Oklahoma’s Republican lawmakers are pushing back on environmentally conscious investment programs, a political effort they say protects the state’s oil and gas economy while also combating “woke ideology.”
But many of those pro-environmental policies Oklahoma is fighting against are embraced by the same multinational corporations the state is aggressively trying to recruit with millions in tax incentives.
Oklahoma recently lost out to Ontario, Canada, for a new Volkswagen facility to build electric car batteries, despite offering more than $700 million in tax breaks.
Canada’s own tax incentives, proximity to raw materials and access to clean energy were cited by the German automaker as reasons for its site selection.
But Volkswagen also was attracted by Canada’s strong ESG practices, according to a Volkswagen spokesperson.
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ESG, which stands for environmental, social and governance, refers to a business strategy that considers environmental impacts when making investment decisions.
ESG policies have been widely promoted for decades, but have recently become a political target by Republicans who claim it steers investments away from fossil fuel companies.
Investments, including state-managed pension funds, should be solely based on shareholder values, not the “proliferation of woke ideology,” stated a letter signed this month by 19 Republican governors, including Gov. Kevin Stitt. The governors were opposing a U.S. Labor Department rule allowing retirement plans to weigh the long-term impacts of social factors and climate change on investments.
Last year, Oklahoma’s Legislature and governor banned state investment funds from working with companies that utilize ESG policies.
State Treasurer Todd Russ, who took office in January, has issued letters to more than 160 companies giving them an April 1 deadline to confirm they don’t “boycott energy companies.”
“I took office on January 9 and began compiling a list of companies, banks, and other entities that act against Oklahoma’s interests because of their ESG stance,” Russ said in a statement. “It is my responsibility to ensure Oklahomans’ tax dollars will not be used to enrich organizations that act counter to our taxpayers’ interests and our values.”
ESG has recently become a political debate nationwide
More Republican-controlled states have adopted similar laws as anti-ESG rhetoric has become a staple in conservative media.
The Oklahoma Council of Public Affairs, a conservative think tank that publishes articles critical of pro-environment and pro-diversity programs in companies and schools, has written four anti-ESG articles since August.
“Not only do ESG policies penalize energy production to prop up ‘green’ companies, but they also pressure businesses to take stances on non-economic issues such as redefining gender, promoting Critical Race Theory, and abortion tourism,” wrote Jonathan Small, the council’s president.
Last week, President Joe Biden vetoed a bill from the GOP-controlled House that sought to block the Labor Department rule Stitt and other Republican governors had criticized in their letter.
“I just signed this veto because the legislation passed by the Congress would put at risk retirement savings of individuals across the country,” Biden said. “They couldn’t take into consideration investments that would be impacted by climate impacted by overpaying executives.”
ESG policies are pushing investments toward the electric vehicle sector
In addition to Volkswagen, state officials recently pitched Panasonic on building its electric vehicle battery plant in eastern Oklahoma.
Panasonic chose Kansas, but Stitt has consistently called the electric vehicle sector a market Oklahoma needs to tap into.
More:For Stitt, climate change is less threat and more business opportunity
“We started really understanding where the puck was headed. We started understanding where research and development dollars were headed, and they were all headed to electric vehicle manufacturing, EV technology,” Stitt said last year when explaining the state’s push to land EV manufacturers.
However, economic officials point to ESG investments as helping to fuel growth in the electric vehicle market.
The state’s ban on investing with ESG firms did not apply to either the Volkswagen or Panasonic deals, and business officials say there are a myriad reasons why a company would choose another state or country.
Democrats were quick to blame Oklahoma’s conservative “culture war” policies and politicians, including Ryan Walters, the state schools superintendent and Stitt’s secretary of education.
“Reflecting on what went wrong, my hunch is that it is not a winning economic strategy to have a secretary of education who demeans higher education and actively works to dismantle public education,” said Monroe Nichols, D-Tulsa.
But Stitt rejected the idea that Oklahoma’s anti-ESG stance was a reason why large companies are not choosing Oklahoma.
“If you want to invest in an ESG company or an ESG company wants to come to Oklahoma, great, that’s fine,” Stitt said on Friday. “But we are not going to use our pension funds to not invest in what we think is the highest value and highest return for our pensions.
“Oklahoma is a free market, and we are going to allow all companies that want to come.”