Several Republican candidates jockeying to take on Trump in next year’s presidential primary have seized on the Right’s culture wars and defense of big oil. And they’re not alone.
Many other far-right politicians are also making attacks on environmentally and socially conscious business practices a top issue in their quests to capture governors’ mansions around the country in this year’s and next year’s elections.
GOP Presidential Primary
Presidential hopeful and anti-“woke” warrior Vivek Ramaswamay has pumped $10 million of his own money into his race so far, according to the latest Federal Election Commission (FEC) filings.
The author of Woke Inc.: Inside Corporate America’s Social Justice Scam (2021), he rails against companies that weigh environmental, social, and governance (ESG) factors in making business decisions, and in 2022, cofounded Strive Asset Management as an anti-ESG challenger to the “Big Three” financial asset managers.
Two other Republican politicians expected to run for president in 2024—Florida Governor Ron DeSantis and New Hampshire Governor Chris Sununu—are also attacking firms that consider ESG goals in managing state pension fund investments.
In December, DeSantis directed Florida’s treasury to divest $2 billion in assets from BlackRock, a leading advocate of ESG investing, and last month he led the formation of an “alliance” of Republican governors “committed to lead state-level efforts to protect individuals from the ESG movement.”
This month, Sununu jumped on the anti-ESG bandwagon, after previously criticizing right-wing attacks on woke capitalism, by issuing an executive order that requires state pension fund managers to consider financial returns only (as opposed to ESG factors) in making investment decisions.
With Louisiana’s gubernatorial election being held this year, Republicans across the country will look to this particular race for evidence of whether anti-ESG messaging—a relatively new issue for the GOP—resonates with voters. They will have the added benefit of judging the saliency of the issue among Democratic and independent voters as well, since the state’s primaries are nonpartisan.
State Treasurer John Schroder and Attorney General Jeff Landry are running against each other in the GOP primary, and both are attacking ESG.
If no candidate gains a majority in the first round of balloting on October 14, a run-off between the top two vote-getters will follow on November 18.
As treasurer, Schroder has been a leading critic of ESG investments. This year he serves as national chair of the State Financial Officers Foundation (SFOF), a group of 35 Republican state treasurers, auditors, and other financial officers on the frontlines of the Right’s fight against “woke capitalism.”
The Center for Media and Democracy (CMD) recently launched a website revealing the ties between SFOF, the fossil fuel industry, dark money groups, and right-wing operatives and organizations. Together, these interconnected interests are manufacturing a crisis around responsible investing and pushing states to divest from firms and companies that choose to move away from fossil fuels or show their commitment to ESG criteria in other ways.
Last fall, Schroder pulled $794 million of state pension funds out of BlackRock because of its ESG investing, arguing that the divestment was “necessary to protect Louisiana from mandates BlackRock has called for that would cripple our critical energy sector,” according to Reuters.
In his subsequent letter to BlackRock CEO Larry Fink, Schroder claimed that BlackRock’s “blatantly anti-fossil fuel policies would destroy Louisiana’s economy” and that the divestment was needed to defend the state “from actions and policies that would actively seek to hamstring our fossil fuel sector.”
Unlike the efforts by Sununu and other GOP politicians, Schroder’s move abandoned any pretense of focusing on maximizing pension returns and made the end-goal clear up front: protecting the oil and gas industry.
“Instead of giving a leg up to less reliable energy producers, we must unleash American energy. ESG isn’t an investment strategy. It’s a movement toward socialism,” Schroder told SFOF meeting attendees last fall. “We owe our quality of life, economic opportunity, public health and even our environmental quality to affordable, reliable energy.”
As an attorney general, Landry has little to do with state pension funds. But not to be outdone by Schroder, he has joined the anti-ESG fray by providing legal guidance in warning pension fund managers to adhere to “their fiduciary duties imposed by Louisiana law”—meaning they need to invest in companies that earn the highest rates of return regardless of any potential negative impact on the environment, social justice, or other ESG considerations.
“Policy is made in our Legislative Branch, not woke corporate boardrooms,” Landry said in a campaign statement released to confirm his anti-woke bona fides. “The Big Three (Vanguard, BlackRock, and State Street funds) have a responsibility to invest with their client’s best interests in mind rather than their own agenda on climate change, politics, and other self-interests.”
To gain political high ground against his opponent, Landry sent an official letter to Schroder in January 2022 reminding the treasurer to avoid investments that violate the state’s fiduciary relationship to its current and future pensioners by using ESG criteria.
In June 2022, Landry joined 24 Republican state attorneys general in filing a 40-page formal comment with the Securities and Exchange Commission (SEC) opposing a proposed rule that would require states to enhance and standardize climate-related disclosures for investors, which the attorneys general characterize as the SEC’s “ill-advised misadventure into environmental regulation.” He also signed a letter from Republican attorneys general to BlackRock accusing it of making decisions based on its alleged political agenda rather than on its fiduciary responsibility to earn the best return on investment for state pension funds.
ESG has emerged as a campaign issue in Kentucky as well, where Republican Attorney General Daniel Cameron is running for governor in this year’s election.
“Rising inflation has made protecting the retirement security of Kentucky’s public employees even more essential,” Cameron said in a prepared statement released last fall. “Prioritizing ESG-related investments above the financial interests of investors is inconsistent with Kentucky law.”
However, research suggests that it may be difficult for Cameron and other GOP critics to fault ESG investments for subpar returns. When researchers from the New York University Stern Center for Sustainable Business and Rockefeller Asset Management analyzed more than 1,000 relevant research papers from 2015–20, they found that a majority of the studies indicated that ESG investing leads to either neutral or improved financial performance. The meta-analysis points out that “improved financial performance due to ESG becomes more marked” over time.
“The Kentucky Bankers Association is suing Attorney General Daniel Cameron for allegedly exceeding his legal authority and violating free speech rights with his recent subpoenas and demands for information sent to six major banks doing business in the state,” the Courier Journal reported.
The gubernatorial primary in Kentucky is on May 15, with the general election on November 7.
In North Carolina, State Treasurer Dale Folwell is running for governor in next year’s election, and like Schroder, he is using his SFOF membership as a springboard for attacking ESG investing.
Like other members, Folwell has signed the group’s anti-ESG letters to Congress. But in a move rare for a Republican state officeholder, he has taken a step further by calling for Fink’s resignation or ouster as BlackRock’s CEO. Known to be pro-business and all-in on free-market dynamics, GOP state officials seldom speak out about corporate management decisions. But that hasn’t stopped Folwell, who has threatened to remove BlackRock from the North Carolina pension system unless Fink steps down.
“BlackRock and Mr. Fink have been using the financial power of their clients to force the global warming agenda by using their proxy voting authority to push companies to ‘net zero,’ often in conflict with their fiduciary responsibilities,” the treasurer said in a prepared statement. “For example, in 2020 BlackRock used its clients’ proxy votes to vote against two management-supported board members of ExxonMobil—the fourth-largest oil company in the world—because of ‘insignificant progress’ toward ESG goals moving the company away from oil and toward renewable energy,” he continued.
Folwell is running against Mark Robinson, the Republican lieutenant governor, who has not yet campaigned against ESG but has spoken out about “woke” ideology. In fact, he has made his stance against the purported teaching of “critical race theory” in public schools the centerpiece of his campaign.
Earlier this month, Republican Attorney General Patrick Morrisey announced his run for governor of West Virginia in 2024. Some had speculated that he might seek a rematch with Senator Joe Manchin (D) after having lost the 2018 Senate race by just 3% in a state former President Trump won by 30% in 2016 and 39% in 2020. But instead, he is running to replace the term-limited Republican governor, Jim Justice, who may be weighing a 2024 Senate run against Manchin.
Like other GOP gubernatorial candidates, Morrisey is outspoken in his criticism of ESG investing. In an extensive formal comment filed with the SEC last August, he led the effort by 21 Republican attorneys general to oppose its proposed rule establishing guidelines requiring firms “to prove that investments that purport to be green or socially aware live up to those claims.”
“The Proposed Rule here continues the Commission’s recent attempt to transform itself from the federal regulator of securities into the regulator of broader social ills,” Morrisey wrote.
Morrisey has vowed to “go to court to defend against any regulatory overreach by the SEC or any other agency in the name of climate disclosures,” and has accused the Biden administration of attempting to “radically transform the SEC and other agencies run by unelected bureaucrats and make them champions of climate change,” according to E&E News.
In their June 2022 filing against an earlier SEC proposed rule that would require publicly listed companies to disclose both the financial impact of climate risks on their business and their greenhouse gas emissions, Morrisey and his fellow members of the Republican Attorneys General Association (RAGA) closed their lengthy argument by urging the SEC to “end this farce and give up its dalliance as an amateur environmental watchdog.”
Morrisey has a long track record of opposing climate regulations on the fossil fuel industry. Last December, he accepted an award from the American Legislative Exchange Council (ALEC) for his Supreme Court victory in West Virginia v. EPA, which struck down the Environmental Protection Agency’s regulation of greenhouse gasses under the Clean Air Act. ALEC praised Morrisey and the ruling for “rein[ing] in the power of federal agencies like the EPA and unelected Washington bureaucrats.”