BOISE, Idaho —
This story originally appeared in the Idaho Press.
Idaho Sen. Mike Crapo joined state officials, GOP lawmakers and national advocates Tuesday to decry national movements toward considering environmental, social and governance criteria in investing, with many saying only financial returns should be considered.
“The use of these criteria may seem innocuous on its surface, but unfortunately, many standards are subjective and grant regulators and corporations undue influence on public policy,” Crapo declared in an address by remote video to a roundtable session at the Idaho state Capitol.
“I’ve long pushed back against efforts to politicize financial decisions and create ‘bad lists’ of legal American companies,” said Crapo, the former chairman of the Senate Banking Committee. “Sadly, we’re seeing more of this.”
At the hour-long roundtable sponsored by Crapo and Idaho State Treasurer Julie Ellsworth, and at a subsequent Statehouse meeting of the Idaho Legislature’s joint Committee on Federalism on Tuesday afternoon, speaker after speaker warned that so-called ESG criteria for investing are a way “the left” is pushing its agenda.
Sen. David Nelson, D-Moscow, the sole Democratic member to participate in the federalism committee meeting, said afterward, “It’s the CRT of 2023, I guess. For a bunch of libertarians, they seem really intent on dictating how we invest and how we just even view investments.”
The concept of ESG criteria for investments has been around for decades, but has become increasingly controversial in the past year or two.
Scott Shepherd, director of the Free Enterprise Project for the National Center for Public Policy Research, a Washington, D.C. free-market think tank, told the federalism committee, “The left have been corporate activists for 40 years while we slept.” He decried corporate attempts to influence public policy, telling the lawmakers, “We want ‘em to go back to flying us around the country and making us bubbly drinks and just shut up.”
But if only financial returns should be considered in investment decisions, that would seem to contradict a bill and a resolution the Idaho Legislature enthusiastically passed this year to encourage Idaho’s state investment funds to shun any Russian investments, in response to Russia’s invasion of Ukraine. HB 728a and HCR 41 passed both houses unanimously.
Rep. Bruce Skaug, R-Nampa, who co-sponsored both of those measures, was in the audience for Tuesday’s roundtable. “We did that when it was a true enemy of freedom and democracy – Russia on Ukraine,” Skaug said. “I’m here learning right now,” he said, adding, “I’m concerned about the things that people shared about the loss of our sovereignty as a state because of large corporate pressure.”
House Majority Leader Mike Moyle, R-Star, who also was in the audience, said, “There’s a big learning curve for me on this one. This is the process to learn what the facts are and what’s really going on.”
Vivek Ramaswamy, an entrepreneur and author of the book “Woke, Inc.” also addressed the roundtable remotely, and blamed the “big three” investment firms, BlackRock, Vanguard and State Street, for pushing the ESG movement by pressing vague and subjective standards. “The vagueness in the definition of what counts as ESG is not actually a bug, it is a feature for the people who created the movement,” he said.
He called the widespread use of the criteria “the single largest fiduciary breach of the 21st century.”
Ellsworth, the state treasurer, decried the idea of “picking out all these things that might make us look good or might make us look not credit-worthy.” She said, “I do not believe this helps my constituents.”
Utah state Treasurer Marlo Oaks also spoke at the roundtable, saying, “We’re talking about implementing economic sanctions to drive a political agenda, and where does this end?” He decried efforts to “get rid of traditional energy.”
Derek Kreifels, CEO of the State Financial Officers Foundation, which includes 27 state officials from 23 states, called ESG “the left’s attempt to pass anything that they want by circumventing the democratic process.”
He said it started with climate change, but then, just last week, shareholders of corporations including Walmart presented proposals “to support reproductive rights in the name of ESG. … So I think this is where the left is going to go.” Walmart shareholders overwhelmingly rejected the proposal.
Members of the Federalism Committee had questions about PERSI, the Public Employee Retirement System of Idaho, but the committee’s co-chair, Sen. Steve Vick, R-Dalton Gardens, cited PERSI documents that showed one of the things PERSI specifically doesn’t do in its investing is take into account ESG criteria.
Last year, the Idaho Legislature passed SB 1405 on straight party-line votes in both houses, and Gov. Brad Little signed it into law. It says public investment decisions in Idaho must follow the state’s prudent investor standards, and cannot override those standards in favor of ESG criteria. The bill was co-sponsored by Vick, Rep. Sage Dixon, R-Ponderay, and Ellsworth.
Vick said Tuesday, “If my money is in the state retirement system, I want that money to be invested to get the best return. … I think that’s where most people are in our society, regardless of their politics, they want to see investments made in a prudent way.”
Dixon, who co-chairs the federalism committee with Vick, said, “I’m happy to see that this is coming together, and that our state constitutional officers are coming out against this and doing that work.” He said the panel will hold further hearings over the course of the summer aimed at possible additional legislation next year.
Nelson said, “I think it’s really appropriate to look at ESG ratings when I’m looking at investments. I’d like to know how much carbon Exxon is emitting, or what are the side effects of Apple’s supply chain on carbon. But that doesn’t mean that the state or an individual investor has to use that decision – that’s just information. I really object to this, where we’re really trying to block people from gathering consistent information to make their investment decisions.”
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