Glenn Hegar stands firm on state divesting from companies boycotting oil and gas industry
By BETHANY BLANKLEY
THE CENTER SQUARE CONTRIBUTOR
(The Center Square) – The U.S. Department of Labor is finalizing a rule allowing companies to prioritize ESG policies when choosing retirement plans. It’s the last phase of a nearly two-year effort to reverse a Trump-era rule banning the practice.
The department said it was implementing the rule to “remove barriers to plan fiduciaries’ ability to consider climate change and other environmental, social and governance factors when they select investments and exercise shareholder rights.”
Both the chief financial heads of Texas and Florida, and Gov. Ron DeSantis, have taken action against ESG, an environmental, social, governance social credit score system, from being implemented in their states.
After hearing of the DOL’s latest announcement, Texas Comptroller Glenn Hegar said President Joe Biden was “using unelected bureaucrats … to push his radical ESG agenda, undermine the Texas economy and jeopardize our national security and energy independence.
“Even as free market forces begin to erode the ESG fairy tale and expose the intellectual dishonesty and utter lack of transparency in this investment scam, President Biden is using the DOL rulemaking process to double down on policies that put his social agenda above the retirement needs of hard-working Americans.”
The rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” follows an executive order President Biden issued last May. His order directed the federal government to implement policies “to help safeguard the financial security of America’s families, businesses and workers from climate-related financial risk that may threaten the life savings and pensions of U.S. workers and families.”
The rule change “will bolster the resilience of workers’ retirement savings and pensions by removing the artificial impediments – and chilling effect on environmental, social and governance investments – caused by the prior administration’s rules,” Acting Assistant Secretary for the Employee Benefits Security Administration Ali Khawar said in a statement. “A principal idea underlying the proposal is that climate change and other ESG factors can be financially material and when they are, considering them will inevitably lead to better long-term risk-adjusted returns, protecting the retirement savings of America’s workers.”
Tuesday’s notice follows a March 2021 and October 2021 announcement and includes comments received from the public. Once published in the Federal Register, it becomes effective in 60 days.
Mr. Hegar also took issue with the announcement’s timing. He said, “Perhaps hoping no one would notice, two days before Thanksgiving, President Biden’s DOL finalized a rule that reversed rules set by the Trump administration that ensured retirement fund managers lived up to their fiduciary duties by selecting investments based solely on ‘pecuniary factors.’ That meant fund managers placed profits and returns ahead of social agendas and prioritized ensuring participants had the resources needed to support themselves during retirement.”
But once the rule goes into effect, he said, “Fund managers will be free to consider climate change and other ESG factors rather than aiming to deliver the highest possible returns for American retirees. These retirees will see their hard-earned dollars diminish as ESG funds fail to deliver promised returns while simultaneously charging higher fees, even as the value of their remaining dollars purchase less due to inflation.”
Worse still, he adds, “As Biden’s inflation exacerbates food insecurity, threatens our economy and saps the longevity of retirement accounts – while the global energy crisis rages on and our fellow Americans struggle to heat their homes – the president and his out-of-touch Washington bureaucrats remain committed to the same ‘green-new-deal’ agenda that prioritizes ESG fantasies over the needs of hard-working Americans.”
In August, Mr. Hegar directed state agencies to divest from companies that were prioritizing ESG, and particularly boycotting oil and natural gas companies, as part of their portfolio. The list includes 350 individual investment funds and 10 financial companies, including, Blackrock, Inc., BNP Paribas SA, Credit Suisse Group AG, Danske Bank A/S, Jupiter Fund Management PLC, Nordea Bank ABP, Schroders PLC, Svenska Handelsbanken AB, Swedbank AB, and UBS Group AG.
Not long after, Gov. Greg Abbott told The Center Square during a meeting with energy leaders at the Port of Houston that Hegar’s directive was working. He said some of the companies on Texas’ list were making an effort to get off of it.
The DOL’s ESG directive comes after President Biden has threatened to tax the oil and natural gas industry for not producing enough petroleum or for making too much of a profit when it does. He’s also blamed the industry for rising gas prices, while it’s maintained that rising costs are a direct result of the president’s energy policies.
Despite numerous challenges, Texas continues to lead the U.S. in oil and natural gas production and job growth. And Texas “continues to provide unmatched support for the state economy and our nation’s energy security,” TIPRO president Ed Longanecker argues, adding that “state and federal policies should reflect the need for reliable energy and growing global demand for oil and natural gas.”
Oil & Gas Workers Association Board Member Richard Welch told The Center Square, “The DOL shifting priorities to the globalists’ fantasy of ESG that’s killing the oil and natural gas industry around the world during one of the worst petroleum shortages in history, is borderline criminal.”
The DOL, like the EPA, he says, “is being weaponized against our most valuable asset, oil. We cannot continue on this destructive path and expect stability and security.
“The Texas oil and natural gas industry – and its workers – have pulled more than their weight to alleviate the crisis caused by ESG policies, the ‘green new deal’ rhetoric and the failed Paris Climate Agreement.
“Pushing investment into an unproven and unpredictable market is gambling with hardworking Americans’ future and livelihoods. The Biden Administration is diligently trying to destroy the very foundation of our daily lives for a failed ‘green energy’ policy that isn’t even possible without petroleum.”