On Feb. 26, 2026, Texas Attorney General Ken Paxton secured a “first of its kind” settlement with the Vanguard Group, which, together with BlackRock and State Street, makes up the “Big three” asset managers representing “the largest shareholders in 88 percent of S&P 500 companies.” Among other things, the press release announcing the settlement noted that “Vanguard has committed to avoid imposing ESG (environmental, social, and governance) goals over its customers’ profitability.” This should be viewed as a win for free-market capitalism. However, two relatively recent posts on the corporate governance blogs of Columbia and Harvard can be read as warning corporate directors and executives who have rushed to embrace ESG that more is at stake than just a haircut for shareholders.    The first, by professor Karen E. Woody, argues the following about ESG and materiality. ESG satisfies all three categories of materiality. First, many ESG factors are substantively material because they affect risk, cost of capital, and long-term value. Second, ESG disclosure requirements are increasingly mandated by jurisdictions around the world, creating regulatory materiality. Third, and most important, ESG is procedurally material because investors have consistently demanded this information. However, there are some obvious rebuttals to each of these points. First, factors that impact long-term value are already accounted for under traditional materiality standards, so we don’t need ESG for them. Second, the costs and benefits of regulation should similarly be accounted for using traditional materiality standards, so, again, ESG adds nothing. Third, to whatever extent investor demand is relevant to this discussion, conflicts of interest must be accounted for—and some of the loudest and most powerful voices calling for ESG are arguably riddled with conflicts of interest due to selling ESG funds and ESG consulting services. All the foregoing leads to the question: If ESG is at best redundant, why do proponents keep selling it so aggressively? To be sure, one answer is that they genuinely believe traditional materiality analysis has blind spots that ESG factors can address. And it’s likely difficult to overstate the aforementioned incentives created by conflicts of interest stretching from asset managers to proxy advisers to corporate managers.  But there is also a darker answer, which brings us to the second piece under review here. Paul Rissman, co-founder of Rights CoLab, argues that, given their widely diversified portfolios, “the asset owner fiduciary imperative for systemic risk reduction will collide with corporate directors’ fiduciary duty to the value of the entity’s shares.” This essentially means that asset managers who have bought into radical leftist ideology regarding issues like diversity, equity, and inclusion (DEI) and climate change will conclude, despite compelling evidence to the contrary (see here, here, and here), that they are duty-bound to force corporations deemed to be creating those excessive externalities to set shareholder value on fire for “the greater good.” This is particularly concerning given that, as alluded to above, whatever value ESG does capture is arguably redundant. Pulling this all together, we would arguably get the following disclosure from leftist asset managers if they were being honest about their ESG agenda: “The dollars you give me to invest on your behalf will be used in part to undermine if not outright destroy individual corporations you may rely on as a worker, consumer, or citizen. But rest assured that this is being done for the greater good.” Once seen in this light, it becomes clear that corporate decision-makers who have embraced ESG may have allowed a Trojan horse in the front door.