Energy

New study reaffirms: ESG investing is bad for Oklahoma

October 24, 2024

Staff

OKLAHOMA CITY (October 24, 2024)—A new study co-authored by two Oklahoma Council of Public Affairs experts finds that “environmental, social, and governance” (ESG) investing violates the fiduciary duty of state pension asset managers, is based on unreliable and inconsistent ratings, and indirectly supports attacks on key Oklahoma industries such as oil and gas.

As a result, the report finds that Oklahoma’s Energy Discrimination Elimination Act (EDEA), which prohibits state pensions from using ESG investment strategies, should be preserved.

“ESG investing is political activism disguised as an investment strategy,” said OCPA President Jonathan Small. “It ultimately leaves pensioners with less financial security while also reducing Oklahoma businesses’ access to capital. State lawmakers made the right decision when they voted to prevent state pension assets from being used for ESG purposes.”

“The ESG Gordian Knot: Evaluating ESG in a Fiduciary World” was co-authored by Small; OPCA Policy Research Fellow Curtis Shelton, and Byron Schlomach, Ph.D.

“Pension asset managers have a legal obligation to pursue investment strategies that generate the greatest returns for retirees, maximizing their financial security,” Shelton said. “ESG fails to meet that basic standard.”

“While ESG proponents argue these investment strategies yield positive benefits, the data make clear that ESG investments can produce lower returns and are based on evaluations that vary so widely that companies with high ESG scores may have worse records with respect to labor and environmental laws than companies in non-ESG portfolios,” Schlomach said. “Even by the standards of ESG proponents, ESG investing fails.”

The full study can be read here.

The Oklahoma Council of Public Affairs promotes the flourishing of the people of Oklahoma by advancing principles and policies that support free enterprise, limited government, personal responsibility, individual initiative, and strong families.