While Congress debates, Utah moves ahead with new laws against ESG codes

While Congress continues to debate the validity of Environmental, Social and Government investment standards, the recently concluded general session of the Utah Legislature has already turned thumps down on such "woke capitalism." (Image courtesy of Facebook).

SALT LAKE CITY – While much attention is being focused on recent legislation regulating social media companies in Utah, the state’s stand against ESG codes has the potential to have much greater impact.

In their recently concluded legislative session, Utah lawmakers jumped on so-called Environmental, Social and Governance codes with both feet, churning out series of new laws combating what they regard as the problematic influence of ESG codes.

“ESG is an investment framework used by some organizations where factors such as corporate climate policies or workforce diversity are considered when investing in an organization,” according to Sen. Chris Wilson (R-Dist. 2).

Under that “woke capitalism” framework, ESG principles say that investor managers should base their decisions on other factors – including a company’s environmental impact and its workforce diversity – rather than simply focusing on its profitability.

“When investments are made based on ESG considerations rather than capitalizing on a return on investment,” Wilson added, “the investments have lower performance.”

In Washington, meanwhile, President Joe Biden vetoed a bipartisan resolution condemning the use of ESG codes by federal fiduciary agents making loan decisions.

That veto, defending liberal ideology, was the first of Biden’s presidency.

Under the Department of Labor policy called the “Prudence and Loyalty” rule, the Biden administration would allow federal retirement account fiduciaries to consider climate change and other environmental, social and governance factors in the process of selecting investments with federal pension funds.

That ruling was opposed by Gov. Spencer Cox of Utah, Gov. Ron DeSantis of Florida and 17 other state governors.

In a mid-March letter to Biden, those state chief executives labeled ESG codes as a threat to the national economy, individual economic freedom and the American Dream.

By putting federal retirement investment decisions in the hands of the “woke mob,” they argued, federal bureaucrats were seeking to bypass voters and inject politics into what should be purely financial matters.

That concern was shared by Republicans in Congress – and even some Democrats – who saw the Labor Department rule as an attempt to bypass Congress to target the oil and gas industries.

Those Democrats included Sen. Joe Manchin (D-WV), Sen. Jon Tester (D-MT) and Rep. Jarred Golden (D-ME) who joined Republicans in crafting the resolution that Biden ultimately vetoed.

Here in Utah, Sen. Chris Wilson (R-Dist. 2) praised his fellow lawmakers for having the foresight to pass several pieces of legislation in the past general session session that will protect Utahns’ investments from being made based on subjective standards like ESG.

Those new laws include Senate Bills 96 (Fiduciary Duty Modifications) and 97 (Public Contract Requirements); House Bills 281 (Social Credit Score Amendments) and 449 (Financial Services Requirements); and Senate Concurrent Resolution 9 (Concurrent Resolution Opposing Efforts to Weaken the Economy or Restrict Energy Supply).

In his legislative wrap-up to constituents, Wilson discussed those proposals at some length.

S.B. 96, he wrote, outlines what considerations an investment manager can and cannot take into account when making an investment with state retirement funds.

S.B. 97 forbids a public entity from entering into a contract with any company that engages in economic boycotts based on ESG standards.

H.B. 281 prohibits a government entity from giving preferential treatment to individuals based on their ESG standing.

H.B. 449 requires Utah companies to disclose if they use subjective standards. If so, they must receive permission to use those standards from customers and investors.

Finally, S.C.R 9 mandates that state investments must be free of ESG factors and calls on Utah’s state auditor, state treasurer and attorney general to enforce that prohibition.

All of those anti-ESG proposals were signed into law by Cox in the past month.

Free News Delivery by Email

Would you like to have the day's news stories delivered right to your inbox every evening? Enter your email below to start!

Leave a Reply

Your email address will not be published. Required fields are marked *

For security, use of Google's reCAPTCHA service is required which is subject to the Google Privacy Policy and Terms of Use.

I agree to these terms.

This site uses Akismet to reduce spam. Learn how your comment data is processed.