TOPEKA — Attorney General Kris Kobach and State Treasurer Steven Johnson tag-teamed testimony Tuesday in support of legislation undermining influence in Kansas of investment strategists applying environmental, social and corporate governance litmus tests to analysis of market options.
The bill in the Kansas Senate would directly target the Kansas Public Employees Retirement System’s $20 billion portfolio as well as the state government’s pooled money investment accounts tied to more short-term transactions. The Senate Federal and State Affairs Committee welcomed advocates of Senate Bill 291, and was expected to take testimony from opponents Wednesday.
Kobach said the so-called ESG movement wasn’t concerned about whether politically correct investments secured the highest return. In terms of KPERS, he said, the influence of corporate saboteurs threatened to damage value of pensions held by teachers, law enforcement officers and state government workers.
“ESG investing uses retirement savings as leverage to force companies to reduce their carbon footprints, adopt racial and gender quotas or to succumb to the ‘woke’ social justice fad of the month,” the Republican attorney general said. “State-funded ESG investment policies should be illegal.”
Kobach said legislation was necessary to make certain KPERS made return on investment the top priority and concentrated on protecting the system from being “commandeered to advance a partisan agenda.” He also said the 10 largest ESG funds in terms of assets underperformed the S&P 500 in the past year.
He also said the Senate bill should require private investors notify individual Kansans when the firm made use of ESG considerations when investing a client’s nest egg.
Johnson, a Republican legislator prior to election as state treasurer, said ESG considerations should be disclosed to individuals because environmental, social and governance demands by advocacy groups could have a detrimental influence on financial returns. He said it was “improper” for ESG ideology to take root at KPERS because those considerations often contradicted the state’s policy goals.
Placing ESG scores on subjective topics such as how well a company safeguarded the environment or whether a company board embraced a diverse workforce enabled personal beliefs and political preferences to be interposed on investment decisions of state-controlled assets, he said.
“In a world where the trend is to politicize everything, when it comes to the return on investment, we cannot afford to lose focus,” Johnson said.
He said there was interest in legislation that would forbid KPERS from using investments for social purposes or economic development objectives. The Legislature also could block government in Kansas from allowing ESG asset managers at BlackRock, State Street and other firms from engaging in proxy voting that would influence a company’s management decisions or selection of directors.
There is a legitimate interest in preventing state agencies as well as local governments from engaging in “preferential treatment or discrimination” based on ESG criteria, Johnson said. For example, he said, a statute could be adopted to mandate neutrality in the public contracting process. That would be relevant to the state’s consideration of its state banking contract up for renewal in 2024.
‘No climate crisis’
William Happer, a former physics professor at Princeton University, said he supported Kansas’ work against ESG strategists because concerns about climate change or global warming were bogus. Doubling atmospheric carbon dioxide content would cause a benign increase in temperature and the change would be beneficial for Kansas agriculture, he said. In fact, Happer said, the plant was in a carbon dioxide famine.
“Supposedly, fossil fuels are causing a ‘climate emergency.’ This is not true,” he said. “ESG efforts to suppress the use of fossil fuels will be all pain and will cause enormous environmental and economic damage.”
Another voice in the quest to counter ESG radicalism, Wallbuilders ProFamily Legislative Network policy director Bette Grande, said Kansas should respond to “large businesses, money-center banks and insurance companies colluding to steer the economic choices of citizens with the nodding approval and privilege provided to them by government. This is not the free market, it is collusion.”
Grande is a former North Dakota state representative and Wallbuilders ProFamily works to affirm the nation’s Judeo-Christian heritage and collaborate with “conservative, God-fearing” legislators.
In Kansas, the campaign to minimize ESG thinking has been championed by the Kansas Independent Oil and Gas Association as well as companies engaged in the oil and gas industry in the state.
Dana Wreath, executive vice president of Berexco of Wichita, said ESG advocates opposed to burning natural gas and coal could drive up the cost of electricity essential to energy industries and to elevate the cost of materials, such as steel pipe, used in gas and oil fields.
“ESG discrimination does have a negative impact on Kansas oil and gas production,” said Wreath, chairman-elect of KIOGA. “Why would the state of Kansas want public money used in a manner that hurts the economy of Kansas?”
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