The Aug. 26 edition of the Wall Street Journal features a compelling opinion piece by Susan Combs, the Texas comptroller of public accounts. Ms. Combs correctly assesses the inherent responsibility of public pension funds to the businesses in which they hold shares. Namely, they should ensure company profitability rather than push agendas that may harm market share and growth.
Just so. Writes Combs: “Not long ago, people who used their few shares to push a point at shareholder meetings may have been marginalized as oddballs. Today, hedge funds and other major players are using their clout to lobby for – and get – big changes in corporate governance.”
Whatever this activism has to do with the ethical obligations of shareholders to one another is beyond the comprehension of Combs and, frankly, your writer. Such has been one theme of my repeated cavils related to the so-called religious-based shareholder activists who submit proxy resolutions year after year related to overturning Citizens United, limiting the depiction of tobacco use in film and television, curtailing hydraulic fracturing and taking expensive measures to avert global warming.
One may agree or disagree with the activists’ point-of-view on any of these given topics, but as Combs notes:
Putting public funds in the activist arena in this way strikes me as seriously bad policy. As the comptroller of public accounts for the state of Texas, I have to manage billions of dollars in taxpayer money, and I have a fiduciary obligation to achieve the very best returns possible. This is a rock-bottom, non-negotiable duty that goes with the office. Our “shareholders” are the tax-paying public.
The same holds for private investments made on behalf of clergy, nuns, and other religious. Many investment opportunities exist for companies more than willing to comply with ill-founded science, questionable public policy, and social progressivism. (more…)