Watchdog accuses state pension funds of violating anti-ESG laws in voting shares.

Conservative states are fighting to keep state funds out of the Environmental, Social, and Corporate Governance (ESG) movement. However, they are finding that fund managers are not always following their lead. Despite recent laws in states like Florida and Ohio banning the use of municipal dollars for political causes, fund managers are continuing to vote the shares owned by state pensions to support the climate agenda, racial equity, and abortion rights. This is according to an investigation of voting records by the American Accountability Foundation (AAF).

“I don’t like this term, but you essentially have a deep state within these pension programs that is not listening to elected leadership,” AAF President Tom Jones told The Epoch Times.

Under the slogan of “where ESG goes to die,” Florida has been one of the most aggressive states working to remove politics from state investments. In August 2022, Florida Gov. Ron DeSantis passed a resolution that investment decisions regarding state funds “must be based only on pecuniary factors, [which] do not include the consideration of the furtherance of social, political, or ideological interests.” On May 2, 2023, DeSantis signed into law a bill that barred state officials from using public money to promote ESG goals.

State Fund Managers Vote Against Conservative Guidance

Despite this, Florida’s State Board of Administration (SBA), which manages the state’s pensions, voted for a resolution at Boeing on April 18, requiring race and gender equity audits. The SBA voted for climate activism resolutions at Berkshire Hathaway on May 6 and at UPS on May 4. In Ohio, the Ohio Public Employees Retirement System (OPERS) voted for a resolution at AT&T to block the company from donating to pro-life lawmakers, voted for a resolution at Home Depot against donating to police foundations, voted for racial equity audits at Disney and Home Depot, and voted for a “net zero emissions audit” at ExxonMobil.

“What we’ve seen is that the left has very significantly captured the leadership space in the financial sector,” Jones said. But as conservatives begin to follow the same path, the number of shareholder proposals against ESG initiatives has increased fourfold, from fewer than 20 in 2020 to 74 this year.

ESG Shareholder Proposals Escalate

A March 2023 Wall Street Journal report stated that the number of shareholder proposals related to ESG has increased from about 600 in the 2020 spring annual meeting season to 682 so far this year. Shareholders are recently learning the cost of companies pursuing political agendas. This includes sharp declines in stock prices of companies like Target and Anheuser-Busch.

Florida Takes Steps Against ESG Movement

Florida has also taken other steps against the ESG movement, such as barring banks from imposing personal social credit scores on their customers. Jimmy Patronis, the state’s chief financial officer, stated that Florida was “fighting back against ESG and social credit scoring … Floridians deserve a banking system that works for them and not some corporate activists.”

“To participate in banking with state or local governments, financial institutions will have to sign an attestation that they will not discriminate against individuals or businesses on the basis of ESG standards,” Florida Deputy Chief Financial Officer Frank Collins told The Epoch Times.

Despite the efforts of conservative states, fund managers are continuing to vote shares according to their own personal beliefs. It remains to be seen whether these states will be successful in keeping ESG out of state funds.