Sooner Rather Than Later: How Oklahoma Is Winning the Fight Over ESG
This month, two Oklahoma leaders made headlines in the ongoing fight against ESG (environmental, social, and governance) investing, the politically motivated scheme that puts Oklahoma’s economy in the crosshairs.
First, House Speaker Charles McCall fired two appointees to a state pension system for their failure to adhere to state law on ESG divestment. Treasurer Todd Russ also acted quickly in response with a scathing 17-page letter to the board, as well as proactive outreach to the legislature to ensure that the state is doing everything it can to stop ESG in its tracks.
Last year, the Oklahoma legislature passed a landmark law requiring the state to cease doing business with financial firms that are hostile to oil and gas. Simply put, if your ESG investment tries to kill Oklahoma’s economy, Oklahoma shouldn’t be buying from you.
That was far from the end of the fight, however. ESG has some powerful friends, including the biggest big-money investment firms in the world, high-ranking allies in Washington, and the megaphone of the “green” environmental movement.
What they don’t have on their side is the facts.
In Oklahoma, the oil and gas industry accounts for 27 percent of the state’s economy and approximately one out of every four jobs. When ESG backers specifically boycott Oklahoma oil and gas companies, they make a political decision that has a real-world impact.
When Treasurer Russ first took office in January, one of his first actions was to compile a list of “companies, banks, and other entities that act against Oklahoma’s interests because of their ESG stance.” That list includes BlackRock and State Street.
Despite that fact, the Oklahoma Public Employees Retirement System voted 9-1 in August (with Treasurer Russ the lone “no” vote) to exempt $6 billion in pension funds invested in those firms from Oklahoma’s ESG law. It was that vote that led to Speaker McCall’s dismissal of his two appointees to the board.
Two other stubborn facts working against ESG might be the most important—ESG doesn’t work and it doesn’t make money.
A number of studies have found that ESG funds “perform poorly in financial terms,” and they actually have “worse compliance record(s) for both labor and environmental rules.”
Oklahoma taxpayers—and anybody who works in the oil and gas industry—have reason to be grateful that they have elected officials like Speaker McCall and Treasurer Russ on their side.
And Oklahoma isn’t alone in this fight. West Virginia cut off state contracts for Wall Street firms that boycott the fossil fuel industry. Nineteen state attorneys general are openly challenging asset management giants like BlackRock for their reliance on ESG over shareholder value. Missouri actively removed its entire $500 million investment in state retirement funds from BlackRock.
