When corporations are forced to care more about social views and political activism than their company operations, and when the number of proposals presented at company annual shareholder meetings continues to climb, it is likely that problems exist with the shareholder proposal process. Such is the fate of today’s corporate governance.

The system has been hijacked and needs an overhaul.

The American Consumer Institute’s recently published paper highlights some of the issues facing shareholder proposals and offers some solutions to streamline the proposal process. 

In the last few years, and for the first time ever, more than half of all proposals submitted are related to Environmental Social Governance (ESG), a term used to base governing considerations on the human effects on the planet, diversity in the boardroom, and other social causes. Basic business functions that would increase the bottom line, improve company procedures and efficiency, and enhance the customer experience take a back seat and ultimately suffer.

Essentially, corporate governance and investment funds are being used to advance social goals, goals which are not widely adopted and generally would not be enacted through standard democratic procedures. 

Because of some lax Securities and Exchange Commission (SEC) standards, these ESG-centric goals are infiltrating countless large companies. The SEC is supposed to maintain “fair, orderly, and efficient markets,” yet it has facilitated in and created a breeding ground for shareholder activism.

Read the full Townhall article here.

Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal