How ESG Became a Right-Wing Flashpoint

Happy Monday—to everyone except former Ohio House Speaker Larry Householder or former state GOP Chair Matt Borges, who were convicted by a federal jury on Thursday for a $60 million bribery and money laundering scheme. Both face up to 20 years in prison.

Up to Speed

• Senate Minority Leader Mitch McConnell—the 81-year-old senior senator from Kentucky—was hospitalized after he fell at a private event in Washington and suffered a concussion, his spokesman David Popp said on Thursday.
• The National Republican Senatorial Committee (NRSC) is urging Montana businessman Tim Sheehy to challenge Democratic Sen. Jon Tester in 2024, Axios’ Josh Kraushaar reports. He’d be a top recruit if he decides to run: “Sheehy is a former Navy SEAL and Purple Heart recipient who completed over 200 missions in Iraq, Afghanistan, South America and the United States Pacific Command. He is currently the CEO of Bridger Aerospace, a Montana-based provider of aerial firefighting and wildfire surveillance services,” Kraushaar reports. “Sheehy is personally wealthy and would be able to self-finance a campaign. He’s also a political outsider who doesn’t have a history of controversial statements or unpopular votes.”
• During a town hall with CNN’s Jake Tapper last week, Virginia Gov. Glenn Youngkin touted his administration’s stances on parental involvement in K-12 education as it relates to transgender policies and banning critical race theory in schools. Youngkin also endorsed building gender neutral bathrooms in response to a question from a 17-year-old transgender student currently enrolled in Virginia’s public school system: “Look at me. I am a transgender man,” the student said. “Do you really think that the girls in my high school would feel comfortable sharing a restroom with me?” Youngkin responded: ​​“That’s why I have said many, many times, we just need extra bathrooms in schools. We need gender-neutral bathrooms and so people can use the bathroom that they in fact are comfortable with.” Youngkin also demurred about whether he will run for president in 2024: “I believe there’s an enormous amount of work yet to do in Virginia.”

ESG Enters 2024 Campaign Debate

If you read today’s TMD, you’re up to speed on the demise of Silicon Valley Bank. If you didn’t, here’s the gist: The bank faced a liquidity crunch thanks to a combination of a cooling tech market and some suboptimal bets on long-maturity investments. It tried to deal with that crunch by selling a heap of those investments at a substantial loss, and its hyper-vigilant venture capital customers read that sale as a sign of structural weakness. Cue a run on the bank.

Or, well, but maybe there was another problem? Here’s GOP Rep. James Comer, chairman of the House Oversight Committee: “They were one of the most woke banks in their quest for the ESG-type policy and investing,” he told Fox News’ Maria Bartiromo Sunday.

As an analysis of the bank failure, this was an odd non sequitur. But as a piece of political messaging, it was unsurprising: ESG has become a significant Republican campaign issue going into 2024.

ESG, which stands for “environmental, social, and governance,” is a catch-all term for company actions that comport with “stakeholder capitalism”—a philosophy that argues companies have duties to their workers and society at large that go beyond maximization of shareholder profit under the law. ESG can be a matter of corporate governance—sweeping in everything from politics-themed marketing to diversity initiatives—or it can be a philosophy of investing, which over the last decade has most typically involved steering investor cash away from fossil fuel companies and toward renewables.

Just two years ago, not many people outside corporate America had ever heard of ESG. (Many still haven’t!) And it certainly wasn’t yet a Republican bugbear. When Glenn Youngkin, fresh off a decades-long career with private-equity firm the Carlyle Group, threw his hat in the Virginia governor’s race in January 2021, none of his primary opponents ever made hay of a 2020 letter in which Youngkin and Carlyle co-CEO Kewsong Lee touted the firm’s “long history of ESG integration” and said that “we believe that strong ESG competencies are hallmarks of management excellence.”  

But the last few years brought several changes that primed ESG to become a right-wing flashpoint. The death of George Floyd in 2020, and the ubiquitous corporate declarations of solidarity with the Black Lives Matter protests that followed, sharpened many Republicans’ indignation against so-called “woke capitalism.” Then, in early 2022, oil and gas markets came roaring back after near-collapse during the COVID pandemic—so much so that fossil fuels started outperforming green energy stocks for the first time in nearly a decade. Throw in a war in Ukraine that choked gas markets, and you had an easy recipe for Republicans, especially those in oil, coal, and gas-heavy states, to cry foul about major market investors who chose to steer clear of fossil fuel companies for ideological reasons.

Accordingly, last year saw a growing number of Republican actions around the country deliberately targeting ESG. Several Republican-led states passed bills forbidding state agencies from investing funds in financial institutions with anti-fossil fuel ESG efforts. A federal bill introduced by GOP Alaska Sen. Dan Sullivan took a different anti-ESG tack, seeking to limit the ability of enormous passive fund managers like Vanguard and BlackRock to participate in shareholder elections at companies where they invest their customer funds. (BlackRock CEO Larry Fink has long been considered a leading proponent of ESG investing.)

It’s still a niche issue, but some anti-ESG measures have some bipartisan appeal. Under a new Department of Labor regulation finalized late last year, the Biden administration began permitting retirement plan fiduciaries to consider ESG factors when making investment decisions. Earlier this month, the GOP House passed a measure blocking the rule, which the Senate also passed thanks to the support of two Democrats—Sens. Joe Manchin and Jon Tester of the energy-reliant states of West Virginia and Montana. Biden has pledged to veto the bill, which would be the first of his presidency.

Many Republican candidates are already carving out space for themselves in the anti-ESG lane ahead of 2024. Vivek Ramaswamy, the biotech founder turned anti-woke activist and presidential candidate, built a whole political brand around ESG and similar issues. But he’s far from alone. Donald Trump bashes ESG. Ron DeSantis bashes ESG. Mike Pence bashes ESG. Mike Pompeo bashes ESG. Even Youngkin now bashes ESG, to an extent: He told Bloomberg News in January that the phenomenon had gone too far. “At the end of the day,” Youngkin said, “the economics of returns should justify the investment decisions.”

Poll: Trump and Abortion Toxic for Republicans Among Women

The Republican Party has a huge problem with female voters largely fueled by two intractable problems: former President Donald Trump and abortion. 

That’s the takeaway from fresh polling and focus groups testing the attitudes of women who live in Phoenix, Arizona, and Bucks County, Pennsylvania—major suburban battlegrounds in key swing states (Phoenix is situated in Maricopa County and Bucks County is adjacent to Philadelphia.) The survey, conducted jointly by Horizon Strategies and Public Opinion Strategies, a GOP firm, examined the preferences of “Republican women swing voters” and “Independent women swing voters,” based partly on votes cast in the 2022 midterm elections. 

Among the significant findings:

• Trump’s favorable ratings among Republican women swing voters was 24 percentage points under water; among Independent women swing voters it was negative-30 points.
• 75 percent of Republican women swing voters want the GOP to nominate someone other than Trump in 2024. These same voters view the party positively, but not by much, giving it a 57 percent/40 percent favorable/unfavorable rating.
• Among Republican women swing voters, just 31 percent approved of the Supreme Court decision overturning Roe v. Wade, which eliminated federal protections for abortion rights, with 61 percent disapproving. Among Independent women swing voters, those numbers were 25 percent and 65 percent, respectively.

Among the notable focus group comments:

• “I’m just tired of Trump and the drama.” —Republican woman swing voter in Bucks County
• “Trump did some good things for the country, but he blew it because he wouldn’t shut up. He couldn’t stop with the dumb stuff.” —Republican woman swing voter in Bucks County
• “I am definitely pro-life. But there are instances when it’s acceptable. It’s scary to think that you wouldn’t have rights. When Kari Lake was leading in the polls, that was the first time I really felt scared.” —Republican woman swing voter in Phoenix

House Republicans Can’t Quit January 6

“Oh brother.”

That was Sen. Todd Young, an Indiana Republican, evincing a mixture of frustration and resignation over some in his party who refuse to stop talking about Jan. 6, 2021. The issue was raised anew this month after House Speaker Kevin McCarthy gave Fox News’ Tucker Carlson exclusive access to previously unseen security camera footage of the ransacking of the United States Capitol by supporters of former President Donald Trump.

The topic, also a proxy for re-litigating the 2020 election—another loser discussion for Republicans—did the GOP no favors in what turned out to be disappointing midterm elections in 2022. Furthermore, it stands to hamper the party’s chances of winning the Senate majority and recapturing the White House in 2024. That’s why, Carlson aside, so many Senate Republicans are perplexed that a considerable bloc of their GOP colleagues in the House refuse to let the matter lie, versus training the spotlight on President Joe Biden and, they argue, his domestic and foreign policy failures.

“It certainly won’t resonate with American voters and it will do nothing to help Republicans other than to satisfy some of the base that just wants a pound of flesh,” Sen. Kevin Cramer, a North Dakota Republican, told The Dispatch. “Anything that gets you asking me questions about Jan. 6 instead of asking me about inflation, I think is a bad idea for Republicans.”

Republican strategists, whose main interest is winning general elections, tend to agree. Successful November campaigns, they emphasize, concentrate on the future and the priorities shared by a majority of voters. Biden, they claim, is vulnerable on myriad issues, from inflation, to border security to challenges overseas posed by a rising China—but not so much if Republicans insist on instigating a debate about January 6.

“It’s a political loser for House Republicans and I think most—if not almost everyone—would have preferred for the tapes to be made public without the selective editing and editorializing from Carlson,” said a veteran GOP strategist, requesting anonymity to speak candidly. “At the very least, it is a self-inflicted distraction at a time when Biden is moving to the center and positioning himself for his re-elect.” 

Gift to the Democrats or not, House Republicans are pursuing additional January 6 investigations, sure to keep the issue alive for the foreseeable future. 

The House Administration Committee—with jurisdiction over Capitol building operations and the U.S. Capitol Police—is moving toward a probe of the security breakdown that occurred on that day and the delay in deploying National Guard reinforcements. The inquiry is expected to be led by Rep. Bryan Steil of Wisconsin, House Administration Committee chairman; and Rep. Barry Loudermilk of Georgia, who chairs the panel’s Oversight subcommittee. 

Some Republicans are defending the effort, saying it is about getting to the bottom of security failures to ensure rioters are not able to breach the Capitol in the future. The findings could result in structural changes to the Capitol Police and better define the rules of engagement with criminal agitators and when to call for backup.

“Maybe this couldn’t have been anticipated, but let’s learn from it,” a knowledgeable Republican operative said, attempting to cast the expected House Administration Committee hearings in a positive light.

But even in the House, some Republicans ret that focusing on January 6 in any capacity, more than two years later, will make it harder for them to defend their paper-thin, four-seat majority in 2024, let alone expand it. To some degree, House Republicans are in a bind. 

Trump, popular with roughly a quarter to a third of the party’s base, won’t stop claiming the 2020 election was stolen, nor will he stop fanning conspiracies about what happened on January 6. That (and some sympathetic media coverage)  is helping to fuel doubts among grassroots Republicans about the events of that day. As one Republican explained, it’s an “itch that needs to be scratched” to keep the GOP base on board, even at risk of damaging relations with swing voters and the more traditional elements of the party.

Besides, say some pragmatic House Republicans, at least they’re checking the box on this issue this year, rather than next, when it could be a real problem. Of course, they don’t quite say it that way, at least not publicly. 

“We’re a long ways off from the election,” said North Carolina Rep. Richard Hudson, chairman of the National Republican Congressional Committee. “What we’re going to be talking about in the elections hasn’t been determined yet. So, I’m not really concerned about it.”

Eyes on the Trail

• Harris-Warren drama ongoing ahead of 2024: Asked by a Boston radio interview earlier this year whether Biden should keep Vice President Kamala Harris as his running mate in 2024, Democratic Sen. Elizabeth Warren said: “I really want to defer to what makes Biden comfortable on his team.” The incident is reportedly still causing drama between Harris and Warren as the White House gears up for an expected reelection bid. Here’s CNN’s Jasmine Wright and Edward-Isaac Dovere with the latest: “‘Pretty insulting,’ is how one person close to Harris described the feelings of many in the vice president’s office and in her wider orbit. Several people close to Warren said the senator was calling to explain her statement as purely a mistake – a fumbling, unintentional attempt to avoid stepping on a campaign announcement from the president…Warren made her case to Harris’ chief of staff Lorraine Voles, who returned the senator’s call in place of Harris, a source familiar with the callback told CNN.”
• Nikki Haley floats entitlement reform: GOP presidential candidate Nikki Haley said she supports raising the eligibility age for retirement benefits, which would later affect Americans currently in their 20s, the Washington Post’s Dylan Wells reported last Thursday. “We’re going to do something with entitlements,” Haley said in a town hall meeting in Nevada, Iowa, last week. “We’re going to change the age, the retirement age for them. We’re going to let them know the rules have changed for them, because they know they’re not going to get it anyway.” 
• Cuccinelli Launches DeSantis for President PAC: Ken Cuccinelli, the former Virginia attorney general who later served as Donald Trump’s acting deputy Homeland Security secretary, launched a PAC in late February supporting Florida Gov. Ron DeSantis’ prospective presidential campaign, The Hill’s Stephen Neukam reported on Thursday. “I have been speaking to many grassroots conservative activists around the country who are very enthusiastic for Governor DeSantis to run for President in 2024,” Cuccinelli told The Hill in a statement. “The energy is there, grassroots conservatives see the Governor as a leader and a fighter with a winning conservative track record who will lead the Republican Party to victory in 2024.”

Notable and Quotable

“Gov. DeSantis … has certainly earned the right to be at the head of the class … not just through his political rhetoric, but through his successful governing of a very large state.”
—GOP Sen. Kevin Cramer of North Dakota on NBC’s Meet the Press, March 12, 2023