In a Nov. 14 interview, Utah’s treasurer Marlo Oaks told The Epoch Times that environmental, social, and corporate governance (ESG) criteria are being used as a political tool, spurring a response from Utah and various other states worried about its consequences.
Oaks and a number of other Republican state treasurers had gathered for the national meeting of the State Financial Officers Foundation (SFOF), held at the Mayflower Hotel in Washington.
He has served as Utah’s treasurer since 2021. He previously managed multi-billion-dollar portfolios for a succession of firms, including Farmers Insurance Group.
Oaks said his background in finance helped him understand ESG early on.
“What I saw was the coercive nature of capital. If you can force companies who are trying to access capital markets to behave a certain way in order to get money, then you can force an agenda on them,” he said.
Oaks later added that he believes the push for ESG “is ultimately coming down to what I believe is a globalist agenda” from entities such as the United Nations (UN) and the World Economic Forum (WEF).
“We’re now seeing this really being pushed hard throughout the economy in the United States,” Oaks said.
“If you can change how capital is allocated, then you can change behavior in the entire economy.”
In addition to speaking with The Epoch Times, Oaks discussed ESG and pensions as part of a panel with Kentucky’s treasurer Allison Ball and Idaho’s treasurer Julie Ellsworth.
There he argued that by accommodating ESG demands, state treasurers might actually compromise their legally binding fiduciary duty to beneficiaries—beneficiaries who are, in many cases, teachers, police officers, firefighters, and other public sector workers whose pensions generally fall under the authority of state treasurers.
The Politics of ESG
Oaks worries ESG could harm Utah’s finances.In his interview with The Epoch Times, Oaks drew attention to adverse publicity from some media in connection with a recent volleyball match between Duke University and Utah’s Brigham Young University.
The university ultimately apologized to the fan who was alleged to have baited the player.
Nevertheless, the damage to Utah’s reputation had been done.
Adverse publicity, Oaks pointed out, can feed into ESG scores. If the publicity that informs ESG scores mostly comes from sources that are biased against Utah, or Utahans, what’s to stop a future campaign of negative press from denting the state’s credit rating?
“You can see how political this can become—how quickly it can be turned against an entire state,” Oaks said.
Some believe that ESG criteria are used to inappropriately reward companies or entrepreneurs for supporting the “right” political causes or, even more narrowly, the Democrat Party.
Although he acknowledged the political dimension of ESG, Oaks thinks it’s concerning enough to transcend traditional political divides.
“Even Democrats,” he argued, will oppose ESG when they get a sense of its potential impact.
Indeed, Oaks’ aim for neutrality over politicization in the market even extends to edge cases with which some conservatives are uncomfortable.
In his book “Woke, Inc.,” ESG skeptic Vivek Rameswamy asserted that it would be “perfectly legitimate” if Airbnb, a United States-based tech firm, strongly disagreed with core American values.
Some on the Right think that goes too far. They say that firms based in the United States should respect certain fundamental cultural beliefs if they intend to reap the rewards of building a business in America.
Oaks argued that anti-American policies from U.S. businesses would pose a problem not so much in their own right but because they would make it harder for shareholders to get a return on their investments.
Banks Under Pressure
At times, Oaks and his SFOF peers sounded optimistic about the curtailment of ESG.In the course of a panel discussion, West Virginia’s treasurer Riley Moore said his state’s decision to place five financial institutions on a restricted list, based on their stances toward the fossil fuel industry, actually prompted one of them, U.S. Bank, to change its tune.
A U.S. Bank spokesperson disputed that claim in a Nov. 15 email to The Epoch Times, saying that its ESG policy predates June 10, 2022, when the relevant West Virginia law came into effect. The spokesperson said the latest policy came into effect at the close of 2021.
“I can’t speak to when they internally decided to change the language, all I know is that during the review process for the finalized list they informed us their policy had changed from what was publicly available during our initial review,” said a spokesperson for Moore.
Moore’s spokesperson directed The Epoch Times to an old environmental policy from the bank, dated 2021, as well as a new environmental and social risk policy they say they were provided in 2022, after West Virginia issued its list of prohibited financial institutions.
The old policy states, “We will not participate in any relationship involving or provide project financing or other forms of asset-specific financing for the development of new coal mines.”
It also bans direct financing for the construction of coal-fired power plants.
“U.S. Bank has and will continue to reduce our exposure to companies that operate within the coal industry,” it adds.
The new policy does not include the development of new coal mines under its list of prohibited relationships.
“Based on his conversations with company officials, Treasurer Moore certainly believes West Virginia’s passage of Senate Bill 262 led to the policy shift,” the spokesperson added.
The Epoch Times has reached out to U.S. Bank for further comment.
During the Nov. 14 panel discussion, Moore called U.S. Bank’s putative shift a “huge win for what we’re trying to do here, which is keep the free market free.”
U.S. Bank’s moves have also helped it gain business in Missouri, according to Moore’s fellow panelist, Missouri’s treasurer Scott Fitzpatrick.
Like West Virginia, Fitzpatrick’s state has taken steps against financial institutions accused of boycotting energy companies.
“U.S. Bank successfully competed for a contract with the State of Missouri because of the changes they implemented,” Fitzpatrick said.
Oaks drew attention to a recent exchange in Congress between Rep. Rashida Tlaib (D-Mich.) and JPMorgan Chase CEO Jamie Dimon.
“Absolutely not. That would be the road to hell for America,” Dimon answered.
“That was a very important development that indicates these entities are viewing this differently today,” Oaks said, adding that he thinks there’s less uniformity on ESG among banks than before.
He again emphasized his view that the fight against ESG should not be seen in partisan terms.
“This goes beyond just your traditional political frameworks.
“If you care about innovation, if you care about our free-market, capitalist system, if you care about our constitutional form of government, all of these are threatened by ESG because you’re taking political issues out of our political realm and pushing them through the capital markets,” he said.
Oaks agreed that government intervention in the market during recent decades, particularly the bank bailouts that started during 2008, helped set the precedent for the current push for centralized control through ESG and similar tools.
“I think that really sowed the seeds for where we are today,” Oaks said.
