Categories
Investing

Political spat over climate risks in investments gets hotter – Star Tribune

…….

ST. PAUL, Minn. — The political fight is only getting fiercer over whether it’s financially wise or “woke” folly to consider a company’s impact on climate change, workers’ rights and other issues when making investments.

Republicans from North Dakota to Texas are ramping up their criticism of “ESG investing,” a fast-growing movement that says it can pay dividends to consider environmental, social and corporate-governance issues when deciding where to invest pension and other public funds. At the same time, Democrats in traditionally blue states like Minnesota are considering whether to make ESG principles an even bigger part of their investment strategies.

In ESG, the E component standing for “environment” often gets the most attention because of the debate over whether to invest in fossil-fuel companies . In the wide-ranging social, or S, bucket, investors look at how companies treat their workforces, thinking a happier group with less turnover can be more productive. For the G, or governance aspect, investors make sure companies’ boards keep executives accountable and pay CEOs in a way that incentivizes the best performance for all stakeholders.

The ESG industry has scorekeepers that give ratings on how well companies do on such environmental, social and governance issues. Poor scores can steer investors away from companies or governments seen as bigger risks, but that could also in turn make it more expensive for them to borrow money and hurt them financially.

Florida has become one of the hottest battlegrounds for ESG. Gov. Ron DeSantis in August prohibited state fund managers from using ESG considerations as they decide how to invest state pension plan money. And even as his state cleans up from the environmental destruction caused by Hurricane Ian, DeSantis plans to ask the Florida Legislature in 2023 to go even further by prohibiting “discriminatory practices by large financial institutions based on ESG social credit score metrics.”

Pension funds are often caught in the middle of the battles. Questions are flowing into the Florida Education Association from teachers about what DeSantis’ moves will mean for their retirements.

“I usually tell them it’s still unclear what this exactly means,” said Andrew Spar, president of the union, which represents 150,000 teachers and educators across the state. Much is still to be determined, including exactly which funds the pension investments will steer toward.

In contrast, the Minnesota State Board of Investment is considering a proposal to adopt a goal of making its $130 billion in pension and other funds carbon-neutral. The board already uses shareholder votes to advance climate issues. It seeks out climate-friendly investment opportunities and eschews investments in thermal coal. While the new proposal goes farther, …….

Source: https://news.google.com/__i/rss/rd/articles/CBMiY2h0dHBzOi8vd3d3LnN0YXJ0cmlidW5lLmNvbS9wb2xpdGljYWwtc3BhdC1vdmVyLWNsaW1hdGUtcmlza3MtaW4taW52ZXN0bWVudHMtZ2V0cy1ob3R0ZXIvNjAwMjIwOTMxL9IBAA?oc=5

Leave a Reply

Your email address will not be published.