[Congressional Record Volume 166, Number 208 (Wednesday, December 9, 2020)]
[House]
[Page H7055]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 DEESE, ESG, AND STAKEHOLDER CAPITALISM

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Kentucky (Mr. Barr) for 5 minutes.
  Mr. BARR. Mr. Speaker, I rise today to once again sound the alarm 
about an increasing danger to retail investors and retirement savers 
across the country.
  We have seen in recent years a trend of asset managers, banks, and 
other financial institutions prioritizing political and social causes 
over investment returns, potentially compromising the long-term 
financial security of their customers.
  We have seen companies cede the primacy of shareholders to so-called 
stakeholders, endangering the longstanding corporate governance 
principle of directors' and officers' fiduciary duty.
  Corporate leaders continue to accede to the calls from the extreme 
left to shun certain industries, deprioritize financial growth, and 
comply with a radical corporate governance reform agenda out of fear of 
being publicly shamed.
  I fear that, if left unchecked, this trend will accelerate in the 
coming years, as government continues to pressure financial 
institutions to be agents of social change at the expense of savers, 
customers, and shareholders. Without a strong defense of free and fair 
market principles, we risk witnessing a decline in American economic 
exceptionalism that will have long-term material impacts on our 
constituents.
  Earlier this month, former Vice President Biden announced that he 
would appoint Brian Deese as the chairman of the National Economic 
Council. Mr. Deese will join the administration from his current post 
as the head of sustainable investing at BlackRock. In that capacity, he 
serves as a leading proponent of BlackRock's environmental, social, and 
governance, or ESG, investing strategy.
  BlackRock has been perhaps the most vocal asset manager on 
restricting access to capital for legally operating fossil energy 
businesses and limiting choices for their investors based on misguided 
public relations goals. This, in part, is attributable to the efforts 
of Mr. Deese, who has orchestrated the curious investment strategy of 
actively alienating an entire sector of the American economy, the U.S. 
energy sector, and the millions of jobs it supports, while at the same 
time enthusiastically providing access to capital to Chinese businesses 
which threaten American competitiveness and national security.
  The appointment of Mr. Deese is a harbinger of things to come. It 
showcases that, unless we act, we will be on the path to socialism, 
where the primary goal of a corporation is not long-term growth or 
hiring more people or providing products and services to the American 
people, but instead to satisfy the most vocal detractors of corporate 
America.
  So-called stakeholder capitalism, or the left's ideals for it, takes 
for granted the laws of supply and demand and discounts the market 
forces that govern businesses' success or failure.
  Shareholder primacy is not about elevating the select few. It is 
about establishing metric-based accountability for corporate leaders to 
ensure that they are operating efficiently and effectively. That 
efficacy and productivity then, in turn, benefits employees, 
communities, and suppliers.
  In today's market, a company cannot be successful without a focus on 
these other constituencies. But it must, first and foremost, make a 
profit to be viable.
  Caring about broader social concerns, treating employees, suppliers, 
and customers well and ethically, and engaging in philanthropy within 
the community may all engender social support for a corporation, and in 
that sense, it may advance long-term shareholder value maximization. 
But that is not the paradigm those on the far left are urging the 
business community to adopt. Instead, they want a new paradigm, a 
paradigm that subordinates the interests of shareholders to the whims 
of stakeholders who have no ownership interest in the corporation 
whatsoever.

                              {time}  1100

  Replacing the focus on shareholder value with a focus on stakeholder 
interests unrelated to the core business of the corporation would not 
only authorize officers and directors to breach their fiduciary duties 
to the owners of the corporation, it would, in the long-term, undermine 
the corporation's ability to advance the interests of employees, 
suppliers, customers, and other stakeholders.
  The socialists think that shareholder value maximization is always 
inconsistent with other stakeholder interests. The opposite is often 
true.
  I believe we are only scratching the surface of how the radical left 
hopes to remake corporate America in its socialist image. We must act 
diligently to preserve the spirit of free enterprise, promote healthy 
economic growth, and protect the long-term interests of investors.
  With Brian Deese departing from BlackRock, perhaps that firm can 
reevaluate its obligation to the investors who entrust their assets to 
them to prioritize returns over political errands, to focus on 
maximizing shareholder value, instead of groveling before radical 
environmentalists, socialists, and the extreme far left.

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