Comptrollers get involved in the ESG debate

While the SEC has become accustomed to ESG debacles, comptrollers are becoming the latest public finance body to get involved.
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As the ESG debate begins to heat up in financial circles, comptrollers in government—on both sides of the aisle—have begun to get involved. The latest to join the fray: New York City Comptroller Brad Lander, a progressive Democrat, who, along with a coalition of investors, is calling on Starbucks shareholders to vote for an “independent workers rights assessment.” It’s part of an annual tradition at the NYC Comptroller’s office, which makes recommendations every fall to its pension funds’ proxy committees on items that may require further scrutiny. Lander filed the resolution in September.

Proxy season, which kicks off in the spring, is a time when investors have a chance to voice their demands, possibly gain board seats, and let the CEO know they’re paid too much. Starbucks, the coffee giant inundated with union campaigns over the past year, is no exception. The Seattle-based brand will host its annual general meeting of shareholders, often called the AGM, on March 23, so now is the time that investors will submit their proposals to the SEC.

Lander, the NYC Comptroller, on behalf of New York City Retirement Systems, its pension funds, and Trillium Asset Management, an investment firm, and others, submitted a proposal for Starbucks to undergo and release a third-party assessment of the company’s compliance with its stated commitment to workers’ rights. . In a nutshell, such an audit would be aimed at determining “management’s adherence to Starbucks’s stated commitments to workers’ rights to freedom of association and collective bargaining,” and any resulting “reputational, legal, and operational risks for the company.”

With the question of the SEC’s role in the ESG movement looming in the air, proposals such as the one submitted by the NYC Comptroller and Trillion Asset Management, continue to highlight governments’ role in an increasingly sticky discussion.

But, it’s not the first time that government comptrollers have gotten involved in the ESG discussion—recently, the State Financial Officers Foundation, a nonprofit that works with state treasurers and comptrollers, has “served as a central coordinating hub for anti-ESG efforts,” per The New Republic, while its counterpart, For The Long Term, aims to help public treasurers with “sustainable growth.”

Texas Comptroller Glenn Hegar has called the Biden administration’s ESG agenda“radical,” claiming that President Biden and the Department of Labor would “undermine the Texas economy” by allowing retirement fund managers to prioritize ESG factors into their investments. Utah State Treasurer Marlo Oaks has also said he is “committed to pushing back against ESG.”

In contrast, Alison Hirsh, chief strategy officer and assistant NYC comptroller for pensions, is encouraging companies to add workers into the dialogue—saying that she hopes companies will reach a workforce-related disputes standard that could provide a way for investors and fund managers to evaluate a factor of companies’ social metrics.  This sentiment has also been echoed by the New York State comptroller.—KT

News built for finance pros

The latest news and insights corporate finance professionals need to know to keep up with their constantly evolving industry.