Stitt, DeSantis fight back against anti-energy policies
March 19, 2023
Gov. Kevin Stitt has joined Florida Gov. Ron DeSantis, a potential GOP 2024 presidential candidate, to push back against President Joe Biden’s efforts to indirectly defund domestic energy production by imposing so-called “Environmental, Social, and Governance” (ESG) restrictions on investment of certain retirement funds.
The joint statement, which was issued by 19 governors, declared that Biden has “put his political agenda above the well-being and individual freedoms of hardworking Americans.”
In November 2022, the Biden administration instituted a rule that explicitly permits ERISA retirement plan fiduciaries to consider ESG factors when selecting investments and exercising shareholder rights. Under Biden’s rule, retirement fund managers can prioritize ESG factors instead of financial returns in their investment decisions.
ESG policies divert investments from firms disfavored by the political left, such as those involved in energy production, in the name of political causes such as “fighting climate change” and similar Democratic agendas.
A number of studies have shown that ESG investing policies have worse rates of return than companies that focus on growth potential. For example, a study by UCLA and NYU found that over the past five years ESG funds underperformed the broader market, averaging a 6.3 percent return compared to 8.9 percent return respectively. Additionally, in comparison to other investment plans, ESG investors generally end up paying higher costs for worse performance.
The recent collapse of Silicon Valley Bank has been attributed, in part, to its emphasis on advancing ESG policies.
The practical effect of the Biden administration’s ESG policy will be to leave retirees with a less financially secure future, the governors’ letter notes.
“Retirees, already suffering from the reckless fiscal policies of the Biden Administration, will continue to experience diminished returns on the investment of their hard-earned money while the corporate elite continue to use their economic power to impose policies on the country that they could not achieve at the ballot box,” the letter states.
This month, Congress exercised its powers under the Congressional Review Act to disapprove Biden’s ESG rule, but Biden has indicated he will veto that measure.
Biden Press Secretary Karine Jean-Pierre said the congressional act would “bar fiduciaries from considering significant risks like extreme climate threats and poor corporate governance when they make investment decisions,” according to the Washington Examiner.
If Biden does veto the measure, the state governors represented in the letter said they will prevent state pension funds from being invested through firms that prioritize ESG principles rather than sound investment strategies.
“We as freedom loving states can work together and leverage our state pension funds to force change in how major asset managers invest the money of hardworking Americans, ensuring corporations are focused on maximizing shareholder value, rather than the proliferation of woke ideology,” the statement declares.
Via Twitter, Stitt said, “Oklahomans deserve to know where their hard-earned retirement dollars are being invested. That’s why I joined 18 other governors to push back on harmful ESG policies that are being used to drive a progressive political agenda.”
Last year Stitt signed House Bill 2034, the Energy Discrimination Elimination Act of 2022. The law requires the state treasurer to maintain and provide to each state governmental entity a list of financial companies that boycott energy companies.
“These harmful policies that are regulating the use of ESG in the financial arena are ultimately hurting Oklahoma businesses and our taxpayer,” said Oklahoma Treasurer Todd Russ. “I am glad to have the support of the governor as I direct these investments of Oklahoma taxpayer dollars toward financial institutions that support Oklahoma industries and values.”
Russ has already sent a letter and questionnaire to national financial institutions, including fund managers and banks, to determine which companies are trying to “boycott energy companies” in Oklahoma.
Under Oklahoma law, any company that fails to respond to Russ’ letter within 60 days (by April 1, 2023) will be presumed to be engaged in discriminating activities and Oklahoma government entities must divest any assets with those companies.
In their letter, the governors also vowed to pursue state-level policies to combat the ESG movement that may include “banning the financial sector from considering so called ‘Social Credit Scores’ in banking and lending practices aimed to prevent citizens from obtaining financial services like loans, lines of credit, and bank accounts.”
The letter said the governor may also advance policies that “include stopping financial institutions from discriminating against customers for their religious, political, or social beliefs, such as owning a firearm, securing the border, or increasing our energy independence.”
“The proliferation of ESG throughout America is a direct threat to the American economy, individual economic freedom, and our way of life, putting investment decisions in the hands of the woke mob to bypass the ballot box and inject political ideology into investment decisions, corporate governance, and the everyday economy,” the governor’s letter states.