Governors of 18 states form coalition to fight Biden administration's ESG policy
Thu, Mar 16, 2023 3:59 PM
By Bethany Blankley, The Center Square
Florida Gov. Ron DeSantis is leading a coalition of governors from 18 states who’ve pledged to fight the Biden administration’s environmental, social and corporate governance agenda.
The governors said Biden's investment agenda is a “decision to jeopardize retirement savings for millions of Americans to promote far left priorities.”
Joining DeSantis are the governors of Alabama, Alaska, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Wyoming.
The coalition argues President Joe Biden’s ESG agenda is “destabilizing the American economy and the global financial system.”
“At my direction, Florida has led the way in combating the pernicious effects of the ESG regime by directing our state pension fund managers to reject ESG and instead focus on obtaining the highest return on investment for Florida’s taxpayers and retirees,” DeSantis said, referring to the state last August divesting its retirement system from funds that prioritize ESG.
The coalition pledged to fight against the administration’s ESG policies after 25 state attorneys general sued the administration over them in January. Many in the governors' coalition overlap with states represented in the AG coalition.
Last August, DeSantis vowed to “spearhead an initiative to join with other like-minded states to send an even louder message to the financial industry that the American people have rejected ESG at the ballot box, and ideologues cannot and should not circumnavigate the will of the people.” The governor’s coalition, he said, “delivered on that promise.”
In a joint statement issued on Thursday, the governors said, “Congress exercised its powers under the Congressional Review Act” to disapprove a Department of Labor Rule, which the president has threatened to veto. In doing so, Biden has “put his political agenda above the well-being and individual freedoms of hardworking Americans.”
The coalition of governors said “... 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 rule risks the pensions of thousands of hardworking Americans, they argue, instead of “prioritizing investment decisions on the highest rate of return.”
The rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” follows an executive order Biden issued last May. In it, he directed the federal government to implement policies “to help safeguard the financial security of America’s families, businesses and workers from climate-related financial risk that may threaten the life savings and pensions of U.S. workers and families.”
The rule change “will bolster the resilience of workers’ retirement savings and pensions by removing the artificial impediments – and chilling effect on environmental, social and governance investments – caused by the prior administration’s rules,” Acting Assistant Secretary for the Employee Benefits Security Administration Ali Khawar said in a statement last fall. “A principal idea underlying the proposal is that climate change and other ESG factors can be financially material and when they are, considering them will inevitably lead to better long-term risk-adjusted returns, protecting the retirement savings of America’s workers.”
The governors argue that retirees are “already suffering from the reckless fiscal policies of the Biden Administration” and are likely to “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 governors have vowed to protect their residents and taxpayers by implementing several measures. These include “blocking the use of ESG in all investment decisions at the state and local level, ensuring that only financial factors are considered to maximize the return on investment, protecting retirees and taxpayers alike.” It may also include “eliminating consideration of ESG factors by state and local governments when issuing bonds or prohibiting state fund managers from considering ESG factors when investing taxpayer money.”
The governors also vowed to protect citizens from ESG influences in the financial sector by “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.” They’re also considering “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 AG’s lawsuit was filed in U.S. District Court Northern District Amarillo Division and names Secretary of Labor Martin Walsh and the U.S. Department of Labor as defendants.