President Donald Trump won in 2024 on a rejection of the Biden administration’s injection of left-wing ideologies into the federal government. Voters cast aside DEI requirements, transgender insanity, and more in a decisive win across the country. And over the past year, the Trump administration has acted on his mandate from the voters, going to war with the deep state.
However, there is a second entity – which could be called a corporate deep state or “Woke Capital” – which has resisted change. It is this group, not the federal government, that coerces stores and corporations to go all-out each year for ideological signals like Pride Month and encourages places of business like Target to advertise LGBT-themed books and clothing for children. The problem is partially within each corporation, but pressures toward wokeism have also been systematically embedded in the infrastructure of our financial system. This includes powerful forces that misuse shareholder voting to force publicly-traded companies to adopt the left’s Diversity, Equity and Inclusion (DEI) and Environmental, Social and Governance (ESG) pet priorities.
The Trump administration’s pushback against Woke Capital started strong, delivering a solid punch to proxy advisory firms like Glass, Lewis & Co,. LLC, and Institutional Shareholder Services, Inc., which have pushed politically biased “advice” to shareholders who often take their voting recommendations at face value. Trump’s pushback came in the form of an executive order last December, empowering the SEC to crack down on its activities.
But a second punch still needs to be landed, as proxy advisory firms are not the only actor here. A huge part of the problem is three giant asset managers – BlackRock, Vanguard, and State Street. The trio specializes in “passive” investments such as index funds. As passive funds and their low fees have become hugely popular, this cartel has amassed massive influence over the U.S. economy. Roughly 90 percent of all S&P 500 companies have one of these three Wall Street firms as their largest shareholder.
The problem is that, when it comes to ideology, these “passive” managers are anything but neutral. They don’t just embrace and accept the Woke Capital agenda — they have been leaders driving it forward. They largely set the standards that proxy advisors responded to and directly pressured corporate leaders to move left. Take their stunning intervention in support of an attempt by Engine No. 1, a tiny ESG-focused hedge fund, to force a “green transition” on Exxon’s board. BlackRock, Vanguard, and State Street all jumped in to back this fringe environmentalist coup at one of the world’s most important oil and gas companies. Without their support, the takeover attempt would have failed. But because they backed it, the environmentalists won three board seats and achieved headlines which blared “Exxon’s Board Defeat Signals the Rise of Social-Good Activists.”
The insanity has extended to the restaurant industry, too. BlackRock has frequently backed fringe proposals from the pressure group The Accountability Board, which argues companies “should meet or exceed the standards of its market regulations” when it comes to ESG. The group, founded by PETA-linked animal rights activists, pushes radical ideologies like NetZero onto companies like Cracker Barrel and Jack in the Box. These companies – which obviously sell meat products – would be weakened if forced to cut back on animal products in ways that would even approach NetZero. And BlackRock, which holds significant stakes in these companies (nearly 15 percent in Cracker Barrel), has helped to push this agenda along.
Seeking to avoid action by the Trump Administration, these companies have rapidly dialed back their explicit support for far-left resolutions. But their new voting principles hide the same extreme views behind new phrases like “cognitive diversity” that maintain the spirit of DEI and ESG. The woke offices within these investing firms have not changed their entrenched personnel or their real attitudes. The same cast of characters is just lying in wait, hoping for another change in the executive branch. Unless this President and his team rein in these firms’ disproportionate power, Woke Capital will come roaring back one day with a vengeance.
To solve the problem for good, President Trump can direct the SEC to push new best practices for these mammoth investors who claim to be “passive.” They should be encouraged or required to adopt “Neutral Voting,” in which passive investors automatically vote their shares at the same ratio as the active shareholders have voted theirs.
If a company’s other shareholders back a proposal 70-30, the passive funds would automatically split their votes 70-30. If a majority of the other investors want a radical proposal to fail, then it fails, no matter how much the “deep state” staff within BlackRock or State Street may like it. This method ensures that active shareholders — whose interests are actually aligned with each company’s performance — can have their voices heard. It’s a simpler and better fix than an often-suggested alternative, “pass-through voting,” which would still afford the biased asset managers enormous sway over what’s being voted on and how.
Going after such massive companies will engender pushback. But the America First movement has never been about making big corporations happy, least of all Wall Street. It is about wresting power from secretive left-wing institutions and returning it to the people. President Trump and the SEC must rein in the index funds that are weaponizing Americans’ dollars against American values. We need to rein in Wall Street while we have the chance.
