Oklahoma State Treasurer Voices Concerns Over Proposed ESG Legislation
Oklahoma State Treasurer Todd Russ is raising alarms about a proposed bill, Senate Bill 714, that he believes could expand the influence of environmental, social, and governance (ESG) factors in the state’s financial dealings. The bill seeks to amend the Energy Discrimination Elimination Act of 2022, a law designed to prevent state funds from being used to support institutions that are perceived as hostile to the oil and gas industry.
The central point of contention lies in the proposed transfer of enforcement authority from the Treasurer’s office to the Attorney General’s office. Currently, the State Treasurer maintains a list of financial institutions that are deemed to be "discriminating" against the oil and gas sector, thereby disqualifying them from conducting business with the state government. Russ fears that Senate Bill 714 could weaken the criteria for inclusion on this list and potentially hinder the state’s ability to enforce the law effectively.
"The bill actually removes the treasurer from oversight of the investment behaviors of big financial institutions and proposes to put it under the attorney generals office," Russ told Fox News Digital. "So, I mean, that alone raises a lot of questions. As a constitutional officer in the state treasurer in Oklahoma, why would you want someone that doesnt have the constitutional commitment and obligation to oversee the financial investments and affairs of the state to be under the treasury and move it to a different constitutional office?"
Russ argues that the Treasurer’s office is uniquely positioned to oversee the state’s financial investments and ensure that they are not influenced by external political agendas. He views ESG as a "social agenda" that has been interwoven into investment decisions, potentially compromising financial performance and profits.
"Over the years, those subject matters have become very politicized. I mean, its not a financial issue. Its a social agenda that theyve woven into the investments," Russ said of ESG. "The state of Oklahomas not trying to get on the other side of that behavior. Were trying to take a stand to say, ‘Look, stay out of the political arena with my investments. Our investments.’ We are solely concerned about the financial performance and profits of our investment, and we dont want outside people using it for political leverage. So, when it comes to environmental issues, oil and gas is very important to Oklahoma. We dont want them acting against the interests of the oil and gas industry."
The 2022 law itself is already facing legal challenges, adding further uncertainty to its future. The law’s objective is to prevent the state from supporting entities that are seen as detrimental to Oklahoma’s energy sector.
Oklahoma Attorney General Gentner Drummond’s office offered a contrasting perspective, stating that the bill is "only necessary because of the treasurer’s dismal failure to successfully defend the Oklahoma Energy Discrimination Act of 2022. That was the real slap in the face to the oil and gas industry." The Attorney General’s office suggests that the Treasurer’s office has been ineffective in upholding the law’s intent to protect the state’s energy industry.
Republican state Sen. Dave Rader, the bill’s sponsor, has indicated that he intends to introduce amendments to the legislation. These amendments include clarifying the definition of "boycott energy company" to include voting on shareholder proposals that penalize or harm energy companies, adding legislative intent to ensure the bill protects retirement systems, eliminating the word "predominantly" from the definition of "ordinary business purpose" to prevent pro-ESG actions, and removing the inclusion of transaction costs when determining a loss, which could potentially delay divestment indefinitely.
Rader’s proposed amendments reflect a desire to strengthen the law’s ability to prevent ESG considerations from influencing investment decisions. However, these amendments have not yet been formally incorporated into the legislation, according to the Oklahoma State Legislature’s website.
The legislation faces a critical deadline, requiring a vote in the full Senate by March 27 before it can potentially move to the state House of Representatives.
The debate over Senate Bill 714 highlights the growing tension surrounding ESG investing, particularly in states with strong ties to the energy industry. Proponents of ESG argue that it promotes responsible corporate behavior and can lead to long-term financial benefits. Critics, however, contend that ESG is often used to advance political agendas and can undermine the financial interests of investors.
In Oklahoma, the debate is particularly sensitive due to the state’s reliance on the oil and gas industry. Supporters of the Energy Discrimination Elimination Act argue that it is necessary to protect the state’s economy from what they see as politically motivated attacks on the energy sector. Opponents, on the other hand, argue that the law is overly broad and could stifle investment in the state.
The outcome of the legislative battle over Senate Bill 714 could have significant implications for the future of ESG investing in Oklahoma and other states with similar concerns about the energy industry. It underscores the ongoing debate about the appropriate role of government in regulating investment decisions and the extent to which social and environmental factors should be considered alongside financial performance.
The bill is an attempt to clarify the original bill to close loopholes that allow organizations to continue to work with the state while at the same time acting against the interests of the oil and gas industry in Oklahoma.
