August 30, 2025 ~ Vol. 39
The MAGA campaign to eliminate all things “Woke” has demonized progressive initiatives including DEI (Diversity, Equity & Inclusion), SRI (Socially Responsible Investing), and ESG Investing (Environmental, Social, Governance). Some of these initiatives were focused on investing and some on business management, particularly with regard to hiring and HR policy. All were tangentially related, and all have been targeted by the Trump White House, resurrecting the purges of Trump’s first term that had been scrapped by the Biden administration.
Modern day “Social Investing” was born of the 1960’s era anti-industrial and anti-Vietnam war protests. The seeds were planted even earlier by Methodist and Quaker congregations who focused on an ethical community and avoided the “sin stocks” of companies engaged in the production of things like alcohol and tobacco, or who promoted or benefited from slavery.
My first personal exposure to the process of social investing was in the late 1970’s when civil rights leader Reverand Leon Sullivan introduced what came to be known as the “Sullivan Principles”—a guide to socially conscious investment decision making, particularly with regard to the divestment of the stocks in companies operating in apartheid era South Africa. I was a freshly minted Merrill Lynch stockbroker, and we had a number of clients in the office that embraced the concept and wanted their portfolios to reflect this new focus on human rights and not just potential financial returns. (At the time South African gold mining companies often had dividend yields of over 10%, offering a tempting choice to investors.) Many clients who embraced “Sullivan Investing” were nonprofits and religious organizations whose charters reflected the principles espoused by Reverend Sullivan: non-segregation in the workplace, equal employment practices for all employees, and actively working to eliminate practices that impeded social, economic and political justice.
The end of apartheid brought about an expansion of the Sullivan Principles to encompass a global directive not limited to the injustices in South Africa. Sullivan teamed up with UN Secretary-General Kofi-Anaan to launch a new global code of investing conduct. In 1999 the Sullivan Global Principles were expanded to include non-segregation in all workplaces including eating areas and rest rooms, a directive that employers should provide a safe, healthy workplace and protect the environment, promote equal opportunity and compensation, promote fair competition and refuse to accept or offer bribes. (Not engaging in bribes may sound easy and obvious, but at the time it eliminated entire countries from consideration as potential portfolio components.)
The Sullivan Principles introduced a new dimension to socially responsible investing by creating a clear, monitorable standard for corporate behavior. Investors used these principles to evaluate their holdings, pressuring companies to either change their practices or face divestment. The Global Sullivan Principles demonstrated how these early ideas have been expanded to address global human rights and environmental issues. Large institutional investors using these stock selection screens were used not only as stock selection tools, but as a cudgel to motivate companies to become more socially responsible. This movement was still ascendant in the early twenty first century and expanded into what came to be known as ESG (Environmental Social and Governance) Investing. ESG was embraced by global money managers like Larry Fink at BlackRock, and corporate CEO’s like Marc Benioff at Salesforce Inc.. Fink and Benioff represented the two sides of the ESG coin. Benioff’s company embraced an ESG ethic, sometimes described as considering “stakeholder” vs. (just) stockholder interests in the management of a company, and Fink’s BlackRock offered and promoted investment portfolios of companies that embraced those ethical principles.
As examples, in 2021, Benioff offered to relocate Salesforce employees out of Texas after the state passed an anti-abortion law. In 2015, Benioff announced that Salesforce would cancel all employee programs and travel to Indiana if that state passed the proposed “Religious Freedom Restoration Act”, which would allow companies to deny services to LGBTQ customers. (You can usually count on these “Religious Freedom something-something Acts” to discriminate against the LGBTQ community.) Under the spotlight, the Indiana legislature rewrote the proposed law to prohibit businesses from denying services to individuals based upon sexual orientation.
Socially Responsible Investing was not embraced for the singular purpose of being good neighbors or good employers or being good stewards of the environment. The Marc Benioffs and Larry Finks of the world have a primary purpose and primary motivation of making money—for themselves and for their shareholders. That is as it should be. No one has come up with a better economic system than capitalism to expand the economic pie and offer everyone an opportunity to prosper and accumulate wealth. Importantly, they also believe that a company that recognizes the concerns of all of a company’s stakeholders – the stockholders, and the employees and customers—will make for a better managed and more profitable company. They believe that the best interests of all of those stakeholders, especially the stockholders, will be best served by focusing on long term strategic planning—by acknowledging that we are in the midst of an accelerating environmental crisis, by acknowledging that employees and customers have good ideas to offer and that a diversified workforce will offer a diversity of talents and ideas. Despite those obvious realities and benefits, the MAGA movement has embraced the notion that all of this is harmful to the economy and the country and should be abandoned (SRI)) or cancelled (ESG) or in some cases outlawed (DEI).
In 2020, during Trump’s first administration, the Department of Labor, which sets policy for the investment of pension assets, fired a shot across the bow of socially responsible investing when they issued a ruling that prohibited pension plan fiduciaries from considering anything other than “pecuniary” factors in the selection of investment alternatives for pension assets. Pecuniary, meaning financial metrics and profit opportunity, and nothing else.
Approximately one third of an average household’s financial assets are typically in retirement accounts, including 401(k)’s, and IRA’s, totaling trillions of dollars. The ruling, set to impact all of those trillions, had a chilling effect on ESG investing because – how do you prove that an ESG screen enhances returns vis a vis something else? Enter Joe Biden. In 2022, the Biden DOL changed course. A new ruling reversed the Trump-era restrictions and allowed fiduciaries to consider climate change and other ESG factors as part of a risk-return analysis. It explicitly permitted using ESG factors as a "tiebreaker" if two investment options were otherwise equal financially.
That worked, until it didn’t, when Trump’s reelection brought about a new DOL ruling reversing course again. This year (2025) the DOL has announced its intent to replace the Biden-era rule. It has withdrawn its legal defense of the 2022 rule in court, stating that new rulemaking is forthcoming. The new rule is expected to restrict the use of ESG factors by ERISA fiduciaries again, potentially returning to a position similar to the 2020 rule.
I really do want to see how this rule is going to work. Fiduciaries, including pension trustees and investment advisors, will be expected to adhere to some nebulous, unenforceable edict regarding portfolio construction. One can invest in Salesforce if they believe that the stock, based upon risk/return modeling and a comparison of CRM’s current value to a projection of its potential value presents an attractive investment opportunity for their ERISA clients, but if they share Marc Benioff’s values they cannot? Fiduciaries cannot invest because they believe that he is forward thinking and an insightful strategic planner who incorporates climate change in the company’s outlook and he treats his customers and employees well and that all of this enhances the prospects for the company? They cannot utilize those qualitative factors in their analysis? But it will be allowable to invest in coal mines because President Trump thinks that is our future, not renewable energy. Let me know how that new rule works out for you. (BTW – I am using CRM as an example; this is not an investment recommendation.)
In the philanthropic community, Socially Responsible Investing is still gaining in popularity, particularly with local “mission aligned” or “place based” investment programs. Many community foundations, whose primary focus is enhancing the lives of community residents, are investing directly in their communities instead of traditional stocks and bonds issued by publicly traded companies. What better way to foster local economic development than to invest directly in local community businesses, or offer loans to build affordable housing, or to local banks to re-lend as car loans to less financially qualified customers who just got their first job. Our local Adirondack Community Foundation and Cloudsplitter Foundation are engaging in local “mission aligned” investments such as these. As the Trump administration continues to cut funding for “social safety net” programs like Medicaid and SNAP, local philanthropic foundations are struggling to fill the gap in services. It is the very definition of Socially Responsible Investing. But they are swimming against the tide.
The MAGA movement, led by the President, is trying to convince the country that diversity, equity, and inclusion for everyone are detrimental values for a community and for the country. We should not be surprised, coming from a movement that also feels that empathy is detrimental to designing public policy. This anti-DEI movement actually believes that a DEI initiative is discriminatory— against white males. Affirmative action programs and corporate HR/DEI departments are being dismantled, and increasingly conservative court judgements are accelerating the trend. Even progressive institutions are falling in line, including the country’s largest universities and law firms, in fear of retribution from a hostile White House threatening hundred million dollar penalties for non-compliance.
A friend who is involved in the Adirondack Diversity Initiative once opined on the rationale and justification for affirmative action programs. Treating everyone fairly, starting now, is not enough. Without affirmative action’s finger on the scale, he suggested, it is like minority participants being invited to play in a game of Monopoly that other participants have been playing for an hour. There is no way to win, unless the new players are given some properties on the board to catch up. We can argue about how long the affirmative action programs should be kept in place until we have a level playing field, or if the new late-to-the-game Monopoly players should be awarded Boardwalk or Marven Gardens. I do not know what that answer is, but I do know that we are not there yet. There are numerous quantitative and qualitative metrics that illustrate how minorities still suffer from systemic racism. One good example is a study (originally conducted by economists Marianne Bertrand and Sendhil Mullainathan) that tracked employment applications for two groups of job applicants: a control group / “mixed bag” of applicants, and another group of applicants with “Black sounding” names, all similarly qualified. Guess which group receives 50% fewer call-backs for job interviews? That is systemic racism. I can cite similar prejudicial processes in C-Suite (non)selection of qualified woman candidates or college admission policies that perpetuate legacy student bodies. When you are ten years into your career in business, your college roommate is often more important to your success than your major.
Progressive movements have waxed and waned throughout history and I would love to think that the pendulum has now swung too far—and is about to swing back or at least take a pause after the midterms. We can only hope. We really must make that happen.
Tell me how you feel about it in the comments. We need fresh ideas; the old ones are obviously not working.
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These are truly despicable policies that have no purpose other than to cudgel those not aligned with the party.
JC, you put your thumb right on it—where do people have their money invested. It doesn’t seem like a hard reach to figure this stuff out and invest in a socially conscious way.