Resolution to discourage Louisiana pension system from ESG investments stalls

(The Center Square) — A resolution to discourage the state’s retirement systems from considering environmental, social, and governance policies in investments stalled in a Senate committee Tuesday.

The Senate Judiciary A Committee on Tuesday deadlocked 3-3 to involuntarily defer House Concurrent Resolution 110, sponsored by Rep. Blake Miguez, R-New Iberia, which aimed "to urge and request state and statewide retirement system board of trustees to uphold their fiduciary duty when making financial decisions and to not allow environmental, social, and governance policies to influence their investment decisions."

The motion to defer came from Sen. Jay Luneau, D-Alexandria, who questioned how the recommendation would impact carbon capture projects in the state. Because it was a tie vote, the resolution remained in committee for now. HCR 110 cleared the House with a vote of 88-6 last week.

"The intent is to keep the retirement systems operating like they were before," Miguez told the committee. "It says the return on investment is the primary factor" but does not rule out climate focused investments.

"I think it does just the opposite of what you think it does," Luneau said.

HCR 110 contends fiduciaries fail to meet their obligation to beneficiaries when they take action or consider factors that promote social, political, or ideological interests, such as reducing greenhouse gas emissions, promoting civil rights laws, or divestments based on politics.

The legislation follows an investigation launched last month by Attorney General Jeff Landry, a Republican candidate for governor, into an investor led coalition that’s pushing corporations to reduce carbon emissions known as Climate Action 100+.

Republicans have pushed back on ESG policies they describe as "woke capitalism" over concerns they advance a liberal agenda over maximizing investment returns. Proponents of ESG policies contend they incorporate moral values and risks from climate change into investment strategy.

Climate Action 100+ involves 700 investment companies worldwide and more than $68 trillion in assets. Landry announced in April he’s looking into the initiative, and in particular participation by Franklin Templeton and the California public employee pension system known as CalPERS, both of which are on the organization’s steering committee that monitors progress toward ESG goals.

"ESG investing puts politics over people and raises significant concerns that companies guided by these green-energy fantasies may be engaging in unfair and deceptive practices that harm Louisiana consumers," Landry said at the time. "Franklin Templeton is deeply embedded in Climate Action 100+; and we are troubled that, by focusing on the radical ESG agenda, it may be violating its fiduciary duties to shareholders in our state."

The AG investigation came after Louisiana Treasurer John Schroder’s decision in October to pull $794 million of state money from BlackRock Inc. funds over the asset manager’s focus on ESG investing.

Schroder wrote in a letter to BlackRock CEO Larry Fink that the ESG policies promoted by the firm conflict with Louisiana’s economic interests and values.

"Your blatantly anti-fossil fuel policies would destroy Louisiana’s economy," Schroder wrote.