North Carolina is pushing back on ESG investing

Would you be willing to risk your pension to further someone else’s political agenda?

Probably not.

But under environmental, social, and governance (ESG) investing criteria, that’s what happens.

It’s exactly as the name suggests: ESG invests funds into companies that promote green technology, diversity and inclusion, gender ideology, and other far-Left, divisive goals. At best, it’s biased. At worst, it’s violating pensioners’ rights and denying critical capital in hopes of stomping out the fossil fuel industry, which remains vital for our country’s future.

Politics aside, it’s also not a smart way to build your investment portfolio. ESG funds are consistently lagging in the S&P 500—after all, they are selected for politics, not their financial performance. 

North Carolina is pushing back

When North Carolina’s public workers save for retirement, they should have peace of mind knowing that those put in charge of investing on their behalf are choosing the best return on investment—not the most radical.

To help give North Carolinians that peace of mind, leaders in Raleigh are taking action.

Last year, State Treasurer Dale Folwell wrote a letter to BlackRock CEO Larry Fink calling on him to resign or be removed from the asset management firm over his aggressive support for ESG. BlackRock is the world’s largest asset manager, overseeing roughly $9.5 trillion, including $14 billion in investments from the North Carolina Retirement System. Treasurer Folwell writes:

“Unfortunately, Mr. Fink’s political agenda has gotten in the way of his same fiduciary duty. A focus on ESG is not a focus on returns, and potentially could force us to violate our own fiduciary duty of loyalty. Ultimately, Mr. Fink’s continued ideological pressure could result in using ESG scores against states and local governments, lowering their credit ratings and thus driving up their cost of borrowing at taxpayers’ expense. This not only concerns me as the state treasurer and ‘keeper of the public purse,’ but as Chair of the N.C. State Banking Commission and the Local Government Commission.”

In the General Assembly, Senators David Craven, Warren Daniel, and Brad Overcash and Reps. Jason Saine, Destin Hall, Celeste Cairns, and Neal Jackson are leading on several bills that prohibit the prioritization of ESG criteria in public pensions and require that state employees’ investments be made on their potential for a high return.

North Carolina is in good company

Other states, including several of North Carolina’s neighbors, have taken important steps to protect their citizens—and those citizens’ pensions—from politically motivated investing.

In 2022, Missouri State Treasurer Scott Fitzpatrick announced a complete withdrawal of Missouri State Employees’ Retirement System (MOSERS) funds—half a billion dollars—from any investments managed by BlackRock due to its political agenda. This followed a MOSERS meeting in which the Board of Trustees required BlackRock to abstain from voting proxies due to concerns over ESG. When BlackRock refused to abstain from voting, the MOSERS Board voted to remove assets from BlackRock-managed funds.

This month, Florida Governor Ron DeSantis signed into law legislation that prohibits financial institutions from discriminating against customers for their religious, political, or social beliefs—like owning a firearm, securing the border, or increasing America’s energy independence. It also eliminates ESG from being considered by state and local governments when issuing bonds and making investment decisions, prioritizing return on investment over politics.

In Oklahoma Governor Kevin Stitt’s first State of the State Address, he called out ESG as an “attack on affordable domestic energy delivered by our oil and gas industry.” State Treasurer Todd Russ sent a letter to top financial institutions like BlackRock, Vanguard, JP Morgan, and others, demanding details of whether they are specifically boycotting energy companies. And legislators introduced legislation to prevent companies that actively engaged in economic boycotts from entering state contracts, to protect retired Oklahomans from politically motivated investing, and to allow Oklahoma to take back the power of its proxy votes on corporate boards.

Lastly, South Carolina: State Treasurer Curtis Loftis announced that the state would divest all $200 million in BlackRock holdings, on account of the firm’s far-Left, anti-fossil-fuel stance. In the state House, legislation is being considered that requires that any proxy shareholder votes in state investments are made only on pecuniary factors, or factors that have a material effect on risk or return on investment; and requires all investments in the state retirement system to be made according to factors that have a material impact on risk or return.