South Carolina is taking a stand against ESG

South Carolina is full of hardworking men and women who go to work each day, take care of their families, and save for retirement. 

But for individuals who invest in the state retirement system, that future is in jeopardy thanks to environmental, social, and governance (ESG) criteria in investing. That’s why the state’s treasurer and lawmakers are right to target this insidious, politically driven investment practice.

ESG trades high returns for a political agenda

Investing should work as follows: Your hard-earned money is invested by money managers with high returns in mind, resulting in a maximum return on your investment. 

Instead, ESG involves a political agenda informing investment decisions, regardless of performance. Industries that may be high-performing or essential—like oil and gas—are boycotted for their “environmental impacts.” In other words, investments are made for the sake of “green energy,” politically motivated companies, and other leftist priorities—not returns on your investment. Your retirement account funds a political agenda with ESG. 

Not only does ESG threaten retirement savings by making decisions that aren’t based on risk and return, but it also contributes to higher energy prices and soaring inflation.

South Carolina is taking a stand against ESG

Thankfully, leaders in the Palmetto State aren’t standing idly by. Last fall, State Treasurer Curtis Loftis announced that the state would divest all $200 million in BlackRock holdings, on account of the firm’s far-Left, anti-fossil-fuel stance. The State Treasurer remarked:

“I will not allow our financial partners to undermine my fiduciary responsibility to maximize investment returns while accepting a prudent level of risk for the benefit of our citizens. It is imperative that we stand up to BlackRock and resist the pressure to simply fall into line with their leftist worldview.” 

In addition, there is current legislation in the South Carolina House of Representatives that could fight ESG and protect retirement savings within the state retirement system. This legislation would do so by 1) requiring that any proxy shareholder votes in state investments are made only on pecuniary factors, or factors that have a material effect on risk or return on investment; and 2) requiring all investments in the state retirement system to be made according to factors that have a material impact on risk or return. 

In other words, this legislation would effectively ban prioritizing ESG investing in the state retirement system, ensuring that state employees’ investments are made based on their potential for high return, not political ideology.

Bottom line: ESG is bad for South Carolina. And voters in the state agree: A 2022 poll found that a staggering 82 percent of likely voters, including 82 percent of likely Democrat voters and 78 percent of likely Independents, oppose investing taxpayer money in banks and investment funds that make business decisions based on a political agenda. 

With last fall’s divestment and this current legislation in play, South Carolina’s leaders are taking a stand against politically driven investing and are working to ensure the state retirement system is protected against ESG.