Is Wall Street woke no more?

OPINION:

Soviet leader Vladimir Lenin once said that capitalists were so greedy and short-sighted that they’d sell their followers the rope they would use to hang themselves. Or words to that effect. Essentially, he was saying that he believed the avarice exhibited in the pursuit of short-term profit would cause the bourgeoise to lose sight of its best interests and would, he believed, create fertile ground in which to plant the seeds of the destruction of the free market system.

Thankfully, it never came to that, but not for lack of trying. Those who only see corruption and avarice in the free-market system but not its benefits have tried for decades to pull it down according to its rules. The manipulation of what early twentieth-century muckrakers called Wall Street’s “malefactors of great wealth” into taking actions and employing investment strategies that worked against its long-term interests is well-documented.

The latest attempt at that was the push to adopt investment strategies favoring the green agenda, diversity over creativity, and the importance of inclusion at the expense of merit and talent. The favorable press that followed, accompanied by studies and reports by alleged economic and investment experts, suggested a market for such things, meaning profitable opportunities lay ahead.

It was all mostly a sham. The green energy transition pushed by President Joe Biden and funding by trillions of taxpayer dollars and obligations has been a bust. Following President Trump’s return to the Oval Office, Wall Street and the American business community have awakened to the problems. They are ending their DEI – for diversity, equity, and inclusion – efforts in hiring and promotion and eschewing ESG investments – for environment, social, and governance – in favor of their primary obligation to make money for the small investors and pensioners whose life savings are in their trust.

Even Larry Fink, the man who, from nothing, built the mighty Blackrock organization into an investment powerhouse unmatched by any other firm, has affirmed his support for going in a new direction. As recently as Monday, at a Houston, Texas energy conference, he called for thinking about the planet’s future energy needs “in a pragmatic way,” which is a far cry from his former support for net zero-emissions goals he once believed would be a profit center for investors going forward.

It was easy for the unions and other significant pension funds to push the anti-capitalist agenda on Wall Street when no one was paying attention. Once pro-free-market groups like the Committee to Unleash Prosperity and the Competitive Enterprise Institute got involved and exposed the costs of such strategies to investors and future competitiveness in the global marketplace well, the corporate moneymen saw the other side of the coin and started their backtrack.

Sunlight is the best disinfectant. Public pressure from the disclosures about the adverse effects of DEI and ESG produced significant victories for small investors. President Donald J. Trump’s moves to end these so-called woke policies have been matched by real action by the private sector, not just words.

Mr. Trump’s “Ending Radical and Wasteful Government DEI Programs and Preferencing” executive order, signed on his first day in office, made waves in corporate America. It ensured companies put consumers first at the expense of the left’s well-funded, devilishly conceived political advocacy efforts. State Street dropped some specific diversity requirements for corporate boards, reflecting a shift in asset managers’ approaches to corporate governance and inclusion metrics. Walmart announced a reduction in its DEI initiatives, reportedly focusing more on core business operations and less on diversity-specific goals.

Home improvement titan, Lowe’s has been scaling back its DEI commitments as part of a larger strategy to streamline operations and focus on profitability amid changing political and economic climates. Meta has shifted resources from DEI to other strategic priorities while maintaining a baseline commitment to diversity.

BlackRock has similarly abandoned its DEI initiatives, responding to the market and prioritizing business interests and fiduciary duty. Once a leader in ESG investing, it is signaling its move to a new approach to the global financial future by withdrawing from the Net Zero Asset Managers Initiative, which had investment firms commit to pushing the net zero greenhouse gas emissions by 2050 agenda. In what can only be described as a devastating setback to the effort to use market systems to bring the free market down, other prominent and influential firms followed it out the door.

These trends have a deep meaning for the global future of finance. In his early 2024 letter to investors, Mr. Fink omitted any mentions of ESG. In its 2024 SEC filings, BlackRock removed references to diversity, equity, and inclusion and will not provide a breakdown of its employee demographics by gender and ethnicity moving forward. The firm also moved to discontinue its ESG exchange-traded funds after launching 30 such funds over the past five years.

The latest shareholder proxy voting season shows signs of significant change. According to a Share Action report, the latest returns saw support for environmental and social shareholder resolutions by prominent asset management companies drop significantly compared to prior years. The so-called Big Three institutional investors—Blackrock, State Street, and Vanguard—almost totally abandoned support for those initiatives.

The market has spoken. People vote with their feet but also with their dollars. Public pressure to “do the right thing” worked, as companies are dropping unnecessary, anti-profit DEI rules and restrictive, profit-thinning ESG investment strategies. Industry leaders are, through their actions, acknowledging, as President Calvin Coolidge famously observed, that the business of America is business, not the construction of elaborate and ultimately anti-free market social policy.

• An experienced journalist and commentator who has contributed to various media outlets and is a highly regarded political analyst, Peter Roff is a former UPI and U.S. News columnist who is now affiliated with several public policy organizations. You can reach him at RoffColumns AT GMAIL.com and follow him on social media @TheRoffDraft.