Disney, BofA, Apple Among ESG Proxy Targets for Conservatives

Conservative activists are accelerating a push for public companies to disclose more about their charitable giving and partnerships with outside organizations promoting social causes.

Bank of America Corp., Levi Strauss & Co., Pfizer Inc. and Walt Disney Co. already are in the crosshairs, according to Securities and Exchange Commission filings. Apple Inc., Eli Lilly and Co. and other companies also have received conservative proposals over abortion support and civil rights, records show.

And conservatives this proxy season are quietly approaching more companies to entice them to negotiate to avoid a public fight, said Scott Shepard, a fellow at the National Center for Public Policy Research, a frequent filer of proposals over environmental, social and governance concerns.

Conservative proposals on ESG have secured very little investor support in past years — if they made companies’ proxy ballots for annual meetings at all. The SEC this year already has let Bank of America, Levi’s and Pfizer discard three National Center for Public Policy Research proposals.

But the organization has no plans to let up. The center will continue to raise concerns at annual meetings and directly with company management that investors are losing money from corporate ESG policies endorsed by liberals, Shepard said.

The group’s position isn’t, “Oh gosh golly, we want to see these companies support right-wing partisan positions,” he said. “We just want to get corporations back to neutral.”

Regardless of whether conservative proposals pass at annual meetings, they’re causing more toil for companies already taxed by shareholder proposals overall, said Elizabeth Gonzalez-Sussman, an Olshan Frome Wolosky LLP partner who is vice chair of the firm’s activist and equity investment practice.

“They may need to talk to shareholders more about it so it doesn’t keep popping up and creating more and more” of these proposals, Gonzalez-Sussman said.

‘Radical Agendas’

The National Center for Public Policy Research wanted shareholders at Bank of America and Pfizer to vote on proposals urging the companies to report on whether their fiduciary duty to investors is compatible with their partnerships with organizations that pursue social and political objectives. The group’s Levi’s proposal sought a vote on whether its board should create a committee to review how company policies, advocacy and charitable donations on social and political issues affect financial sustainability, raising questions about the clothing company’s commitment to law enforcement.

The organization said in supporting statements with its Bank of America and Pfizer proposals that it was particularly interested in any partnerships the companies had with the World Economic Forum, Council on Foreign Relations, and Business Roundtable, which it said have “radical agendas.” With the Roundtable, for example, activists have taken exception to the business group’s Statement on the Purpose of a Corporation, a 2019 document that called on companies to work for the benefit of their customers, employees, communities and others, not just their investors. On Levi’s proposal, the group expressed concern with company donations to the American Civil Liberties Union and other organizations.

Bank of America, Levi’s and Pfizer asked the SEC if they could toss the proposals on procedural grounds, saying the National Center for Public Policy Research failed to follow agency rules on timely filings. The SEC earlier this month agreed with the three companies. The SEC can bring enforcement actions against companies that improperly block shareholder proposals, usually prompting them to seek the agency’s advice.

The agency has yet to release a decision on Lilly’s request to throw out another ESG-related proposal from the National Center for Public Policy Research. That proposal would encourage the Indiana drugmaker to report on any risks or costs associated with its concern with opposition to a state law that bans abortion, except in cases of rape, incest or to protect the mother’s life or physical health. Lilly has argued the proposal would micromanage its business, which is grounds for dismissal under SEC rules.

Apple, however, never asked the SEC for its blessing to stop a National Center for Public Policy Research proposal for a civil rights and non-discrimination audit. The proposal is on Apple’s proxy ballot for its March 10 annual meeting, though the tech giant has told investors to oppose it. Apple is committed to diversity and inclusion and already is undergoing a civil rights audit, the company said in its proxy statement.

Lawyers for Bank of America and Levi’s declined to comment. Representatives of Apple and Lilly didn’t respond to requests for comment. A Pfizer spokesperson said the company takes “seriously all shareholder concerns.”

J.W. Verret, a George Mason University Antonin Scalia Law School associate professor, who studies securities law, said he appreciates the “cleverness” of conservative proposals on ESG, following the example of left-leaning activists. Coca-Cola Co. and Costco Wholesale Corp. both were targeted by shareholders seeking reports on company activities related to abortion rights. Investors rejected the Costco proposal; the Coca-Cola request still is pending.

The shareholder proposal process generally does little for corporate value regardless of political persuasions, Verret said.

“Largely it’s been an avenue for progressives to push a political agenda,” said Verret, a former member of the SEC’s Investor Advisory Committee. “The fact that it’s now being used by conservatives to do the same is not an improvement on this situation.”

Investor Confusion

At the SEC, Disney had no luck ditching an ESG-related proposal from conservative investor Thomas Strobhar. Shareholders this year will get to vote on a proposal that would ask Disney to publish on its website any recipient of at least $10,000 in charitable gifts from the company.

The entertainment giant sought to exclude the proposal, saying the request sought to micromanage the company. The SEC said earlier this month it disagreed with Disney’s assessment, allowing the shareholder’s request to stay on the company’s proxy ballot.

Strobhar in a supporting statement with his proposal highlighted his interest in Disney’s contributions to the Planned Parenthood Federation of America and the Southern Poverty Law Center, a civil rights advocate, among other organizations.

“I don’t expect overwhelming shareholder backing on this,” said Strobhar, who’s pushed companies on donations since the 1990s. “But the point is there, and I hope it gives them food for thought.”

A lawyer for Disney didn’t respond to requests for comment.

Such proposals, regardless of their chances of success, are keeping companies on their toes, Gonzalez-Sussman said.

Companies opposed to conservative proposals targeting ESG need to work hard to communicate very clearly to shareholders that these requests are problematic in order to avoid confusion, she said.

“Even I have to look at things twice and say, ‘What are they really looking at? What are they looking for? Is this something that I can support?” Gonzalez-Sussman said.


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