'It' doesn't refer to anything. It's being used as a dummy pronoun.
From that article:
A dummy pronoun, also called an expletive pronoun or pleonastic pronoun, is a pronoun used for syntax without adding further meaning. An example is the "it" in "it is raining".
Dummy pronouns are used in many Germanic languages such as English. Pronoun-dropping languages such as Spanish, Portuguese, Chinese, and Turkish do not require dummy pronouns.
A dummy pronoun is used when a particular verb argument (or preposition) is nonexistent (it could also be unknown, irrelevant, already understood, or otherwise "not to be spoken of directly"), but when a reference to the argument (a pronoun) is nevertheless syntactically required. For instance, in the phrase, It is obvious that the violence will continue, it is a dummy pronoun, not referring to any agent. Unlike a regular pronoun of English, it cannot be replaced by any noun phrase (except for, rhetorically permitting, something like 'the state of affairs' or 'the fact of the matter'.)
So, the 'it' in that sentence could be considered to be referring to the general state of affairs or situation. You could rephrase it like this:
Certainly, there is some disagreement about that, but most people characterize the current situation such that we want judges who are not judicially activist.
Or, you could just drop all that:
Certainly, there is some disagreement about that, but most people want judges who are not judicially activist.
Except that now it is the speaker characterizing the current situation, rather than him characterizing most people as characterizing the current situation.