To: Interested Parties
From: Unlocking America’s Future
Date: December 20, 2023
This memo highlights the latest developments related to Tennessee’s attempt to block responsible investing (aka ESG), and contextualizes the issue amidst a growing and coordinated set of attacks.
On December 18, the state of Tennessee filed a lawsuit against BlackRock, the world’s largest financial asset manager, in an attempt to block the company from considering climate change impacts as part of its long-term investment strategy.
Tennessee’s lawsuit is just one of the many efforts attacking responsible investing being pushed at the state and federal levels. Recent examples are aplenty.
- Federal. The Judiciary Committee of the U.S. House of Representatives targeted BlackRock and other investment firms with subpoenas. This is the latest in a series of actions by House Republicans targeting and investigating businesses for considering responsible investment principles in their investments.
- Texas. The Texas Legislature and Attorney General Ken Paxton are restricting financial firms who consider responsible investments in their business with the State and pushing policies that prevent insurers from using ESG guidelines to determine risk.
- Kansas. The Kansas Legislature passed legislation preventing the state and local governments from using ESG principles to invest their funds or award contracts.
- Arkansas. The General Assembly in Arkansas passed a bill that would require the state and local governments to divest of certain investments that use metrics related to responsible investing.
- Oklahoma. Oklahoma enacted an anti-ESG law that seeks to ban six major firms from doing business with the state in a move that could cost taxpayers tens of millions of dollars.
These attacks on responsible investing hurt everyday Americans, resulting in billions of dollars of losses from pensions and harm to local economies.
- The Kansas State Division of the Budget projected reduced returns of $3.6 billion over 10 years for the Kansas Public Retirement System if anti-ESG investment restrictions were adopted.
- The Arkansas Public Employees Retirement System estimated that they could lose $30 million to $40 million per year due to an anti-ESG bill that would require the State Treasurer and public entities to divest assets from certain institutions that use ESG-related metrics. The Arkansas Teacher Retirement System estimated that the system could lose an additional $7 million or more per year as a result of the legislation.
- An analysis by the Wharton School of the University of Pennsylvania and the Federal Reserve Bank of Chicago found that Texas municipalities will be paying $300 million to $500 million in additional interest because of the state’s anti-ESG law – and that’s just on the $31.8 billion borrowed in the first eight months after the law went into effect.
- An analysis by the economics consulting firm ESI for the Sunrise Project found that taxpayers in six states — Kentucky, Florida, Louisiana, Oklahoma, West Virginia, and Missouri — could be on the hook for up to $700 million in excess interest payments if restrictions on sustainable investing are implemented.
Attacks on responsible investing are unpopular among Americans across the political spectrum.
- Both Democrat and Republican state officials have denounced these attacks, citing the economic impact of legislation that would block sustainable investments.
- More than half of national likely voters (53%) support their state investing public retirement funds in assets related to clean energy.
Corporate polluters and special interests are behind the attacks on responsible investing.
- Fossil fuel companies are “the major driver in the fight against sustainable finance,” according to documents obtained by InfluenceMap.
- Many of the politicians spearheading these attacks are simultaneously raking in tens of millions of dollars in contributions annually from oil and gas companies.
- Leonard Leo, the conservative kingpin known for remaking the judiciary, has spearheaded several initiatives and organizations to target responsible investing.
