LINCOLN, Neb. (KMTV) — Should state treasurers be lobbying against climate change policies and slamming investment firms that consider “environmental, social and governance” factors in financial decisions?
Are state treasurers being “weaponized” against efforts to invest in alternatives to fossil fuels and nominees of President Joe Biden?
Those are questions raised after a recent article in the New York Times about a Republican-dominated, Kansas-based group, the State Financial Officers Foundation.
Nebraska State Treasurer John Murante is the group’s current national chairman. He says his duties include ensuring that “our tax dollars are not used for a political agenda.”
The organization, whose members are about a dozen GOP state treasurers, has declared war on BlackRock Inc., an investment firm that has stated its investments must consider climate change and “ESG,” a company’s stance on “environmental, social and governance” issues.
In recent months, the push has led to hundreds of millions of dollars in investments being pulled from companies like BlackRock, Goldman Sachs and JPMorgan in the states of West Virginia, Louisiana and Arkansas because they are reducing their investments in coal and focusing too much on environmental factors, the New York Times reported.
Tool of oil, gas industry
The foundation drew fire in the Times article as being a tool of the oil and gas industry and straying from the traditional, nonpartisan role of the state treasurer’s office, which is to manage the state treasury.
One former Nebraska state treasurer, Dawn Rockey, a Democrat, questioned why Murante and the foundation were bringing politics into what should solely be financial decisions.
“The politics should really be diminished,” Rockey said. “That, to me, is outside the scope of the job.”
Murante, a Republican who faces no Democratic Party challenger in a re-election bid this year, defended the foundation as being “committed to making the decisions in the best financial interest of our constituents and are fighting back against the use of public funds for political purposes.”
Former Nebraska State Treasurer Don Stenberg, a Republican who was one of the founders of the Financial Officers Foundation in 2013, also defended the organization. He described its purpose as promoting sound investment strategies that bring the best return for the state, “not social programs, either conservative or liberal ones.”
Investment Council presentation
Stenberg added that if BlackRock strays from its fiduciary responsibilities of maximizing investment return for clients, it could be sued.
The massive company, the world’s largest investment manager, oversees nearly $10 billion in investments for the Nebraska state pension plan and college savings plan through the Nebraska State Investment Council.
That eight-member council, at the advice of State Investment Officer Michael Walden-Newman, had BlackRock representatives provide a presentation on ESG at its July retreat.
“It’s coming to the forefront, and we’re getting ourselves educated,” Walden-Newman said.
Murante is a nonvoting member of the investment council, which guides about $40 billion in state investments.
In the BlackRock presentation, the company stated that its “global principles” on environmental and social issues include seeking “robust disclosures” with companies on the risks and opportunities presented by rising global temperatures and emerging technologies. That, the presentation indicated, aligns with an industry effort, called the Task Force on Climate-Related Financial Disclosures, to increase and improve information related to a future aimed at reducing carbon emissions.
Profound impacts
“There is no company whose business model won’t be profoundly affected by the transition to a net zero (emission) economy,” BlackRock Chairman and CEO Larry Fink was quoted as saying on the presentation.
On its website, BlackRock states that “climate risk is investment risk” and states it is simply trying to provide the best information possible to its clients as they invest in a world undergoing an “energy transition” from fossil fuels to renewables.
Walden-Newman said the presentation to the Investment Council sparked a “robust discussion.” The board, he said, is still educating itself on ESG issues and took no action.
Murante said the State Treasurer’s Office has no banking relationship with BlackRock and said he does not anticipate that it will.
Murante: ‘I have concerns’
He added, “I have questions and concerns over BlackRock’s public statements that they are using their resources to advance a left-wing agenda.”
The State Financial Officers Foundation says on its website that its mission includes defending “economic freedom” and “a free society.”
The Times story, citing a review of thousands of pages of internal emails and documents, said the foundation is pushing state treasurers to use their power to promote oil and gas interests and derail Biden’s climate agenda.
It quoted one critic, a researcher with the watchdog group Documented, as saying the foundation was “weaponizing” the GOP state treasurers against federal and corporate efforts to address climate change.
Murante said that while the Financial Officers Foundation is a “nonpartisan” group, only Republicans are members at this time, but he said any state treasurer or comptroller “who believes in limited government and free markets are welcome to join.”
Officials ‘under pressure’
“Elected officials at all levels are under increasing pressure to adopt progressive policies that undermine economic freedom and economic growth,” states the Financial Officers’ website.
Besides going after BlackRock, the foundation’s recent activities, as outlined in the Times article, include joint statements in opposition to a proposed federal rule allowing retirement plans to consider investment risks from global warming and fighting Biden appointees to the Federal Reserve Bank and the Office of the Comptroller of the Currency — appointees who later withdrew from consideration after their nominations became controversial.
Murante, a former state senator, minced no words in a November press release on behalf of the Financial Officers Foundation, denouncing Biden’s nominee for the Comptroller post, Saule Omarova, as a “radical extremist” and better qualified to be “comptroller of the Chinese communist party.”
Omarova, a banking law professor at Cornell University, told NPR that the banking industry distorted her research and that conservative groups falsely accused her of having “communist” views because she was born in Kazakhstan when it was part of the Soviet Union.
Nebraska’s Republican Attorney General Doug Peterson has also joined in the conservatives’ attacks on BlackRock. He issued a press release earlier this month, as part of a coalition of attorneys general, accusing BlackRock of being more interested in ESG than enhancing investment returns.
‘Forced to support’
“It appears that anyone purchasing a BlackRock fund is forced to support ESG whether they like it or not,” Peterson said in the press release.
He signed onto a letter last week from 21 Republican state legal officers opposing a proposed Securities and Exchange Commission rule to require firms to demonstrate how ESG investments they sell truly adhere to ESG principles.
Proponents of the SEC rule say it’s an important disclosure for investors at a time when ESG investing is growing by leaps and bounds.
Randy Adkins, a political science professor at the University of Nebraska at Omaha, said the Financial Officers Foundation is clearly an effort by a small group of states to coordinate and increase its clout to change policies of financial institutions such as BlackRock.
Adkins wondered whether the foundation’s activities fall within the duties of state treasurers and whether they can make decisions based on partisan considerations.
The Nebraska Constitution and state law are pretty general on the duties of the State Treasurer’s Office. “To receive and keep all monies of the state,” says one statute on the core duties of the $85,000-a-year office. The treasurer also oversees the state college savings plan and seeks to return unclaimed property to its rightful owner.
When asked about the Financial Officers Association and Murante’s involvement, Jane Kleeb, the chair of the Nebraska Democratic Party, said it was another indication that the Republican Party had “lost its way” and become a party of “corporate yes men.”
Former State Sen. Al Davis, a Democrat who lobbies for the Nebraska Chapter of the Sierra Club, questioned why Murante was going to bat for the oil and gas industry when it is such a small entity in the state.
“But we do have farmers and ranchers who are victims of global warming,” said Davis, who is Democrat Carol Blood’s running mate in the governor’s race.
Lobbying for changes in national policies doesn’t appear to be in the job duties for the office, Davis added.
“My gut instinct is (Murante) doesn’t have enough to do,” he said.
A proposed constitutional amendment on the ballot in 2010 would have eliminated the office of state treasurer as an elected position, in large part to save money. In a dozen states, it is an appointed position.
Three former Republican governors and then-Gov. Dave Heineman — a former state treasurer — opposed the constitutional amendment, which was defeated by a 2-to-1 margin.
Nebraska Examiner is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Nebraska Examiner maintains editorial independence. Contact Editor Cate Folsom for questions: info@nebraskaexaminer.com. Follow Nebraska Examiner on Facebook and Twitter.
Download our apps today for all of our latest coverage.
Get the latest news and weather delivered straight to your inbox.
