ESG Funds Under Attack: Why Republicans Are Targeting Socially Responsible Investing

AMY GOODMAN: On Thursday, the head of a leading shareholder advocate nonprofit testified before the House Judiciary Committee’s legal counsel after his group was subpoenaed as part of a House probe into whether socially responsible investing and shareholder advocacy violates federal antitrust laws. Andrew Behar, the CEO of As You Sow, says his group is being investigated by the House Judiciary Committee for alleged antitrust activity as part of an orchestrated Republican crackdown on socially responsible investing.

Republicans currently have introduced 145 bills in 27 states making it illegal to work with banks and asset managers that use environmental, social and governance, or ESG, policies in their investment practices. So far, 18 states have adopted these laws, leading to financial losses at state pension funds and forcing state treasurers to pay premiums on interest for state bonds. The crusade against socially responsible investing is backed by the right-wing judicial activist and Federalist Society co-chair Leonard Leo.

Well, for more, we go to Washington, D.C., where we’re joined by Andrew Behar.

I assume you’re tired after hours of testifying yesterday. Andrew, can you start off by just explaining what are ESG funds? We don’t have much time. And explain what is happening in Congress right now and around the country.

ANDREW BEHAR: Sure. So, ESG stands for environmental, social and governance. It’s a framework for assessing risk. Basically, every successful business person, every successful investor assesses and addresses risk. Any company that, for instance, is making cotton shirts needs to assess climate risk in their supply chain, because we’re having droughts in Texas. There’s no cotton. We’re having floods in Pakistan. No cotton. They’re addressing social risks — how do you attract and retain the best and the brightest — and governance risks.

So, basically, what they’re saying in these state laws are not allowing the states to work with any asset managers or any banks that, for instance, believe climate change is real, have a climate transition plan. And so, what it’s done so far is lead to their pension funds underperforming, which is impacting the ability to retire for firefighters, teachers, policemen across these states. It’s also, according to the Texas State Chamber of Commerce, which includes Exxon and Chevron — they just put out a report saying that the Texas bill cost the state $600 million and lost them 3,000 jobs. So, these anti-ESG, this crusade, is really anti-business, anti-freedom, whereas, basically, just basic good business says you want to assess and address risk. And that’s what they’re trying to suppress.

AMY GOODMAN: What would have happened if you didn’t testify? You were subpoenaed?

ANDREW BEHAR: Yeah, I had to testify. I got a subpoena. I would have been, I guess — I don’t know. I’d sort of been, you know, put in jail or something. But, no, here’s the thing. I voluntarily — they asked — the way it worked is, they filed this antitrust action against As You Sow last August, and they asked us for a lot of documents. And since we’re a nonprofit, we didn’t quite understand, because antitrust has to do with setting pricing, and we don’t have a price or a product. So we asked them for some clarification, and they sent us a subpoena saying, “We need all your documents.” And so we sent them 12,000 pages of documents. They said, “Not enough.” So we had our president, chief counsel testify in January. They said, “Not enough.” I said I would testify. They set the March 28th date. And then, within a week of that, they threatened us with contempt of Congress. I still voluntarily was coming in, and then they sent a subpoena last week. So, they’re just — I don’t know.

AMY GOODMAN: And so, talk about this momentum that the chair of the committee, Jim Jordan, how hard at the federal level and the states are pushing. Particularly talk about the attempt to protect the fossil fuel industry from the accelerating divestment and green investment movements, the kind of progress you’ve made over the years, and now how it’s being turned back.

ANDREW BEHAR: So, just understand this anti- — the letter that we got also went to 13 other groups for antitrust. And those include the largest pension fund in the country, CalPERS, BlackRock, State Street, Vanguard, ISS, the largest proxy voting company in the world, as well as GFANZ, which is 500 of the world’s biggest banks in 45 countries. They’re investigating the entire global economy.

And what they’re saying is, because — they’re saying that shareholders cannot have a conversation, and by asking companies to reduce their carbon emissions, that we are threatening the freedom of all Americans. And that’s a quote from the subpoena. So, they are basically trying to suppress information. I mean, we talk to a lot of companies. As You Sow, again, is a nonprofit. We engage hundreds of companies on these issues. We do a great deal of research. Then we sit down with companies, and we try to help them find ways to reduce material risk for all stakeholders and also to improve their long-term profit maximization, their long-term — just becoming a better company. And we have great, great — working with these companies, we’ve had great success.

And that’s a threat to them, because what they’re trying to do is to basically stop people from looking at the climate risk from the oil companies. And they’re saying, “Don’t look up.” They’re saying, “Put your head in the ground.” And what we’re saying is, “We need the freedom to invest.” Like, they’re trying to suppress our freedom to be able to make logical, good business choices. And in doing so, at the state level, their harming their own citizens. They’re just — just this anti-ESG is just anti-business. It’s leading to loss, you know —

AMY GOODMAN: Well, talk about Leonard Leo’s role in this, the co-chair of the Federalist Society, the founder. And talk about the trillions of dollars that could go to climate action, unless it’s banned by this.

ANDREW BEHAR: So, Leonard Leo, he’s the, you know, co-chair of the Federalist Society. Those are the folks, all of the right-wing judges, particularly the Supreme Court, but across the whole landscape. He was given $1.6 billion in mid-2022 to lead this crusade. It’s a very orchestrated campaign.

They have put out a lot of communications just tainting the acronym ESG, saying that it somehow, you know, is a bad thing to do, even though in a recent survey by IBM, 5,000 C-suite executives in 22 countries, across 22 industries, 79% of them said that they use sustainability and ESG in order to maximize their profits. This is the market. The market has spoken. A hundred and eighty-one companies in the Business Roundtable signed an agreement for stakeholder capitalism. That means that you take care of your employees, you take care of your customers, the communities where you operate and your supply chains. And that leads to greater competitive strength and profits for your shareholders. That was in 2019. We’re now —

AMY GOODMAN: We have 15 seconds.

ANDREW BEHAR: — in the implementation phase. So, the bottom line is, the pro-ESG is all about profit maximization, about long-term sustainable growth. And the anti-ESG, they’re really just — they’re losing money, and it’s anti-business, anti-freedom and, frankly, anti-capitalist.

AMY GOODMAN: Andrew Behar is the CEO of As You Sow, a nonprofit promoting environmental and social corporate responsibility through shareholder advocacy. His group is being investigated by the House Judiciary Committee, along with a number of others, for alleged antitrust activity.

That does it for our show. A happy pre-birthday to Mike Burke. I’m Amy Goodman, for another edition of Democracy Now!