The Daily Signal - Your Credit Scores Politicized: State Treasurer Warns of ESG

Episode Date: June 6, 2022

Are your financial investments being weaponized to undermine your political beliefs? Investment firms, banks, and many other companies have embraced environmental, social, and governance, also known as ESG—a politicized rating system that advances the left's agenda. In Utah, Treasurer Marlo Oaks is fighting S&P Global Ratings, which adopted ESG to make decisions about the credit ratings of state and local governments. He's also warning Americans that it'll soon affect them as well—if it hasn't already. "Most Americans don't want to be exposed to politics in the workplace and in our choices as consumers, but that's where we're going," Oaks tells The Daily Signal. "They're using our money against us, to drive a political agenda that most of us don't want." Listen to our interview on "The Daily Signal Podcast" or read a lightly edited transcript at DailySignal.com. Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Monday, June 6th. I'm Doug Blair. And I'm Rob Blewey. On today's show, I talk with Utah treasurer Marlowe Oakes about his efforts to protect his state from the left's environmental, social, and governance agenda. We also read your letter to the editor and share a good news story. Before we get to today's show, we want to tell you about a new addition to the Heritage Foundation podcast network. It's called The Kevin Roberts Show. Dr. Kevin Roberts is the president of the Heritage Foundation, and now you can hear his political analysis.

on the most important issues facing America. Each weekly episode of the Kevin Roberts Show is a rallying cry for lovers of freedom everywhere. The show is packed with analysis on the issues of the day and deep conversations with movers and shakers of American politics and culture. New shows are available every Wednesday, and you can find the Kevin Roberts Show on Apple Podcast, Google Play, or wherever you find your podcasts. We even put the full episode on YouTube. Now stay tuned for today's show coming up next. We are joined on The Daily Signal podcast today by Marlow O. He's the treasurer in the state of Utah.

Marlowe, it's good to have you. Thank you. Good to be here. You are a leader, not only in your state, but nationwide, when it comes to fighting back against ESG, known as environmental, social governance. Before we get into some of the things that you're doing in Utah, just to take a moment to explain for our listeners what ESG is and why they should be concerned about it. Sure, yeah. So ESG stands for environmental, social, and governance.

and it's a rating system that's used by investors mostly to determine if a company typically is complying with particular ESG factors. So, you know, environmental, there's a big push for net zero carbon emissions. And so the environmental factors tend to look at that kind of thing. and then, you know, the social, the social is any number of issues. I think we've seen this year a couple of proposals at companies to pay for abortions, things like that, right? So that might be a social issue. And then governance is typically around executive pay or, you know, things of that nature.

And the reason that it's so problematic is that you have really two significant, layers of subjectivity. Number one is who's deciding what the ESG factors are. And number two, who decides what the correct answer is to those factors, right? And when we're doing a traditional investment analysis of a company, you're looking at very quantitative numbers that, you know, you might look at them a little bit differently and include things in some of the footnotes in an annual report and, you know, but by and large, it's fairly cut and dry, right, what you're working with. ESG is not that way at all. And in fact, some people would say, my friend Vivek Ramoswamy would say that's a feature, not a bug. Right. And so generally, that's that's,

that's kind of what ESG is. And where did this come from? I mean, why are we seeing companies embrace this agenda, what is the motivation for them to decide to go down this path? Well, that is a little bit complicated, but I think there's a lot of virtue signaling today. There's a fear of maybe being viewed negatively if you don't do it, right? So I think there's a number of different reasons why companies offer ESG information. And they're doing it voluntarily today, right? They may believe it and be advocates for this. They may see it as an opportunity to kind of virtue signal in the marketplace

and show their clients and their shareholders that they're good corporate citizens, right, or they may feel like they need to to stay competitive, right? And so those reasons lead to sort of group think, right, in a lot of cases. And what's unfortunate is that in February there were 1,800 lawsuits globally, related to ESG disclosures, three quarters of those were in the United States. And so if we're forcing companies to make these disclosures, that's only, that number is only going to go up, right? And it's a way to go after companies, unfortunately, for any number of reasons, given their own disclosures. It's very unfortunate.

What steps are you taking, are you able to take as Utah's treasurer, and why have you decided to make this a priority? Well, I think the reason that I'm making this a priority is, you know, I've been talking for months in the state of Utah, that we have the highest credit rating in the world, and we do. We've never been rated below the highest credit rating of AAA. And so we're known as a triple AAA rated state because the three major credit rating agencies give us their highest rating. But that may not matter if we have an ESG score. And basically the credit rating determines what, how expensive or inexpensive it is to borrow money in the capital markets, right? And so it's just like a personal credit score, the higher your credit score, the lower you pay on interest for

borrowing money. But if we have a separate ESG score, then investors could look at the state of Utah and say to other investors, well, we really shouldn't give the state of Utah the best rates in the marketplace because of this factor or this factor, this factor, that are really political by nature. And so you suddenly have politicized the capital markets, and you can weaponize them against entities that are not kind of following the line of what ESG advocates. believe you should be doing. So that is very problematic because you are bypassing the democratic process, our legislative process, where we pass laws to essentially go back door and say, okay, you need to have these policies or you're not going to get the best rates in the marketplace, right? And it also undermines free market capitalism because what happens is the investors begin to collude

and point to things that are not related to their finances, to an entity's finances, right, and decide that you shouldn't get the best rights in the marketplace. So I'm just very concerned about the politicization and the weaponization of capital because I believe that this is the greatest threat to our American form of our constitutional republic and free market capitalism in my lifetime. Well, and I think very well you have a good reason to be. One of the things that you've done is led a letter to S&P global ratings with the entire Utah congressional delegations. You've written about this for the Wall Street Journal. We'll provide a link for our listeners who'd like to read more on it. But what was that, what was behind that action? And have

you received a response from S&P to your letter? Yeah. So, really the story behind it is, you know, I'd been talking about our credit rating, talking about the impact of an ESG score, what that would do. And then on March 7th, I received an email from S&P saying we would like, Treasure Oaks, we'd like to talk to you about the ESG indicators that we plan to apply to the state of Utah. And I thought, okay, here we go. And so they didn't ask me for my input. They just said, here's, we want to.

to talk to you about what we're doing. With the traditional credit rating, we pay one of the credit rating agencies to provide that. In this case, they provided it without us paying for it, right? And so it's not something that we requested or wanted. And so that's when I became very concerned, because we view the credit rating of the state of Utah as a key asset of the state. We've always been very conservative in how we manage our finances. And that's why we have the best credit in the world. But this would impact that. And so the constitutional officers of the state of Utah,

five constitutional officers, the governor, lieutenant governor, attorney general, auditor, treasurer, the Speaker of the House, the President of the Senate, and then our two senators, all four congressmen, signed this letter to S&P basically calling out what ESG is, and that's a political writing, and that we do not want this published on the state of Utah, and we believe that it is inappropriate and highly problematic, and that we do not want them published. So we did receive a response back a few weeks ago, and it really didn't

address all the questions that we had, and they kind of stuck to their position, which was unfortunate. And so that's where we're at. Do you find that other states are joining your effort to raise awareness about this? And what work are you doing with other state treasurers to make sure that it's maybe a coalition effort, not just Utah doing this alone? Yeah. So we, Idaho has recently sent a similar letter to S&P. And, you know, West Virginia was very supportive of what we did. They came out a couple days after we submitted our letter. And, you know, I think other states are working on things because, frankly, they see the risk here.

And it's a significant risk. It puts all of us at risk. And it's not, it's really not good for any state or any municipality. Because, you know, the pendulum today is on the left, but it could swing to the right. and suddenly entities might be forced to make pro-life contributions, organizations, whatever it is, I'm just as against that as I am with what ESG is doing because you're politicizing the capital markets. It's just not appropriate.

We need to keep our capital markets and businesses neutral so that we can focus on doing the business of business. And in the case of states, we focus on, the finances of a particular state and whether you're going to get paid back. That's, that's appropriate. And if there is an ESG metric that has a material financial component to it, that should be part of the credit rating, not an ESG score. I've seen a response from your critics to your Wall Street Journal piece who suggest that it's not political. And they say that ESG simply provides more transparency. What do you say to them? Yeah, so transparency is, you know, it's a tricky thing because that

may be the motivation, but whether intended or not, this information can be weaponized. And so we have to be very careful about providing information that really isn't relevant to a credit rating and frankly, you know, we're looking at one cost, right, the cost of carbon emissions or, you know, things of that nature. We're not talking about the cost of what would happen if we dropped traditional energy, traditional fossil fuel. What kind of cost would that create? And I can tell you that would be much more significant and much more negative to

all of us. Cheap, inexpensive, clean energy like what we produce in the United States is the foundation for society. And what's happening today with inflation, with gasoline prices, and trying to cut off capital to the energy companies leading to inflation is hurting the people who can least afford it. It's very, very sad. So our poorest, our poorest. and leased, you know, most disadvantaged communities are really suffering from this. And so it's tragic. And we're not talking about the cost to those people. I think you're right.

And I think that some of that might be intentional. I mean, the president himself has acknowledged that we need to go through this transition. And it seems that he's willing to put Americans through this pain and suffering. Thank you for bringing it down to the individual level. I want to make sure that listeners understand how this could impact them in their daily lives. And I think one of the things that we've heard people like Vivek, Ramoswamy, mentioned you referenced him earlier, is that this could lead to a situation where, I mean, hopefully not, but we end up on a slippery slope like they have in China and there's a social credit system.

So what is it that an individual who might be listening to this interview needs to recognize that, yeah, it's not just the state of Utah, and it's not just corporations. that are struggling with this, but ultimately they could be suffering the consequences as well. Well, yeah. I mean, a lot of people are feeling the politicization of our business community just by what's happening at work, right? And like having to go through DEI training or, you know, CRT training or any number of things. We have an environment, like in our universities as well, where free-s-es-es-examined.

speech is frowned upon that you have to have the kind of the right thinking in order to in order to survive and that's very stressful for for all of us right most americans don't want to be in be exposed to politics in the workplace and in our choices as consumers but that's where we're going and so uh so people can I think one of the keys to remember is that a lot of our investment money that is being used to drive this. So the Black Rocks, the State Streets, the vanguards, they're using our retirement money. So the money that's in your 401K, if it's sitting in one of those fund managers' portfolios, it's being weaponized against you. And so I talk a lot about that, and I know Vivek does as well.

that that's they're using our money against us to drive a political agenda that most of us don't want and so ultimately we're going to have to move that money away from them because that's the power that they are using against us but unfortunately there aren't a lot of choices right now but those are going to down the line and hopefully not too far in the future those choices will be there but there are there are some choices today and it's important that people let their voices be heard at their companies to say, I don't want my retirement money politicized. I expect my retirement money to be managed for a financial return. And people are going to start feeling that if they do use ESG in a retirement fund.

Most don't. But that's something that will impact everyone. And so we all need to be aware of and demand that we go to a neutral environment in business and have the fiduciary standard, which is to manage money in our retirement plans for our financial benefit, not another reason like politics. Treasurer Marlow Oaks of Utah, thank you so much for that advice. Thanks for the work that you're doing and bringing us up to speed on ESG and some of the challenges that we're having to fight back. We appreciate you being with the Daily Signal.

Thank you very much. Who doesn't love a good story? At the Heritage Foundation, we believe that every single policy issue discussed in D.C. tells us. story. So we want to tell it well. On the Heritage Explains podcast, co-host Tim Decher and Michelle Cordero, take one policy issue a week, mix in a creative blend of clips, narration, and hard-hitting interviews to equip you on crucial issues in under 20 minutes. Subscribe to Heritage Explains wherever you listen to podcast. Thanks for sending us your letters to the editor. Each Monday, we feature our favorites on this show. Doug, who's up first? In response to Biden administration,

implements a racial spoils system, Bernadette Walker writes, while I support equality for all Americans, I strongly disagree on the intent of these proposed orders. If our Constitution states equal treatment for all, then no one group should be singled out for special treatment. To award government contracts, jobs, promotions, and all of the other special treatments these orders include based on race, ethnicity, or gender is racist in the extreme. I thought President Biden vowed to be the president for all Americans, unifying our great country. Instead, he is leading us into the great abyss of socialism, trampling our magnificent constitution on the way. And in response to Bernardin Hassen's piece, Leah Thomas says trans women are not a threat to women's sports.

Don Stevens writes, What you have said or illuminated about transgender people competing in women's sports shows you the complete lack of reason that has taken over our society. Thomas says there is a small minority of transgender people competing, but look at what happened and how he devastated the opportunity. for all those women who had to train for years by being so selfish. Well, I'm certainly glad he's happy. We certainly wouldn't want to damage his self-esteem. Keep up the good work. Your letter could be featured on next week's show,

so send an email to Letters atdailySignal.com. At the Heritage Foundation, we believe voting is a sacred duty. It's how people express what course they want our nation to take. Given the importance of the ballot box, it's necessary to have a transparent and fraud-free system that can be trusted. This is why Heritage created the Election Integrity Scorecard. The scorecard compares the laws and regulations for elections state to state and ranks them on their security and transparency. Check out the Election Integrity Scorecard at heritage.org

slash election scorecard. Bernadette, you have a good news story to share with us today. Over to you. Thank you, Doug. As one of Chick-Fle's oldest employees at the age of 90 years old, Miss Marie in Nashville, Tennessee, is still serving chicken with a side of smiles. She tells News Channel 5 Nashville that after a 30-year career as a school bus driver, she came to Chick-fil-A. So I came to Chick-Fillet and put my application in, and they hired me that day. For the past 11 years, she's considered essential to Chick-fil-A's hospitality, and guests of the restaurant have recognized that as well.

Marie has been a part of our lives ever since we've came in because she's so, loving. She's the grandmother to so many people or just the friend to so many people. Miss Marie sees the opportunity to work as a blessing and an opportunity to serve. As long as God give me strength, I will be working. Miss Marie is an example for all of us to be grateful for an opportunity to serve and to bring joy to someone else's day. Bernadette, thank you so much for sharing. What a wonderful story. We are going to leave it there for today, but you can find the Daily Signal podcast on the Rickashay Audio Network, and all of our shows can be found at DailySignal.com slash podcasts.

You can also subscribe on Apple Podcasts, Google Play, or your favorite podcast app. If you like what you hear, please leave us a review and a five-star rating means a lot, and it helps us spread the word to other listeners. Be sure to follow us on Twitter at DailySignal and Facebook.com slash the Daily Signal News. Have a great rest of your week. The Daily Signal podcast is brought to you by more than half a million members of the Heritage Foundation. The executive producers are Rob Bluey and Kay Trinko. Producers are Virginia Allen and Doug Blair.

Sound designed by Lauren Evans, Mark Geiney, and John Pop. For more information, please visit DailySignal.com.