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Democracy Before ESG

Institutional investors are increasingly applying environmental, social, and governance criteria in their portfolio decisions. Yet as important as these factors are, they pale in comparison to the question of whether a business is engaged in the dirty business of dark-money political influence.

CHICAGO – Amid growing concerns about climate change and social unrest, institutional investors are increasingly applying environmental, social, and governance criteria in their portfolio decisions. Yet while ESG factors are important for investors to consider, the new focus risks obscuring an even bigger issue: the role that corporations play in the democratic process.

The Universal Declaration of Human Rights (Article 21, Section 3) stipulates that, “The will of the people shall be the basis of the authority of government. This will shall be expressed in periodic and genuine elections.” Democracy therefore is a human right, which means the first social responsibility of business – be it a sole proprietorship or a multi-trillion-dollar company – is to refrain from undermining democracy, either at home or abroad.

Many will consider this point obvious or irrelevant. What do corporations have to do with democracy? In fact, many corporations play a leading role in distorting the democratic process, the proper function of which is to transform popular will into legislative action. Let me illustrate the point with examples from the United States, which used to be considered the world’s most advanced democracy.

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