CEO Eviscerated ESG Long Ago

Via a two-part analysis of "The Evil of ESG" (which I recommend) by Yaron Brook, I learned of a lengthy reply by Cypress CEO T. J. Rodgers to a nun who "criticiz[ed] the lack of racial and gender diversity of Cypress's Board of Directors."

After carefully explaining why even attempting to hire by such criteria in the mid 1990's would be a fool's errand, Rodgers explains at some length why the principles of ESG -- then called "corporate responsibility" -- would harm his business and his investors, including the Sisters of St. Francis.

The whole thing is worth reading, but I particularly appreciate Rodgers calling the demands immoral and explaining why:

Image by ja84752, via Wikimedia Commons, license.

By "immoral," I mean "causing harm to people," a fundamental wrong. Here's why:

• I presume you believe your organization does good work and that the people who spend their careers in its service deserve to retire with the necessities of life assured. If your investment in Cypress is intended for that purpose, I can tell you that each of the retired Sisters of St. Francis would suffer if I were forced to run Cypress on anything but a profit-making basis. The retirement plans of thousands of other people also depend on Cypress stock -- $1.2 billion worth of stock -- owned directly by investors or through mutual funds, pension funds, 401k programs, and insurance companies. Recently, a fellow 1970 Dartmouth classmate wrote to say that his son's college fund ("Dartmouth, Class of 2014," he writes) owns Cypress stock. Any choice I would make to jeopardize retirees and other investors from achieving their lifetime goals would be fundamentally wrong.
• Consider charitable donations. When the U.S. economy shrinks, the dollars available to charity shrink faster, including those dollars earmarked for the Sisters of St. Francis. If all companies in the U.S. were forced to operate according to some arbitrary social agenda, rather than for profit, all American companies would operate at a disadvantage to their foreign competitors, all Americans would become less well off (some laid off), and charitable giving would decline precipitously. Making Americans poorer and reducing charitable giving in order to force companies to follow an arbitrary social agenda is fundamentally wrong.
• A final point with which you will undoubtedly disagree: Electing people to corporate boards based on racial preferences is demeaning to the very board members placed under such conditions, and unfair to people who are qualified. A prominent friend of mine hired a partner who is a brilliant, black Ph.D. from Berkeley. The woman is constantly insulted by being asked if she got her job because of preferences; the system that creates that institutionalized insult is fundamentally wrong.

Finally, you ought to get down from your moral high horse. Your form letter signed with a stamped signature does not allow for the possibility that a CEO could run a company morally and disagree with your position. You have voted against me and the other directors of the company, which is your right as a shareholder. But here is a synopsis of what you voted against... [bold added]

This letter is a classic and has stood the test of time. Please consider reading it and passing the word.

If there were more CEOs with this degree of moral -- and communication! -- clarity, the ESG movement would be far less of a threat to American industry than it is today, if not an outright laughingstock.

-- CAV

Updates

Today: Added link to text of letter at "whole thing" above and here.