‘ESG investing’ is a leftist power grab by another name

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From Coca-Cola to Major League Baseball to Disney, companies are wading into contentious political debates. Without fail, these corporations align with leftist positions on the issues of our times.

The primary impetus for this leftward drift of corporate America is the rise of “woke capital,” or investment designed not to maximize financial returns but to impose a leftist social and economic agenda that cannot otherwise be implemented through the ballot box.

In many cases, “woke capital” is dressed up as so-called “ESG investing,” a strategy that purports to be concerned with environmental, social, and governance issues.

ESG supporters argue that their activism does not interfere with making money. They are wrong and are deliberately trying to disguise the fact that ESG investing is a ploy to subvert the will of the people for the sake of “progressive” politics.

Right now, the pressure of “woke capital” comes from three main sources: asset managers who use their ownership of company stock to push those companies leftward; banks and insurance companies that refuse to do business with disfavored industries, such as energy or firearms; and government regulators imposing ESG-related legal mandates.

These efforts are coordinated through standard-setting bodies such as the Financial Stability Board or industry coalitions. Financial industry coalitions such as Climate Action 100+ and the Glasgow Financial Alliance for Net Zero bring together companies with trillions of investable capital to point them all toward the same goal: implementing the Left’s agenda through coercive financial means.

Asset managers rarely make headlines, but they can be very effective in pushing businesses to adopt leftist policies by throwing their ownership weight around.

Most recently, many of these asset managers banded together to elect ExxonMobil board members who want to get Exxon out of the oil and gas business. Imagine the board of an oil company actively getting it out of the business it was founded to operate.

The two largest asset managers, Blackrock and State Street, are part of a coalition pushing utilities to retire all of their gas and coal plants. Gas and coal represent over 60% of the U.S. electricity supply. Losing this energy would weaken our country, drive up the high prices we already pay, and produce blackouts threatening our most vulnerable.

There is no reliable evidence that ESG investing produces better returns, but there is evidence that ESG investing does worse for clients. A former Blackrock insider recently explained in detail how these investments do little for the environment. But they do help Blackrock’s bottom line.

Even worse, while companies like Blackrock seek to hamstring the United States’s energy-producing capabilities, they simultaneously invest in China — which undercuts our national interests and unleashed the COVID-19 pandemic on the world.

Meanwhile, companies refusing to do business with others based on their political beliefs are practicing one of the most treacherous forms of ESG. No one should have to worry that their bank will close their account because they own a gun store or because they tweeted something that was against the left-wing orthodoxy of the day.

ESG is even taking over government regulation. The Securities and Exchange Commission recently proposed a rule that would require all publicly traded companies to make expensive disclosures related to ESG issues. This was strongly supported by large asset managers, who want to use the power of government to make all companies comply with their ESG preferences. This rule was proposed despite evidence that its requirements might actually harm ordinary investors. And what woke capital wants, woke capital gets from the Biden administration.

Elected leaders need to fight back — and state attorneys general and other elected officials are doing so.

States are investigating companies, for example, and passing laws that prohibit state governments from doing business with financial institutions that boycott fossil fuel companies or the gun industry.

As Indiana’s attorney general, I have joined with my colleagues around the country and helped lead the states to oppose President Joe Biden’s ESG efforts. If Biden doesn’t listen, we will follow with litigation.

But others need to take action. This means that elections for state treasurer and governor are very important, as these officials work closely with the pension board and others making state investment decisions. They should not let such funds go to ESG-based woke companies.

I am hopeful that companies will return to their noble purpose of serving their customers and their shareholders. But the fight is far from over.

Elected officials must remain vigilant to counter the threat to liberty from Wall Street banks and the Biden administration imposing ESG policies on Hoosiers. This is a fight we can win — and we must. The country depends on it.

Todd Rokita is Indiana’s attorney general.

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