MEMO: House Ways and Means Hearing on Responsible Investing

To: Interested Parties

From: Climate Power

Date: November 7, 2023

Re: House Ways and Means Hearing on Responsible Investing

Despite clear public opposition to congressional attacks on responsible investing, the House Ways and Means Committee is holding a hearing on Tuesday entitled Hearing on Ensuring that “Woke” Doesn’t Leave Americans Broke: Protecting Seniors and Savers from ESG Activism. 

Not only are these attacks wildly unpopular, they are also costly. Policies to block responsible investing initiatives hurt the economy, could cause public pensions to lose billions, and result in local communities losing money.

POLLING SHOWS ANTI-ESG INITIATIVES ARE VERY UNPOPULAR

A 2023 Global Strategy Group poll found that attacks on ESG are unpopular and Americans support responsible investing: 

• Americans – including Republicans – don’t want Congress investigating ESG. Only 8% of Americans and 7% of Republicans think investigating how companies spend money on ESG issues should be a priority for Congress.
• Those who support the anti-ESG agenda are a small and extreme minority. Only 15% of Americans disapprove of companies that speak out on social and political issues. Those voters identify as “very conservative.”
• The majority of Americans support responsible investing.  72% of Americans think it’s important for companies to take action on ESG issues.

A Morning Consult poll shows that a majority of voters don’t want lawmakers to punish companies for speaking out on social and political issues. 

• According to a January 2023 Morning Consult poll, voters largely don’t want Congress to punish companies for speaking out on certain social and political issues, The survey found that a majority of voters wouldn’t want lawmakers to punish companies for speaking out against discrimination, openly supporting abortion rights or withholding campaign donations from Republicans who voted against certifying the 2020 election results.

ATTACKS ON RESPONSIBLE INVESTING HURT THE ECONOMY

Republican Attacks On Responsible Investing Will Result In A Loss Of Billions Of Dollars In Returns For Public Pensions: 

• The Kansas State Division of the Budget projected reduced returns of $3.6 billion over 10 years for the Kansas Public Retirement System if anti-ESG investment restrictions were adopted. 
• The Arkansas Public Employees Retirement System estimated that they could lose $30 million to $40 million a year due to an anti-ESG bill that would require the state treasurer and public entities to divest assets from certain institutions that use ESG-related metrics. The Arkansas Teacher Retirement System estimated that the system could lose an additional $7 million or more a  year as a result of the legislation. 
• The Indiana Public Retirement System (INPRS) found that anti-ESG legislation “could result in reduced aggregated investment returns for defined benefit and defined contribution funds managed by INPRS by $6.7 billion over the next 10 years. Such a decrease would reduce the estimated annual return on investment for defined benefit pensions managed by INPRS from 6.25% to 5.05%.”
• According to the Chief Investment Officer, the Oklahoma Public Employees Retirement System could face $9.7 million in taxes, fees and commission costs if it is forced to divest from BlackRock, Wells Fargo, JP Morgan Chase, State Street Corp, and Bank of America because of anti-ESG legislation. 

Republican Attacks On Responsible Investing Are Costing Their States And Cities Billions Of Dollars 

• An analysis by the University of Pennsylvania Wharton School and the Federal Reserve Bank of Chicago found that Texas municipalities will be paying $300 million to $500 million in additional interest because of the state’s anti-ESG law – and that’s just on the $31.8 billion borrowed in the first eight months after the law went into effect.  
• A Bloomberg analysis found that since its anti-ESG laws went into effect, “Texas, with its perfect AAA credit rating, is paying 19 basis points more in yield (the equivalent of $1.9 million on every $1 billion of bonds sold) than AA rated California on routine borrowings.”
• An analysis by the economics consulting firm ESI for the Sunrise Project found that taxpayers in six states — Kentucky, Florida, Louisiana, Oklahoma, West Virginia and Missouri — could be on the hook for up to $700 million in excess interest payments if restrictions on sustainable investing are implemented.