Economic activist investors lately aren’t leaning as much into environmental, social and governance aspects of their respective campaigns seeking to unlock shareholder value, according to Vinson & Elkins LLP partner Patrick Gadson.

“Part of that is a repositioning of large institutional shareholders and their policies related to whether they do or do not advocate for ESG and [diversity, equity and inclusion, or DEI],” Gadson told the Activist Investing Today podcast. “If there is a change in policy among the voter you are trying to get, you change your thesis.”

Gadson also discussed preparing companies for meetings with proxy advisers, and he explained that when there are societal changes, there will also be changes within corporate America.

“Ultimately, ESG has been become a political football,” he said. “Now we’re seeing different ESG, and an alternative to DEI is being advocated for by the more right-leaning side of the fence — merit, excellence and intelligence, or MEI, sort of the other side of DEI.”

Gadson also spoke about how activists are likely considering the effect of a Democratic vs. Republican administration, along with macroeconomic issues such as interest rate policy, on whether to launch both M&A and operational campaigns in 2025. More interest rate-sensitive industries, such as real estate, utilities and financials, could see an uptick in activism if the Federal Reserve drops interest rates in the coming months, he added.

Check out the podcast with Patrick Gadson below:

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