Not long ago, state finances were rarely discussed outside of policy wonk circles or the occasional media coverage of financial scandal. But in the era of ESG—the reorientation of the world’s top financial services companies toward leftist Environment, Social, and Governance priorities rather than traditional standards—the realm of state finance officials has become a hot topic.
During a panel discussion led by Derek Kreifels, Co-Founder and Chief Executive Officer of the State Financial Officers Foundation (SFOF), Impact Conference attendees heard about the latest ESG concerns from two state treasurers. Marlo Oaks of Utah noted that the option of socially responsible investing has been around for some time. But what’s new about ESG is the extent to which it uses coercion—both toward small investors and toward companies that now must comply with often unreasonable demands in order to avoid hits to their stock prices.
Bringing transparency to the budgetary process after years of neglect is especially valuable in the era of ESG and runaway spending.
With membership including thirty-five state leaders that collectively control $3 trillion in state assets across twenty-eight states, SFOF members have been credited with pulling billions of dollars of state retirement fund investments from the top ESG funds, like Blackrock and Vanguard. Through SFOF, members like Messrs. Oaks and Lieber share ideas and collaborate to protect their states’ financial health and the interests of employees.
One example of ESG pressure being put on states came in the form of an email from Standard & Poor’s, alerting Mr. Oaks that the state would now receive an ESG score as part of their state credit rating. Mr. Oaks quickly organized a letter signed by Utah’s entire congressional delegation and all financial officers informing S&P that Utah no longer wanted a credit score. The result was that, earlier this year, S&P announced they would no longer apply a separate ESG score to states.
Mr. Lieber is in a different position as the only conservative in a very liberal administration, so his focus has been on restoring the Wisconsin state treasurer’s office accountability role, which has been systematically reduced for the last two decades. Bringing transparency to the budgetary process after years of neglect is especially valuable in the era of ESG and runaway spending.