Anson Frericks, a former executive at Anheuser-Busch, shared with “Jesse Watters Primetime” that the woke corporate governance causing fiscal damage to companies like Anheuser-Busch and Target, usually begins with investment firms exerting pressure to behave in certain ways.
Frericks said that investment firms like New York-based BlackRock and Pennsylvania-based Vanguard are the ones politicking and leading up to these decisions. BlackRock, Vanguard, and State Street collectively manage $20 trillion in capital, which is not their money but of the investments made by mutual funds and state pension funds of Americans.
Frericks mentioned that one of these firms manages California’s pension fund, and therefore, California politicians can have a say in the corporate governance and politicking of the firms they invest so heavily in. Frericks said that these investment firms tell BlackRock, State Street, and Vanguard that if they are going to manage their money, they have to commit to things like ESG (diversity, equity, inclusion) and adopt firm-wide commitments that they then force onto all the major companies in corporate America.
Frericks left his post at Anheuser-Busch, in part, because of the way much of corporate America acted in defying public sentiment when engaging in politics. Frericks pointed to the corporate responses of Coca-Cola and Delta Airlines following Georgia’s legislators passing election integrity laws. Frericks said he was living in Atlanta at the time and witnessed these companies’ corporate responses to the legislative process. He also pointed out Major League Baseball, which punished the state by moving the All-Star Game to more progressive Colorado.
Receive a FREE Gift for Subscribing to the Newsletter!
Frericks said that the trend seen in Atlanta and other concerns is dangerous since it led to customer alienation and politicizing the companies’ long-held roles. Frericks used Coke as an example which has always been known for ‘just delivering soft drinks.’ The trend is also bad for democracy since it is a small group of asset managers and CEOs telling citizens how to live their lives. According to Frericks, citizens should be able to decide these things through free and fair elections. Host Jesse Watters pointed out that the political Left once hated Wall Street but now partners with it for political means.
During a recent forum, BlackRock CEO Larry Fink said it is important for the companies his firm invests in to force behaviors, including those related to gender, race, or team composition. Frericks stated that the activism in corporate America, not just in Georgia but in other states too, is not about representing the shareholders’ interests but about pleasing the few asset managers who hold most of the shares. He noted that the lack of representation for individual shareholders is another downside of the trend in corporate management.
Frericks explained that it is the power of asset managers that is forcing so many companies to jump on the progressive bandwagon. By refusing to kowtow, these companies risk negative fallout since these same managers control their access to capital. Frericks pointed out the case of Target in 2016 when the company fell foul of this group’s progressive fervor. Target humiliated itself by ordering its policy around ‘inclusive’ restrooms because the investment groups told them they needed to adopt those policies. The same happened with Anheuser-Busch, which involved the deft activism of an investment firm and a lone transgender, resulting in the nationwide boycott of Bud Light.
Frericks said individuals must have power in the market to make their voice heard. He noted that one of the problems is how most people have their money tied up in mutual funds. He also mentioned the Employee Retirement Income Security Act (ERISA), which means that fund managers have complete and utter control over the money of most people who have 401(k) and pension plans in their name.
Moreover, Frericks stated that he is not against ESG and diversity. He added that when pressure happens, companies generally involve themselves in these causes. However, he is opposed to asset managers telling the companies to do so without the proper debate and conversation, informed by all the stakeholders. Once an investment group has aggregated such a large number of shares, and thus votes, companies rely on their support and kowtow to the investment group’s desire. Frericks notes that it is not a level playing field. The investment managers who control a vast majority of shares in a company are organizing government action that other shareholders have no power to initiate or control.
Frericks shared the story of how Anheuser-Busch was forced to change the name of one of its beers by a Hindu group who claimed it was insulting to their religion. The company was forced to do it mainly to protect its access to capital. Therefore, it wasn’t the public that forced Anheuser-Busch to change the name of its beer but, investment firms who pressured it to do so to comply with their ESG rules. As per Frericks, this is not a sign of strength for shareholders unless they own a good percentage of the company’s stock. In such cases, they can effect change corporately and within government legislation properly.
Frericks also accused the media for reducing the subject to a binary issue in most news articles. The binary issue is that corporations, such as Coca-Cola and Delta, are taking a stance against what is usually being portrayed as reactionary state-level legislation. Reactionary or not, Frericks points out that most of these issues are quite complicated, and the progressive bandwagon is quite a poisoned chalice for those drinking from it. He believes that these leaders need to look long and hard at their decision-making process and strategies and the role of ESG rules in their decision.
Receive a FREE Gift for Subscribing to the Newsletter!