ESG is “intricate plan to defeat our democracy”
Indeed, Puzder says ESG is “the most devious and intricate plan to defeat our democracy, our economic freedom, our individual freedom” that he’s ever seen. He points to Abraham Lincoln’s warning about dangers that “spring up amongst us.” ESG, Puzder says, is the “internal threat.”
It might sound overblown, but that viewpoint helps explain why officials in roughly 20 states, from Alaska to Oklahoma to South Carolina, have pushed back on ESG, despite evidence that doing so might actually hurt states financially.
Texas has criticized financial firms, including BlackRock and UBS Group AG, for what officials characterize as being hostile to the fossil-fuel industry — even though those firms are invested in or provide financing to oil and gas companies. Florida has barred its public pension plans from using ESG in investments. Louisiana and Missouri have pulled a combined $1.3 billion from BlackRock.
And a group of 19 state attorneys general is investigating the role of major banks like JPMorgan Chase & Co. and Goldman Sachs Group Inc. over their role in a banking coalition that’s pledged to cut greenhouse gas emissions. The attorneys general say banks could harm US companies that don’t follow a “woke climate agenda.’’
ESG proponents have hit back, saying the attacks are politically motivated, anti-free market and go against fiduciary responsibilities, risking the savings of millions of retirees.
In one of the first legal actions taken against the ESG backlash, the Kentucky Bankers Association filed a lawsuit last week against the state's attorney general, Daniel Cameron, accusing him of acting outside his authority and improperly wasting taxpayer money after his office launched an investigation into “violations related to ESG investment practices" by Wall Street banks.
A spokeswoman for the attorney general said the office is reviewing the lawsuit and will respond Wednesday.
Among the groups that stand to benefit the most from the ESG attacks is the oil and gas industry, says David Armiak, research director at the Center for Media and Democracy, a nonprofit watchdog in Madison, Wisconsin. “Laws protecting the fossil-fuel industry will ensure their businesses won't be negatively impacted by Wall Street’s climate measures,’’ he said.
All the political rhetoric will likely lead to more definitive action in 2023. The American Legislative Exchange Council, a group that produces model laws for conservative states, is using Puzder’s anti-ESG draft bill as a template. ALEC had fought socially responsible investing and anti-apartheid divestment efforts back in the 1980s.
“Andy was one of the very first people in this country to identify ESG, and radicalized ESG, as a problem,” Jonathan Williams, ALEC’s chief economist, said in July when he introduced Puzder at a panel discussion.
Puzder’s proposal prohibits putting ESG causes ahead of fiduciary responsibility in public pension funds. Idaho is one of the first places to turn Puzder’s ideas into law, according to state Treasurer Julie Ellsworth. She says she drew on Puzder’s advice when Idaho changed its laws in May to ban investments or share-voting for funds that put ESG before fiduciary considerations.