The world’s largest financial institutions were blacklisted Wednesday by Oklahoma from doing business with state entities over their support of the climate change-focused investment strategy ESG.
The move by Oklahoma Treasurer Todd Russ, a Republican, follows through on a threat earlier this year to boycott behemoth banks and investment firms like BlackRock, Wells Fargo, JPMorgan Chase and Bank of America unless they ceased engaging in environmental, social and governance investing, or ESG.
Mr. Russ said the companies’ pro-ESG financial strategy, which takes into consideration climate change and social justice politics, was akin to shunning Oklahoma’s oil industry and hurting the state’s economy.
“The energy sector is crucial to Oklahoma’s economy, providing jobs for our residents and helping drive economic growth,” Mr. Russ said. “It is essential for us to work with financial institutions that are focused on free-market principles and not beholden to social goals that override their fiduciary duties.”
Oklahoma is expected to divest a cumulative $7.7 billion in holdings from the firms for managing the state’s Public Retirement System. However, it’s unclear the total amount of money at stake from barring any state business with the 13 companies.
Mr. Russ’ full boycott list includes 13 firms: BlackRock, Wells Fargo, JPMorgan Chase, Bank of America, State Street, GCM Grosvenor, Lexington Partners, FirstMark, Touchstone Partners, WCM Investment Management, William Blair, Actis, and Climate First Bank.
BlackRock vehemently pushed back, saying in a statement to The Washington Times that it has invested on behalf of clients more than $15 billion in public energy companies based in Oklahoma and roughly $320 billion in publicly held energy companies globally.
“BlackRock offers our clients the choices they need to help them achieve their investment objectives for low fees,” a BlackRock spokesperson said. “We believe lists like these ultimately raise costs for Oklahoma taxpayers and reduce returns for firefighters, teachers and state employees seeking to retire with dignity. They also undermine free-market competition and choice for investors.”
JPMorgan Chase also fired back at Mr. Russ, telling The Times his decision is “anti-free market” and denying that the bank discriminates against oil. Between 2021 and 2022, the company said it provided more than $2 billion in financing and other services to 40 Oklahoma companies in oil and natural gas.
“The treasurer’s decision today is baseless — as the nation’s largest bank, we are among the top financiers across the energy sector, including traditional energy sources,” a JPMorgan Chase spokesperson said. “Our business practices are not in conflict with this anti-free market decision, and we look forward to continuing to serve customers and communities in Oklahoma.”
Asset manager State Street told The Times they “strongly disagree” with Mr. Russ.
“State Street does not discriminate against oil and gas companies, or any other industry sectors,” a spokesperson said. “We would welcome the chance to work with policymakers to provide them further clarity on our stance, and to address their concerns.”
The Oklahoma Legislature laid the groundwork for Mr. Russ’ action with an anti-ESG law last year letting him punish corporations deemed to be boycotting fossil fuel.
Oklahoma adds to the list of red states such as Florida, Texas, West Virginia, Idaho and Utah that have divested billions of dollars in state funds — mostly in the form of public pensions — from financial corporations that engage in ESG. Conservative critics call ESG woke capitalism that violates fiduciaries’ obligation to achieve the best return on investments for their clients.
However, the Republican war against woke ESG investing has suffered recent setbacks in GOP-dominated states. State pension managers, banking associations and business groups have warned that legislation blacklisting pro-ESG asset managers and investment funds could cost retirees and hurt local banks.
ESG supporters counter conservatives’ messaging by saying the decades-old financial practice aligns investments with clients’ moral values and takes long-term, non-monetary risks like climate change into account.
• Ramsey Touchberry can be reached at rtouchberry@washingtontimes.com.
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