Law & Principles , Energy

Oklahoma anti-ESG law having an impact

Jonathan Small | October 30, 2023

In recent years, Oklahoma state lawmakers voted to prevent state funds from being invested by entities that boycott energy production through “environmental, social, and governance” (ESG) policies.

The goal was twofold. First, the law would keep Oklahoma taxpayer money from being used to harm the overall state economy, which remains heavily dependent on oil-and-gas production. Second, it would maximize the return on state pension fund investments, benefiting retirees.

Under the law, the state treasurer identifies investment firms that boycott oil-and-gas companies regardless of the impact on returns. State entities cannot contract with firms on that list.

One sign the law is working can be seen in the efforts of ESG supporters to roll back the law. But it can also be seen in other areas, as was made clear during a recent legislative study.

“It’s having a positive effect for Oklahoma,” said Corporation Commissioner Kim David, who supported the law when she was a state senator.

She said global investment companies continue to stick to their ESG policies, but that “the banking community as a whole” is starting to become more welcoming to oil-and-gas companies.

The law is also causing large investment companies to at least shift their rhetoric, which shows they are feeling the heat.

State Treasurer Todd Russ told lawmakers that he has a message for investment firms who are currently barred from doing state business: “Don’t tell me. Show me.” He noted that although many are now saying the right thing, their company websites still tout ESG policies.

Some government entities, including one state pension system, want to be allowed to contract with ESG firms, claiming that changing providers will cost them millions of dollars. But Russ questions those estimates, noting his office found other firms often provide the same service at lower cost.

ESG policies are about left-wing virtue signaling, not serious policy, and Oklahoma lawmakers are right to keep taxpayer money from subsidizing those efforts. As David noted, the only way that the oil-and-gas industry disappears in 10 years is if “you’re willing to not have electricity, heating, and air.”

Furthermore, several studies have shown that ESG investing policies generate worse rates of return than what occurs when firms focus on growth potential, and ESG investors generally end up paying higher costs for worse performance.

Also, ESG proponents only seem to target U.S. energy production. For example, Blackrock is among the most high-profile firms to tout ESG goals but, as Russ noted, Blackrock manages assets for Chinese entities, even though China plans to build around 180 new coal-fired power plants in the coming years. If ESG is so important to Blackrock, it wouldn’t take those Chinese contracts.

What other people do with their own money is their business. But what they do with our money—as Oklahoma taxpayers—is something else altogether.

Jonathan Small President

Jonathan Small


Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.

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