:47,600
Speaker 2: in in rainforest destruction and fossil fuels and private prisons,

807
00:48:48,160 --> 00:48:51,160
Speaker 2: but you've handed off your right to vote to vanguard

808
00:48:51,239 --> 00:48:53,480
Speaker 2: that votes with management ninety eight percent of the time.

809
00:48:53,920 --> 00:48:57,680
Speaker 2: So we've all handed over all of our power. Our

810
00:48:57,760 --> 00:49:00,280
Speaker 2: power is in our money and we've said oh okay

811
00:49:01,200 --> 00:49:03,120
Speaker 2: in Vanguard, Yeah, you can do whatever you want to do,

812
00:49:03,239 --> 00:49:05,160
Speaker 2: and all you have to do is, you know, it's

813
00:49:05,160 --> 00:49:07,959
Speaker 2: like it's your money. The person who earns the money

814
00:49:08,120 --> 00:49:10,680
Speaker 2: should decide how it is invested, and they can use

815
00:49:10,719 --> 00:49:13,400
Speaker 2: it to capitalize a future that they want to live in.

816
00:49:14,000 --> 00:49:16,279
Speaker 2: The person who owns the money should have the right

817
00:49:16,360 --> 00:49:18,560
Speaker 2: to vote. They have the right to vote, but they

818
00:49:18,560 --> 00:49:21,680
Speaker 2: should actually use it to express their values to the

819
00:49:21,719 --> 00:49:25,200
Speaker 2: companies they own. It's so basic, and we're getting to

820
00:49:25,200 --> 00:49:27,840
Speaker 2: the point now. It's a new thing called pass through voting.

821
00:49:28,640 --> 00:49:30,719
Speaker 2: As you sow as four oh one k plan, we

822
00:49:30,760 --> 00:49:34,839
Speaker 2: are literally piloting starting in a few weeks, we're all

823
00:49:34,920 --> 00:49:37,160
Speaker 2: going to every employee, as you say, will be voting

824
00:49:37,320 --> 00:49:38,880
Speaker 2: every one of our shares. So if we own a

825
00:49:38,880 --> 00:49:42,040
Speaker 2: target date fund, that's two thousand companies or so, we're

826
00:49:42,120 --> 00:49:45,279
Speaker 2: voting everything on everyone, and we're doing it with one click.

827
00:49:45,360 --> 00:49:47,759
Speaker 2: We call it as you Vote, and we also offer

828
00:49:47,800 --> 00:49:52,319
Speaker 2: this for free anyone who owns shares individually, Like if

829
00:49:52,320 --> 00:49:55,719
Speaker 2: you just have if you're getting your proxy statements, your

830
00:49:55,719 --> 00:49:59,120
Speaker 2: ballots into your inbox, literally one click, you can sign

831
00:49:59,200 --> 00:50:01,520
Speaker 2: up for as you Vote and all those ballots going

832
00:50:01,560 --> 00:50:05,120
Speaker 2: forward will be voted in an ESG aligned way according

833
00:50:05,120 --> 00:50:08,000
Speaker 2: to our policy. That means you're voting against eighty percent

834
00:50:08,040 --> 00:50:10,840
Speaker 2: of the CEO pay packages, you're voting against seventy percent

835
00:50:10,840 --> 00:50:14,719
Speaker 2: of the board, you're voting for all the good shareholder resolutions,

836
00:50:14,719 --> 00:50:17,399
Speaker 2: and you're voting against all the anti ESG resolutions, which,

837
00:50:17,440 --> 00:50:20,120
Speaker 2: by the way, another that's another piece of the Leonard

838
00:50:20,160 --> 00:50:23,359
Speaker 2: Leo puzzle is they're following these resolutions. They're calling them

839
00:50:23,440 --> 00:50:26,359
Speaker 2: racial justice resolutions, but what they say is white men

840
00:50:26,360 --> 00:50:27,400
Speaker 2: are discriminated against.

841
00:50:28,239 --> 00:50:30,680
Speaker 1: Yes, it's the reverse racism thing. They've been trying to

842
00:50:30,719 --> 00:50:32,440
Speaker 1: make this argument since the nineties.

843
00:50:32,520 --> 00:50:34,439
Speaker 2: The good news is they wouldn't be pushing back as

844
00:50:34,480 --> 00:50:38,920
Speaker 2: hard if we weren't making progress, and we are making good,

845
00:50:39,040 --> 00:50:42,880
Speaker 2: solid progress, and we have the market forces at our back,

846
00:50:43,600 --> 00:50:47,160
Speaker 2: and they are trying to stop the unstoppable.

847
00:50:52,680 --> 00:50:55,440
Speaker 1: That's it for this week. We'll be back with a

848
00:50:55,440 --> 00:50:58,320
Speaker 1: few more episodes in our Real Free Speech Threat series

849
00:50:58,400 --> 00:51:02,279
Speaker 1: over the next month or so. This episode was engineered

850
00:51:02,320 --> 00:51:05,400
Speaker 1: by Peter Duff. Her music is Bird in the Hand

851
00:51:05,480 --> 00:51:09,000
Speaker 1: by Foreknown. You can find a transcript of this interview

852
00:51:09,080 --> 00:51:12,839
Speaker 1: and lots of other related articles and podcast episodes on

853
00:51:12,880 --> 00:51:16,279
Speaker 1: our website at drilled dot media, and you can follow

854
00:51:16,360 --> 00:51:19,799
Speaker 1: us across social media at we Are Drilled or I'm

855
00:51:19,800 --> 00:51:23,319
Speaker 1: at Amy Westerveldt. Thanks for listening and we'll see you

856
00:51:23,320 --> 00:51:23,759
Speaker 1: next time.