In recent years, state lawmakers voted to prevent state funds from being invested by entities that boycott energy production through “Environmental Social Governance” (ESG) policies.
The goal was two-fold. First, the law would keep Oklahoma taxpayer money from being used to harm the overall state economy, which remains heavily dependent on oiland- gas production. Second, it would maximize the return on state pension fund investments, benefitting retirees.
Under the law, the state treasurer identifies investment firms that boycott oil-and-gas companies regardless of the impact on returns. State entities cannot contract with firms on that list.
One sign the law is working can be seen in the efforts of ESG supporters to roll back the law. But it can also be seen in other areas.
“It’s having a positive effect for Oklahoma,” said Corporation Commissioner Kim David, who supported the law. She said global investment companies continue to stick to ESG policies, but “the banking community as a whole” is becoming more welcoming to oil-and-gas companies.
The law is also causing large investment companies to at least shift their rhetoric, which shows they are feeling the heat.
State Treasurer Todd Russ told lawmakers he has a message for investment firms who are currently barred from doing state business: “Don’t tell me. Show me.” He noted although many are now saying the right thing, their company websites still tout ESG.
Some government entities want to be allowed to contract with ESG firms, claiming that changing providers will cost them millions. But Russ questions those estimates, noting his office found other firms often provide the same service at lower cost.
ESG policies are about left-wing virtue signaling, not serious policy, and Oklahoma lawmakers are right to keep taxpayer money from subsidizing those efforts. As David noted, the only way the oil-and-gas industry disappears in 10 years is if “you’re willing to not have electricity.”
Furthermore, several studies have shown ESG investing policies generate worse rates of return than when firms focus on growth potential, and ESG investors generally end up paying for worse performance.
ESG proponents only target U.S. energy. Blackrock is among the high-profile firms to tout ESG goals but, Blackrock manages assets for Chinese entities, even though China plans to build around 180 new coal-fired power plants in the coming years. What people do with their own money is their business. But what they do with our money—as Oklahoma taxpayers—is something else altogether.