Flagship investment firm rejects climate, ‘diversity’ proposals

Shareholders in Warren Buffett’s Berkshire Hathaway investment firm Saturday overwhelmingly rejected proposals related to ESG and DEI.

Environmental, social and governance (ESG) is a form of grading companies and countries — and soon people, experts warn — based on how well they conform to prevailing narratives on environmental and social issues. For example, the more “environmentally friendly” or “racially inclusive” a company purports to be, the more virtuous it is and thus more worthy of investment. If a company’s ESG score is below certain thresholds, they are not to be invested in at all. 

ESG ideology, which has come to mostly refer to environmentalism and “climate change," dictates that a company’s profits must sometimes take a backseat to saving the weather.

Proponents of ESG include lawmakers, the world’s largest investment firms, and tech giants. BlackRock CEO Larry Fink, who manages $10 trillion in wealth, vowed to “force behaviors” when it comes to ESG.

At Berkshire’s shareholders meeting Saturday, the California Public Employees’ Retirement System (CalPERS) and Caisse de Dépôt et Placement du Québec (CDPQ) put forth a proposal to make Berkshire disclose the “climate risks” of every company in which it invests.

“Unfortunately the Company continues to stand out as a laggard on climate-risk reporting relative to the broader market,” said the proposal about Berkshire Hathaway.

But the company’s board of directors, including Buffett, unanimously recommended shareholders vote against the measure, saying that the portfolio companies already disclose their “climate risks”.

Another proposal suggested that Berkshire not only disclose its climate assessments of its portfolio companies but also its climate assessments of its executives and whether they are properly “trained” and “competent” in ESG.

A third proposal complained that Berkshire “earned a zero in recent scoring by the Climate Action 100+ for lack of compliance” and does not commit to ESG.

Berkshire’s board of directors unanimously recommended its shareholders vote against these proposals, too.

Yet a fourth proposal demanded that Berkshire report on its “diversity, equity, and inclusion efforts” including “data by gender, race, and ethnicity”.

Diversity, Equity and Inclusion (DEI) is an ideology which views humans according to skin color and genitalia and assigns certain privileges or demerits to each.

But the board of directors unanimously recommended shareholders reject the proposal, explaining that the board already has four directors who are female and two who are “ethnically diverse”, though “they were not selected for diversity purposes”. The company also already publishes its workforce data.

All these proposals were voted against by shareholders with margins of three to one or greater.

The pushback against the DEI proposal clashes with remarks made two years ago by executives of Berkshire Hathaway Energy, Berkshire’s $21 billion subsidiary. Executives told employees that “meritocracy is a myth”.

“In our society, we are taught that anybody can achieve their dreams if they just work hard enough, try hard enough or ‘pull themselves up by their bootstraps,’” reads a document Berkshire Hathaway Energy emailed to employees.

“In reality, there is no such thing as a meritocracy; it’s a myth.”