Main Street Investors Coalition

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The Main Street Investors Coalition (MSIC) was a partnership of industry lobbying groups that seeks to reduce the power and influence wielded by passive investment management firms in corporate governance via proxies. The MSIC claims that its purpose is to return this shareholder power and influence to ‘Main Street’ or individual investors.

According to the Los Angeles Times columnist Michael Hiltzik in January, 2020, the Main Street Investors Coaltion appears to have suddenly dissolved.

The Main Street Investors Coalition website is archived.

The MSIC pressured the largest investment management corporations, BlackRock and Vanguard, to invest in areas that maximize profit instead of investing with regards to environmental and social considerations. The MSIC opposed environmental standards passed by investment management firms that encourage companies to disclose their climate impacts, in order for investors to accurately assess investment risks. The coalition pushed the message that fund managers shouldn’t “play politics with other people’s money.”

The coalition was a partnership between the American Council for Capital Formation, National Association of Manufacturers, Savings and Retirement Foundation, Equity Dealers of America, and Small Business and Enterprise Council. The coalition was started in March of 2018 and was classified as an “Educational Institution.”

The Main Street Investors Coalition does not disclose ties to anti-regulatory and oil and gas political elements who may seek to undermine corporate activism which typically champions more liberal social and environmental causes. 

In addition, they fail to disclose that organization partners have previously attempted to limit climate action via other means. Greenpeace has reported before that the American Council for Capital Formation and the National Association of Manufacturers have worked together previously in attempts to “produce and disseminate distorted economic analyses that overstate the costs of climate legislation” that have been “credibly debunked more than once.” This previous relationship calls into question the true purpose behind their newest joint venture, as the two organizations have worked together to undermine climate action in the past.

Evidence: 

The Main Street Investors Coalition staff and advisory council members, as well as MSIC partner groups, are highly politicized, and often supported by the fossil fuel industry. 

Executive director George David Banks is currently the Vice President of the American Coalition for Capital Formation. The ACCF is a conservative think tank actively opposes regulation surrounding emissions of pollutants and greenhouse gases. The American Council for Capital Formation has received $600,000 from Koch Foundations since 1999 and more than $1.6 million from Exxon since 1998.

Banks was a Special Assistant to President Donald Trump on matters related to energy and the environment. Prior to his stint at the White House, Banks lobbied for energy utility companies such as First Energy Corporation and Constellation Energy. He was also a policy advisor to the Heartland Institute when he worked for the Alliance for Wise Energy Decisions, an anti-wind group that attempted to push back on government regulations that promoted the growth of wind power.

Banks is an adjunct research scholar at Columbia University’s Center on Global Energy Policy. According to DeSmogBlog, the Columbia center, receives funding from ExxonMobil and has advocated for fossil fuel industry. He also serves on the board of ClearPath, a foundation dedicated to “free markets, more innovation and less regulation” in regard to a “clean” energy future. ClearPath’s objectives focus on clean coal and expanded natural gas and nuclear infrastructure, however do little to mitigate carbon pollution and climate change.

MSIC Partner Organizations

The National Association of Manufacturers

The National Association of Manufacturers (NAM) is a lobbying group dedicated to advocating for legislation that promotes manufacturing jobs. Though NAM supposedly advocates for the industry as a whole, in reality their members are primarily undisclosed corporations, not individual workers, leading some to criticize the organization for favoring industry over workers (SourceWatch). NAM opposed EPA regulation surrounding greenhouse gases, arguing that regulations could undermine manufacturers’ ability to create jobs as these jobs rely on access to cheap and reliable energy. The National Association of Manufacturers has received millions of dollars from Koch front groups such as Freedom Partners, according to DeSmogBlog. In addition, one of NAM’s board members, Philip Ellender, is the president and COO of Koch Companies Public Sector, and was described by Politico as a “the Koch brothers’ enforcer,” who is part of their “low-profile inner circle.”

NAM has received over $1.1 million from the American Petroleum Institute, and over $70,000 from Norfolk Southern, which owns and operates coal mines. In addition, many of NAM’s grants have gone to industry groups, such as the American Chemical Council, a member of the American Legislative Exchange Council (ALEC).

According to Greenpeace, the ACCF and NAM have worked together previously in attempts to “produce and disseminate distorted economic analyses that overstate the costs of climate legislation” that have been “credibly debunked more than once.” This previous relationship calls into question the true purpose behind their newest joint venture, as the two organizations have worked together to undermine climate action in the past. 

The Small Business and Entrepreneurship Council

The Small Business and Entrepreneurship Council, which advocates and promotes entrepreneurship, has received funding from the American Petroleum Institute ($125,000).

In addition, the president of SBE, Karen Kerrigan, previously worked at The Center for International Private Enterprise prior to founding the SBE Council. The Center for International Private Enterprise is an affiliate of the U.S. Chamber of Commerce.

MSIC Advisory Council

The Main Street Investors Coalition advisory council consists of Bernard Sharfman Ike Brannon, Bret Swanson, Charles Cox, and Nan Bauroth.

Ike Brannon

Ike Brannon is a visiting fellow at the Cato Institute, which is a libertarian think tank that opposes greenhouse gas emission and environmental regulations. Brannon works primarily on tax and regulatory issues. The Cato Institute has received over $17.2 million from various Koch foundations.

Brannon was a fellow at the Bush Institute after working at the American Action Forum. The Bush Institute still holds the position that “the science regarding global climate change is not settled.” Additionally, according to DeSmogBlog, The Koch-funded DonorsTrust has contributed at least $170,000 to the AAF and has also donated to its sister organization the American Action Network.

Brannon has also served as chief economist for various Republican government committees, serving under prominent climate deniers such as Roy Blunt (R-MO) and Steve Scalise (R-LA) among others.

Brannon is also heavily featured on Foundation for Economic Education’s website. The FEE is a think tank that is aligned with the Charles Koch Institute as a partner organization. The FEE has received thousands of dollars from Koch foundations in the past years.

Brannon is also the President of the Prosperity Caucus and a co-founder of the Savings and Retirement Foundation along with libertarian economist and policy specialist Charles Sauer. Both the Prosperity Caucus and the Savings and Retirement Foundation are partners of Sauer’s political advocacy and daily news group, the Market Institute. The Heartland Institute’s Horace Cooper, who is notorious for opposing climate regulations, is senior fellow at the Market Institute.

Sauer has written various op-ed’s in opposition to environmental regulations in the name of the free-market (examples here, here, & here).

Bernard Sharfman

Bernard Sharfman is the chair of the advisory board and a fellow at the R Street Institute. Sharfman has previously served as a Visiting Professor of Law at Maryland and Case Western universities. Sharfman has written extensively on corporate governance and law.

Bret Swanson

Bret Swanson is the founder and President of Entropy Economics, a consulting firm specializing in technology and innovation. He also serves as a board member of the Indiana Public Retirement System.

Swanson is a fellow at the U.S. Chamber of Commerce, a right-leaning, business-oriented lobbying group. The USCC has close ties to ConocoPhillips and Consol Energy. It consistently makes the list of the top 20 lobbying funds of any group, receiving a good portion of its donations from the fossil fuel industry. For example, Charles Koch’s own Freedom Partners Chamber of Commerce donated at $5 million to the U.S. Chamber between 2012-2014. According to a Greenpeace study, it gives 94% of these funds to candidates who deny the scientific evidence of climate change.

Swanson is also a visiting fellow at the American Enterprise Institute. AEI is a conservative think tank which actively denies anthropogenic climate change. AEI received $3.0 million from Exxon Mobil, $1.8 million from the Charles Koch Foundation, andover $22.6 million from the Donors Capital Fund, a not-for-profit donor advised charity that has funnelled money to causes that deny “the science and impacts of human-caused climate change.” This fund is linked to Koch foundations and other oil & gas industry interests. 

Charles Cox

Charles Cox is a former SEC commissioner under President Ronald Reagan, and currently serves as an executive vice president of Compass Lexecon LLC, an economic consulting firm. Compass Lexecon has helped clients in the oil and gas industry, including BP in the wake of the 2010 Deepwater Horizon disaster. Compass Lexecon’s president and chairman wrote a report urging universities not to divest from the fossil fuel industry; claiming divestment would have little to no impact on the companies nor climate change. Cox’s report was financed by the Independent Petroleum Association of America. The IPAA is a trade association that conducts lobbying and public relations for oil and gas interests.

Nan Bauroth

Nan Bauroth is an independent journalist who has previously worked at Citigroup and Merrill Lynch.

Conclusion

While the Main Street Investors Coalition aims to reform investment proxies have some merits, they have failed to disclose their numerous and conflicting connections with anti-government and anti-environmental regulatory actors. While the coalition is certainly concerned with investors’ bottom line, they conveniently omit information about the physical and economic costs of climate change and negative environmental impacts. They also fail to recognize the potential returns that can be made from investing in solutions to these environmental costs (according to Ceres). In a Harvard Law study, which outlined environmental/climate change proposals passed by institutional shareholders such Vanguard and Blackrock, proposals were only agreed upon if the backers could convey “a demonstrable link to long term shareholder value.” Simply put, fund managers are not investing in groups that uphold social and environmental ideals despite the bottom line, instead they are investing to reduce potential long term risk associated with environmental costs. The Main Street Investors Coalition reform would idealistically allow individual investors greater authority over their investment portfolios; however this concern does not seem to have arisen as a way to fight for the little guy, but instead to constrain corporate governance reforms that are not ideologically aligned with the positions of the coalition members.

While, in theory these proposals could have negative capital formation impacts on investors’ 401ks, they could just as realistically have positive impacts that actually enhance their economic value. The coalition has consistently claimed that social and environmental shareholder proposals harm the fiduciary responsibilities of investment management firms, but have been unable to show any evidence to back up this point. This argument is simply a vehicle for the partners to reduce shareholder activism in corporate governance because the proposals being considered are not in line with their ideals, not because there is an inherent risk to “Main Street’s” investments. ACCF and NAM have attempted to subvert climate action before, and as a result the Main Street Investors Coalition could simply be another attempt of doing so, this time in the private sector.