Antisemitism and ‘stakeholder capitalism’

A burgeoning number of impact investors employ SRI to select or eliminate investments using ESG factors, putting the squeeze on C-suites to champion what is known as stakeholder capitalism.

 airbnb (photo credit: REUTERS)
(photo credit: REUTERS)

With high-pitched demands from a younger generation that C-Suites step up their social activism, animosity toward Jews and Israel have begun to manifest themselves overtly in workplace settings.

Biases are emerging as well on the investment side of the corporate ledger – more subtly, though no less perniciously – now that environmental, social and governance (ESG) considerations have worked their way into the scrutiny of businesses and as a gauge of their commitment to corporate social responsibility (CSR).

A burgeoning number of impact investors employ socially responsible investing (SRI) to select or eliminate investments using ESG factors, putting the squeeze on C-suites to champion what is known as stakeholder capitalism – the notion that a company is obligated to all its stakeholders, not just its shareholders – or risk a reputation liability.

In a significant move that applies even more pressure to corporations, Business Roundtable – an association of CEOs of leading companies in the US – gave its imprimatur to the materiality of such factors by issuing an updated statement in 2019 “On the Purpose of a Corporation” that endorses stakeholder capitalism by declaring its commitment to the needs of customers, employees, suppliers, communities, and shareholders (in that order), which supersedes previous statements endorsing shareholder primacy.

The US Department of Labor also gave its nod with a recently proposed amendment to the Employee Retirement Income Security Act (ERISA) of 1974 that would affect fiduciary duties in workplace retirement plans. The revision would specify that “consideration of the projected return of the portfolio… may often require an evaluation of the economic effects of climate change and other ESG factors.”

So, ESG screens may well figure prominently in your 401(k) whether or not it is your preference or you’re even aware of it.

But even ESG’s staunch proponents (including those featured in a Wall Street Journal examination of ESG’s future in its Wealth Management Report on November 18) acknowledge the challenge of its murky metrics.There currently is no global standard for defining ESG and measuring its performance. That hole in quantifiable assessment can breed transparency issues and anti-Israel bias.

David M. Schizer, dean emeritus of Columbia Law School whose research focuses on corporate governance, nonprofits and energy law, describes this lack of clarity as a conduit for “arming managers with another way to disguise self-interested choices,” enabling them to “choose the combination of… metrics that is [their] justification.”

A founder and co-director of Columbia’s Richard Paul Richman Center for Business, Law, and Public Policy, and founder and co-chair of the Center for Israeli Legal Studies, Schizer is writing a book addressing difficulties within not-for-profit management of recognizing self-serving choices that are cloaked in diluted metrics for measuring performance.

The insertion of these ambiguities into private industry, which has thrived on a clear and uniform metric of profitability, is problematic, he says. So is the increased pressure for companies to take stands on political issues.“[Your business] expertise doesn’t necessarily make you an expert in geopolitics or in energy policy or in lots of other areas that are important,” Schizer said.

Ben & Jerry’s may offer a concrete illustration of Schizer’s points. Its energized corporate activism – “play[ing] in the ‘aspiring social justice business’ sandbox” is how its leadership describes it in Harvard Business Review – apparently dealt a financial blow to a group of its franchisees, according to a letter made public and bearing the company letterhead with its “peace, love & ice cream” tagline.

Operating 30 Ben & Jerry’s stores with a combined revenue of $23.3 million, the franchisees penned the letter to executives to denounce the company’s plans to terminate its contract with the licensee in Israel, saying it “distorts the situation on the ground” and “has imposed, and will continue to impose substantial financial costs on all of us.”

Signatories underscored the “adverse effect on the value of our independently owned franchises and investments” and chastised the company for continuing “to consider the calculated negative affect [sic] on its franchisees as acceptable collateral damage.”

With the broad shift toward political activism in the business world, Schizer notes, policy-making takes place without the public scrutiny customarily afforded to a democracy’s citizens through the ballot box, with so-called experts who advise C-suites easily able to inject their own values on these matters.

It is precisely those ambiguities and privileged behind-the-scenes opportunities that are leveraged by proponents of the Boycott, Divestment, Sanctions (BDS) movement in wielding their antisemitic agenda.

BDS exploiting investment field

BDS activists didn’t invent investor advocacy, CSR, or values-based investing, but with all these aspects of the field open for manipulation, they have exploited this platform for 20 years to promote their narrative, says Julie Hammerman, CEO and founder of the San Francisco-based JLens, a network of Jewish institutional values-based investors.

Setting the stage for BDS’s campaign of economic warfare on Israel was the global human-rights conference in Durban, South Africa, which convened in 2001 purportedly to eliminate racism and instead was consumed with vilifying Israel and Zionism. 

Currently, there are 124 non-Israeli companies worldwide that are being pressured actively by the BDS movement, Hammerman notes. But other companies try to eliminate the controversy over Israel by quietly divesting and calling it a realignment of business.

 “The problem is that BDS activists have been very strategic when it comes to inserting Israel into that space and making it a controversy and an area of focus,” Hammerman said. “I’m saying that through the prism of CSR and values-based investing (or ESG, or SRI or whatever term), Israel is not a positive. I think the BDS narrative has very much been accepted in that space….”

That doesn’t mean companies aren’t partnering with Israel by any stretch, but “this increasingly is a threat to those relationships and to new potential relationships,” Hammerman says.

And while these ill-intentioned players hold powerful sway, “the Jewish community, by and large, has not been present, has not had a seat at the table, has not had their voice heard,” she adds, leaving a void in its clout with corporate heavyweights over this issue.Non-governmental organizations (NGOs) in particular are savvy in attaching themselves to levers of power and are therefore very influential in this field.

“A number of them have recognized there’s incredible power in this space—we’re talking about trillions of dollars of investment capital, and we’re talking about the most powerful companies on the planet,” Hammerman explains. “So when an NGO wants to go toward the sources of power – political power, economic power, grassroots communal power – there’s power in this arena now that social and environmental factors are up for debate, for consideration.”

‘Teflon’ NGOs accessing C-Suites

Contrary to their altruistic veneer, NGOs working to isolate and demonize Israel achieve their mission by weaponizing “the rhetoric of human rights, humanitarian relief, and international law,” according to Gerald Steinberg, founder and president of NGO Monitor and professor emeritus at Bar-Ilan University; it is a strategy NGOs hammered out in Durban.

NGO Monitor’s mission is to expose the biases and hidden power of these organizations, which claim to be politically neutral or merely progressive in promoting a human-rights agenda.

NGOs occupy a sacrosanct niche and as such has become a major embodiment of “soft power warfare” Steinberg explains, based on their manipulation via the media, in the United Nations, on college campuses, and other spaces.

They are exempt from accountability due to a “halo effect,” a protective shield that enables NGOs’ allegations of human-rights abuses in their reports and social-media drives to be accepted as objective by journalists, diplomats and academics who then act as force multipliers for these tendentious agendas by repeating those claims as credible, unbiased documentation.

More worrisome, Steinberg believes, is how this soft power will affect hard power, namely, security cooperation with Israel in the face of threats from Iran and its proxies – a key target of the Jewish state’s detractors.

Indeed, funding to replenish Israel’s Iron Dome missile defense system remains stalled, as Iran just unveiled a long-range missile capable of striking Israel even while indirect talks between Washington and Tehran to restore the 2015 nuclear agreement proceed in Vienna.

The influence of these ambitious NGO campaigns on corporations plying their own far-reaching platforms should not be underestimated.

Concerned about their social-justice images, almost all large companies have a CSR team that reports to the C-Suites or they employ such consultants, according to those with knowledge of the field. But how and to what extent CSR professionals vet these NGOs, their credentials for vetting, and precisely how decisions are made remain blurred.

Steinberg noted that prior to Airbnb’s reversal of its decision to delist properties in the West Bank, he spoke with the company’s officials about the social injustice that was inherent in their becoming part of the process of demonizing Israel. While unable to share specifics of their meeting, Steinberg said when he raised the topic of NGO involvement, there were no denials from these officials.

“We are talking about $100 million a year on these campaigns, under the façade of human rights and moral universal principles,” Steinberg says. “The willingness of the corporate leaders to lend themselves to this kind of discriminatory campaign is a serious problem.”

Part one of this series of articles appeared in last Sunday’s Jerusalem Post.

The writer is an award-winning journalist, including recognition for business and economic reporting. She was a correspondent for The Boston Globe, reported for The Associated Press, and has been published in The Wall Street Journal, as well as working for other news organizations as a writer and editor.