As VEA Vice Chair Nell Minow wrote about the so-called (and now defunct) “Main Street Investors Coalition” on the Harvard Law School Forum on Corporate Governance, “the more folksy or patriotic the name of the group, the more likely that it is funded by people who are promoting exactly the opposite of what it is trying to pretend to be.” These are “astroturf” groups, fake grassroots organizations designed to look like public interest groups but in reality are funded by corporations to undermine everything from government regulation to market forces to any other aspect of public discourse.

The latest corporate funded group with a fake public policy sounding name is the Corporate Citizenship Project, which promises it will provide “objective” and “quantitative” evaluations of corporations at no charge. They say they will not take money from the companies they cover, either. So far, everything they have produced is an attack on ISS, with no coverage of public corporations, and their website has no information about their funders or the qualifications of their analysts. [March 11, 2023 update: Still no reports available on their website.]

We have written to the Corporate Citizenship Project with questions. The answers are below, with our comments. We will continue to monitor this group and provide updates as they are available.

Do you have a sample of your reports or advice on proxy policies or specific proxy issues, particularly relating to CEO pay, political contributions, or climate change? 

We are in the process of putting together these reports starting with larger companies. Our intention is to never take money from the subjects of our reports.  We are also finalizing an objective rating system for companies based on more quantitative than qualitative metrics to preserve objectivity (see below for a description of our views)  

Our comment: It is disingenuous to claim that there is such a thing as “more quantitative than qualitative metrics.” Sure, the word “metrics” sounds all math-y and scientific. But obviously, the selection and weighting of the quantitative elements is subjective and there is no indication of expertise in quantitative analysis, statistics, or ESG on the site. We look forward to detailed information about the quantitative elements TCCP will be relying on in developing their “objective” assessments.

Your critique of ISS [for having no diversity in its top executive team and giving positive ESG ratings to companies doing business with Russia] suggests that you support shareholder initiatives on diversity and exiting Russian operations and joint ventures. Is that correct? 

Our views: 

-Companies should not discriminate based on race, gender, or sexual orientation 

-Companies should be free to appoint board members and executives who they feel are most qualified for the positions regardless of their race, gender or sexual orientation. Shareholders deserve the most qualified leaders. Period.  

-Racial quotas of any kind are demeaning  

-ESG initiatives at many companies are more aimed at virtue signaling than actually making the world a better place 

-The brutal Russian invasion of Ukraine illustrates the risks of ESG because the ESG movement—led by ISS—has hurt our ability to tap into domestic energy sources like oil and LNG which could reduce the leverage of Putin’s Russia over Europe.  

Our comment — this is a combination of misdirection and complete and utter baloney. They say that they oppose quotas and want companies to select entirely on the basis of merit, and yet one of their first three reports attacks ISS for its all-white roster of top executives, with no suggestion, much less evidence, that those selections were based on anything but merit. They then claim (see below) expertise based on their own all-BIPOC staff. And they deploy the most useless of terms used to attack ESG issues, “virtue signaling,” without any supporting data or analysis. If TCCP believes that corporate claims of DEI by public companies are not supported by their actions, as in the many documented examples from Judd Legum showing corporate rhetoric contrary to political contributions, we expect to see that in their future reports.

A clue as to the funders of this organization is in that last comment about the conflict in Ukraine. It has been shocking to even the most cynical to see the fossil fuel companies try to use that horrific tragedy to undermine climate change efforts and reap windfall profits instead of realizing further the importance of shifting to non-fossil fuel energy. As White House Press Secretary Jen Pskai pointed out to partisan dupe Peter Doocy, there is no need for allowing new drilling permits when the industry already has 9000 permits it is not using. And as Sheldon Whitehouse, Ro Khanna, and other Democrats in Congress pointed out in proposing new windfall profits legislation, ConocoPhillips, Chevron, and other oil companies are paying negative taxes on huge profits. And that does not even factor in the enormous taxpayer subsidies to the oil industry.

Who is funding your organization and is it for-profit or non-profit? 

We are an LLC. We are funded by several publicly traded companies who are industry leaders in ESG. They are offended that ISS gives unduly high marks, accolades, and certifications to companies who pay ISS money and who have large teams in place to deal with ISS. Meanwhile, companies who actually have diverse workforces and protect the environment but do not have the resources or interest in paying and groveling to ISS get low marks. It doesn’t seem fair. As you can imagine, many of these companies fear potential retribution from ISS.  

Our comment: We trust that TCCP will do better with future claims than this fraudulent and defamatory assertion that ISS is less tough on consulting clients than it is on non-clients. While the partners of VEA did not allow consulting when we ran ISS in the 1980s, we acknowledge than an independent study verified that there is no difference in proxy advice for clients, and that. all client relationships are clearly disclosed so that proxy advisory subscribers can review the guidance with that in mind. We note also that TCCP says they will not accept payment from companies for their reports, but does not say whether that means that they will not be reporting on the companies providing their funding. Before they accuse ISS of conflicts of interest, they had better make sure they are free from any of their own.

What past experience in corporate governance does your staff include? 

People of color who have worked in corporate America who can tell the difference between true commitment to diversity and a virtue-signaling grift.  

Our comment: So far, TCCP has not shown any evidence that they have the expertise or capacity to provide this analysis and everything we have seen from them so far suggests the contrary. While the website says that they will insist on corporate transparency and they criticize ISS for lack of transparency, they do not seem to believe in it for themselves. The sole individual described on the site says little about her background except that it is in public relations. She has no background in economics, finance, corporate governance, or securities law or analysis. There are a lot of claims about the failings of ESG but no specifics relating to investment risk or portfolio theory. We look forward to the quantitative analysis and transparency and accountability they are promising but so far it is just shrill, unsubstantiated claims, many inconsistent with the extensive quantitative data they apparently have not examined..