It is a core tenet of my forthcoming book, The Profit Motive: In Defense of Shareholder Value Maximization, that investors are far more skeptical of ESG and stakeholder capitalism than their proponents want us to believe. Sure, you can cite survey data in which a substantial number of investors say they love ESG, but things look differently when you look at concrete examples of what investors do.
As you may know, Spirit Airlines is currently the target of competing takeover bids from Frontier and JetBlue. The union representing Spirit flight attendants reportedly supports the Spirit-Frontier deal, while the union representing JetBlue flight attendants is opposed to the deal. f shareholders are concerned with ensuring that stakeholders like the flight attendants are protected, presumably shareholders would also favor the Frontier deal. But today's WSJ reports:
On Wednesday, [Spirit Airlines] postponed a shareholder meeting scheduled for Friday that would have included a vote on the acquisition bid made by its competitor Frontier Airlines. Spirit’s board of directors retains a strong preference for this merger, which seems like a perfect cultural fit, over a rival one proposed by JetBlue Airways. But the board’s latest move betrays hesitation that shareholders might not put the same value on non-pecuniary factors.
Investing is allegedly about making money and investors can get more of it from JetBlue.
It is an anecdotal example, of course [insert joke about lawyers, anecdotes, and date here.] But it is consistent with a point I make in The Profit Motive:
Turning to shareholders, despite the acknowledged proliferation of socially responsible and ESG investors, it remains the case that when most shareholders invest “in a corporation, they do not think that they are giving their money away.” To the contrary, they expect “to receive a healthy return on their capital.” As a harshly critical statement on corporate purpose signed by over 6,000 stakeholder theorists and other progressive academics concluded, “left to their own devices, most capital investors will not care for the dignity of labor investors; nor will they lead the fight against environmental catastrophe.”
