Breaking up with ESG is hard to do

Presented by Prologis:

Sep 05, 2023 View in browser   By Jordan Wolman and Allison Prang Presented by Prologis THE BIG IDEA Oklahoma Treasurer Todd Russ is trying to defend his state's fossil fuel "boycott list." | Sue Ogrocki/AP Photo THE ESG TIGHTROPE — Republican politicians aiming to punish Wall Street firms over sustainable investing policies that they say are hurting everyday Americans are meeting resistance from officials in their own states. The latest example is from Oklahoma, where the Public Employees Retirement System's board voted to retain its current roster of financial advisers, including BlackRock, after deciding that complying with a 2022 state law that bars doing business with firms accused of boycotting fossil fuels would violate its fiduciary duty. BlackRock, the world's biggest asset manager, was on the state's boycott list along with JPMorgan Chase, Bank of America and State Street. The conflict reflects the tension between GOP lawmakers looking to score political points by attacking companies over environmental, social and governance principles, and fiduciaries who are more concerned about their potential culpability for the financial costs the anti-ESG actions could impose on retirees and taxpayers. Oklahoma’s law permits exemptions in cases where fiduciaries determine that avoiding the blacklisted firms would result in a “loss in value.” Oklahoma state treasurer Todd Russ, the only OPERS board member to vote against the exemption, said he’s concerned that the fund isn’t complying with the law. “They were concerned they'd get sued if it cost the pension money,” said Russ, whose office publishes the state’s energy boycott list. “I told them I'm more concerned that we'll get sued if we're in violation of statute and state law.” Oklahoma Insurance Commissioner Glen Mulready, who has representatives on three different state pension boards, including OPERS, said that he was more concerned about lawsuits from the pensioners themselves and that he thinks the issue will come up for other pension boards in the state. “Everyone that I know of I think is probably leaning in the same direction and that is taking the exemption because of the financial impact on the pension fund,” he said. It’s not just Oklahoma doing the anti-ESG dance. In Texas, public pension funds have slow-walked divesting from firms on that state’s boycott list. Some funds in Kentucky have said complying with that state’s energy boycott law would violate its fiduciary duty. “The process has played out very differently throughout the states,” said West Virginia Treasurer Riley Moore, a Republican congressional candidate who leads an anti-ESG coalition that has spurred the divestment actions in red states. None of the major firms accused of boycotting coal, oil and gas are doing so. BlackRock, JPMorgan, Citi, Wells Fargo and Bank of America are among the leading fossil fuel financiers, a fact that has prompted speculation that the red-state complaints are more political than prudential. "We oppose efforts at all levels of government that would politicize credit and effectively allocate capital based on unrelated policy preferences,” said Blair Bernstein, a spokesperson for the American Bankers Association. Next up: Indiana, which will soon be coming out with a list of firms that officials say have made ESG commitments and therefore should not be doing business with the state pension system — though similar exemptions could be claimed as in Oklahoma. Indiana’s pension system has warned of high costs associated with the law. And let’s not forget about the backlash against the ESG backlash: A left-leaning nonprofit has launched new ads attacking five House Republicans for their support for anti-ESG policies stemming from the GOP’s “ESG Month” in July.   A message from Prologis: Join us for GROUNDBREAKERS 2023, where we bring together some of the foremost visionaries and leaders to the stage to explore the revolutionary breakthroughs profoundly changing the world of logistics. This livestream forum will explore the latest innovations in supply chain transformation spanning AI, workforce, energy and mobility. You won’t want to miss this groundbreaking experience. Register today. [Join us: September 27, 9AM PT]   AROUND THE NATION FINAL TEST — A pair of potentially game-changing corporate climate disclosure bills are heading for a final vote in the California State Assembly after clearing a final committee hurdle on Friday. Companies supporting the bills are gathering at the California Capitol in Sacramento on Wednesday to meet with lawmakers to push for final passage, according to Alli Gold Roberts, senior director of state policy at Ceres, a nonprofit and leading supporter of the two bills. Both were passed by the state Senate earlier this year. SB253 would require all large businesses operating in California to disclose their emissions, going further than proposed federal rules. SB261 would mandate that large corporations disclose climate-related financial risks. Both bills failed last year and would need a final vote by Sept. 14. Meanwhile, California is also closer than it’s ever been to enacting legislation that would make it easier for consumers to get repairs of cell phones, laptops and other personal electronics without going to the manufacturers, Marcia Brown reports. SB 244 would require companies like Apple and Samsung to provide the tools and information that consumers need to make repairs on their own or through third-party repair shops, which advocates say would reduce consumption and keep electronics out of landfills. The bill also heads to a floor vote in the Assembly after passing the Senate 38-0 in May. The right-to-repair movement has picked up steam across the country over the past year, with sweeping bills enacted into law in Minnesota, Colorado and New York. The California bill got a big boost in August, when Apple came out in support. It’s a major about-face for the iPhone maker, which has vigorously opposed repair legislation for years. Biden administration regulators also seem to be falling in line. The National Highway Traffic Safety Administration reversed course last month after receiving blowback for previously saying that a Massachusetts repair law violated federal law and increased hacking risks. MONEY GRAB — Regulators beware: If you’re going to open up the checkbook, you can expect more grabby hands. Such is the situation in New York, where utility regulators considered a request from four offshore wind projects seeking additional state financial assistance — only to receive arguments from a hydropower transmission project seeking a roughly 11 percent increase in the per megawatt hour costs of the project. The Champlain Hudson Power Express project, which would deliver hydropower from Quebec to New York City, cites the same supply chain, inflationary and high interest rate concerns as the wind projects struggling to get off the ground — forcing regulators to make tough decisions about the high costs of shifting to greener energy sources, Ry Rivard reports.   A message from Prologis:   BUILDING BLOCKS WE HAVE A DEAL — A federal judge gave his preliminary approval of a settlement deal between chemical giant 3M and public water systems over the company’s contamination of drinking water supplies with “forever chemicals,” Jordan reports. The settlement, valued between $10.5 billion and $12.5 billion, was greenlit the same day that a bipartisan coalition of 22 attorneys general withdrew their opposition to the settlement offer after winning concessions from 3M. The company resisted pressure from the attorneys general and did not agree to increase the settlement offer or pay the money out quicker than the 10-year timeline it originally proposed. That’s prompted concerns that 3M could declare bankruptcy before it pays out its settlement. It’s the second major PFAS settlement reached last month that U.S. District Judge Richard Gergel in the District of South Carolina preliminarily approved after the attorneys general secured concessions from Chemours and DuPont in a settlement worth $1.2 billion.   SUBSCRIBE TO CALIFORNIA CLIMATE: Climate change isn’t just about the weather. It's also about how we do business and create new policies, especially in California. So we have something cool for you: A brand-new California Climate newsletter. It's not just climate or science chat, it's your daily cheat sheet to understanding how the legislative landscape around climate change is shaking up industries across the Golden State. Cut through the jargon and get the latest developments in California as lawmakers and industry leaders adapt to the changing climate. Subscribe now to California Climate to keep up with the changes.     YOU TELL US GAME ON — Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. Join us every Tuesday as we keep you in the loop on the world of sustainability. Team Sustainability is editor Greg Mott and reporters Jordan Wolman and Allison Prang. Reach us all at gmott@politico.com, jwolman@politico.com and aprang@politico.com. Sign up for the Long Game. It's free!   Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of the first episodes in September – click here.     WHAT WE'RE CLICKING — The idea of cooling the planet by reflecting some of the sun's heat back into space is attracting attention and raising concerns, according to the Financial Times. — The rising tide of climate-related disasters is creating a market boom for bonds that allow the insurance risk to be transferred to investors, the Wall Street Journal reports. — Bloomberg has taken a global look at the conflict over return-to-office policies and put a price tag on it: $1.3 trillion.   A message from Prologis: Reboot. Renew. Reimagine. GROUNDBREAKERS 2023 brings together some of the supply chain's foremost visionaries to the stage to peel back the layers of complexities and possibilities that AI and other revolutionary innovations bring to the world of logistics. The vital areas of workforce, energy and mobility are evolving quickly as a confluence of people, purpose and productivity accelerate transformation. As the supply chain moves beyond the standards of the past, adopting and adapting to the velocity of change, GROUNDBREAKERS 2023 welcomes the next generation of innovators. The Future is Here: Is Your Supply Chain Ready? Join two leading visionaries at the forefront of supply chain infrastructure as they share insights into the future of commerce and sustainable logistics. Energy Transition and Renewable Energy: Is the World Prepared? Groundbreaking companies in the energy sector are leading the transformation to cleaner solutions. Register today. Join us: September 27, 9AM PT     Follow us on Twitter Debra Kahn @debra_kahn Greg Mott @gwmott Jordan Wolman @jordanwolman Allison Prang @AllisonPrang   Follow us

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