During the 2023 legislative session, surprising and unusual bills were introduced in Missouri’s statehouse. A bunch of them — 13 to be exact — were funneled into HB 863, a piece that would have added expense and cumbersome-ness to folks in the investment community. If it had passed, investors that combined their desire for environmental, social and corporate governance along with their desire for money would have been required to register their interests with the state. This desire — sometimes summed up as “doing well by doing good” — is often used by conscientious investors that want to get their money out of companies that make guns, tobacco products, fossil fuels and the like.
Lawmakers in your state may have introduced legislation similar to this. And, in your state, it may have passed. According to Reuters, 14 states passed similar laws. Florida, Texas, North Dakota and so forth. In Missouri, HB 863 was rejected, much to the relief of non-profits like Sierra Club and for-profits like the banks and stockbroker firms. Then, Missouri’s secretary of state Jay Ashcroft went around lawmakers and signed a rule that requires broker-dealers to register investors going for “social or other nonfinancial objectives.”
As one of my investing friends said, “this is pretty crazy (even for the ‘Show Me’ State).” Another chimed in, “sad to see MO turn a redder shade of pale.” One friend pointed out that this could discourage companies like Google, which seeks carbon neutrality, from being associated with our state.
Missouri’s “ESG form” states, in part, “Examples may include investments in companies that promote environmental stewardship, consumer protection, human rights, and racial and gender diversity. Other types of socially responsible investing strategies may avoid investing in businesses perceived to have negative social effects such as alcohol, tobacco, gambling, weapons, or fossil fuel production.” Phillip Arnzen, head of governmental affairs for the Missouri Chamber of Commerce, told media that “This rule, it’s so vague that you could look at it and almost every single transaction, you could say, theoretically, you’re going to need this consent form,” he said.
This language is obviously aimed at outing the “woke” community. We hope that every church, college and non-profit that owns investments, have signed this form. Zuck and Musk, if they’re not too busy training for their cage match in the Roman Coliseum (Google it), should be appalled.
If nothing else is accomplished by Ashcroft’s efforts, the new rule brings attention to the amazing success in the Socially Responsible Investing (SRI) and Environmental, Social and Governance (ESG) communities. The Forum for Sustainable and Responsible Investment (US SIF) issued a report last December that claims sustainable investing has reached $8.4 trillion in assets.
According to US SIF, the movement started at zero in 1995. In fact, the movement is much older, reaching back to the 1960s when divestment was a strategy to end apartheid in South Africa.
The way SRI/ESG works is this: When an investor signs up with a socially responsible broker, they fill out some kind of wish list, claiming, for example, “I don’t want to invest in fossil fuels” or “I do want to invest in solar.” While many companies are diversified and pursuing many avenues, investor and broker work through a list to find investments that more or less fits their aims. There are even strategy firms that rate companies in terms of SRI and/or ESG goals. Many mutual funds have declared themselves in alignment with these goals, making it easy for retirement accounts to move into the sector. US SIF publishes results of investments with these funds and it shows gains at or above gains from non-curated funds.
According to US SIF, investors are most concerned with climate and carbon emissions. Thus, investors are dropping fossil fuel investments. And, indeed, fossil fuel companies themselves are trying to diversify into areas like solar and wind. Pursuing carbon neutrality and seeking out sustainability and organic materials in terms of corporate inputs are also on the SRI/ESG radar, which echoes the interests of a population that can no longer ignore climate change.
Tobacco and military/weapons are the next category after fossil fuels on the “no” list. Besides their social costs, these are holdings that could lose value due to lawsuits from the public. On the “yes” list is workplace fairness, which takes in ethnic and sex discrimination. In fact “corporate governance” has emerged as a top concern in shareholder resolutions, which are one way that shareholders can communicate with their companies’ Boards of Directors.
Reactions to this new requirement have been pretty much like, “How is this watchdogging part of anybody’s business?” The attention has moved one group to ask their retirement account managers to make SRI funds available for their own accounts.
Similar bills were introduced last year in 36 states. A ridiculous waste of time? A new doorway into oligarchy? You be the judge.
Margot Ford McMillen farms near Fulton, Mo., and co-hosts “Farm and Fiddle” on sustainable ag issues on KOPN 89.5 FM in Columbia, Mo. Her latest book is “The Golden Lane: How Missouri Women Gained the Vote and Changed History.” Email: margotmcmillen@gmail.com.
From The Progressive Populist, September 15, 2023
Blog | Current Issue | Back Issues | Essays | Links
About the Progressive Populist | How to Subscribe | How to Contact Us