Rokita: Environmental factors in public pension funds favor leftist agenda
*This story has been updated to include a statement from the Indiana Bankers Association.
The State of Indiana has been drafted by its top legal official to get involved in a nationwide effort to target financial institutions that have chosen, or are perceived to have chosen, to walk away from fuels investments. fossils or to participate in “left-wing social causes”.
Indiana Attorney General Todd Rokita released a advisory opinion claiming that investments made by the Indiana Public Retirement System Board could not be made with strategies based on non-financial considerations known as environmental, social and governance, or ESG, considerations.
Rokita said existing federal and state laws prohibit trustees from making investment decisions with anything other than the financial best interests of beneficiaries in mind. He said ESG considerations violate these laws and “advance left-wing social causes” and “bad economic agendas” that could not be achieved through elections.
“This specific type of investment is disguised to appear as a good deed. Good for you, good for the planet, perhaps, but this moves away from having to put the financial interests of individual savers first, rather than the political goals of investment managers,” Rokita said in a press conference. “Woke” big business is collaborating with their leftist allies to overthrow the will of the people. This includes investing Hoosiers pensions in ways that work against the best interests of Indiana families.
Rokita’s opinion follows a failed attempt to pass a bill in the 2022 legislative session that would have prohibited the state from investing in or contracting with companies that “boycott” fossil fuels. The bill was withdrawn after the Indiana Bankers Association opposed the legislation, calling it “an anti-free market bill.”
IBA told the Indiana Environmental Reporter that it is still reviewing the advisory but generally opposes the investment restrictions.
“While we are still considering the impact of IN AG 2022-3, restricting investments or state trading based on ESG statements, or any other corporate statements, is fundamentally wrong. does nothing to alleviate the growing pressure financial institutions face from federal regulators regarding climate risk management.Restricting investments based on subjective ESG statements only harms Indiana financial institutions and those which draw on a diverse mix of investment options available to the IN public pension system,” said IBA Policy Director Dax Denton.
ESG criteria are used to screen investments avoid losses when companies engage in risky or unethical practices, such as supporting more and more unpopular and potentially unprofitable investments in fossil fuels.
The burning of fossil fuels resulted in greenhouse gas emissions that trapped heat in the atmosphere, causing dangerous and costly climate change.
Financial institutions, pension funds, city and state governments, faith-based organizations and other entities around the world are committed to retaining approximately $40.6 trillion investments from the fossil fuel industry.
The fossil fuel industry has retaliated against the divestments by using its influence on red state officials and politicians through various right-wing organizations it funds, such as the American Legislative Exchange Council, the Heritage Foundation and others, to enact legislative and administrative measures which would protect the industry.
ALEC provides “model legislation” to lawmakers who pursue right-wing goals like opposite federal action on climate change, amendment the American Constitution to make it more favorable to conservative ideas, delay closing coal-fired power plants, urging logging companies to clear forests to fight wildfires, to prevent States and regional efforts to regulate greenhouse and other gases.
States like Kentucky, Oklahoma, Tennessee and Texas have all passed laws based on ALEC’s model legislation that sever ties with financial institutions that divest from fossil fuels.
Rokita served as main speaker at the 2016 ALEC Annual Meeting in Indianapolis.
Rokita’s advisory opinion is based on a request from Indiana Senator Eric Koch, public chair of the ALEC Communications and Technology Working Group.
Some controversial environmental rollbacks in Indiana have ties to ALEC or its model legislation, such as the repeal of most state wetland protections Written by ALEC State President Senator Linda Rogers and a law 2021 which prohibited local governments from enacting laws eliminating or phasing out the use of natural gas and other fossil fuels or requiring energy-saving or energy-generating systems.
Representative Ethan Manning introduced a bill which reflected a ALEC Model Policy during this year’s legislative session. House Bill 1224 sought to end a “boycott” by companies that refused to invest in fossil fuels at all levels, including pledges to reduce their carbon footprint and other self-governance decisions.
The bill was withdrawn after the Indiana Bankers Association objected to the policy in public hearings and the Indiana Department of Administration warned that the legislation would further limit the already limited number of financial institutions that can provide financial services to the state, such as credit cards, fuel cards, administration of child support payments, unemployment benefits and other social programs.
The bill could resurface in the 2023 legislative session.
Rokita said he will join Republican attorneys general in Arizona and Missouri in investigating major investment management companies and programs such as BlackRock Inc., Vanguard Group Inc., State Street Corp., Morningstar Inc. and the United Nations Environment Program Net-Zero. Banking Alliance violated Indiana state law.