State's pension funds used to push anti-oil shareholder proposals
Jason Cohen
Daily Caller News Foundation
Louisianans’ pension funds have frequently been used to advance climate-related proposals within publicly traded companies, according to a report from conservative watchdog group American Accountability Foundation (AAF).
The Louisiana State Employees’ Retirement System (LASERS) utilizes Institutional Shareholder Services (ISS), a massive proxy advisory firm that is a proponent of environmental, social and governance (ESG) agendas. Despite Louisiana’s status as a leading oil-producing state, LASERS’ pension funds have backed ESG shareholder resolutions focusing on climate issues, specifically targeting fossil fuels and carbon, according to documents AAF obtained through a public records request.
@ISSGovernance is pleased to announce the launch of our Newly Enhanced Vote Disclosure Services, allowing #investors to showcase their #ESG Stewardship Program and easily meet best practice disclosure standards.
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— Institutional Shareholder Services Inc. (ISS) (@issgovernance) June 29, 2021
“These bureaucrats are actively working to implement the radical ESG agenda of strangling the American energy industry in a state where over 150,000 people depend on oil and gas for their livelihood,” AAF President Tom Jones told the Daily Caller News Foundation.
“These woke bureaucrats, who get their paychecks from Louisiana taxpayers, should stick to their job of looking after taxpayer money and trying to get the best possible returns instead of using that money to further the cause of ESG leftists,” Jones added.
LASERS has roughly 100,000 members and membership is a requirement for every state employee whose agency is involved with the system unless they have a legal exemption, according to its website. The system has assets valued at $14.5 billion as of June.
There were over 400 instances of LASERS voting in favor of what the watchdog calls “woke” shareholder proposals, mainly in the categories of “racial equity audits,” “political contributions reports targeting conservatives,” “championing abortion rights” and “anti-oil and gas or ‘net zero’ resolutions,” AAF asserts. The watchdog identified a total of 402 votes on these issues, with asset manager GoldenTree casting one vote and LASERS casting the remaining 401 votes based on the advice of ISS.
“In the last couple of years LASERS has been refining their proxy voting guidelines with ISS, in particular where it addresses ESG/Climate issues,” John Broussard, Chief Investments Officer for the Louisiana Treasury Department, told the DCNF. “It is an annual review process, and it takes time, years-long time.”
“Out of about 70,000 proxy votes, [AAF] found about 400 to meet their criteria (less than one half of one percent),” Broussard told the DCNF. Around 300 of them were proposals to make reports, while less than 100 were to take a position or change policy, he added.
Crucially, LASERS worked with ISS throughout the period covered in AAF’s report to make it so they no longer back proposals on making reports or ESG, Broussard told the DCNF.
LASERS votes all of its proxies under the advisory of ISS except for GoldenTree, which manages its assets rather than making recommendations, the state retirement system told AAF in an email in response to its public records request, according to the report.
Groups, companies or individuals holding shares in publicly traded companies often put forward resolutions designed to influence corporate boards to act on various measures, such as evaluating climate impacts or conducting so-called racial equity audits.
These resolutions often focus on ESG issues instead of only prioritizing financial return maximization, AAF’s report alleges. Proxy investment advisers who advocate ESG principles recommend pension funds leverage their substantial holdings to vote in favor of these resolutions.
Louisiana is the third-largest producer of natural gas and holds approximately 7% of America’s natural gas reserves, according to the Energy Information Administration. The state is home to 15 oil refineries that represent almost one-sixth of the country’s capacity and can process millions of barrels of crude oil daily.
There were around 30 proposals pertaining to reducing greenhouse gas emissions (GHG) emissions at oil and gas firms or going after their funding and insurance, AAF found.
For instance, at energy company Phillips 66’s May 2022 yearly shareholder meeting, LASERS voted to support a resolution for the company to adopt GHG reduction goals in line with the Paris Climate Accords “to limit global warming to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C.”
At JPMorgan Chase’s May 2022 yearly shareholder meeting, LASERS voted to back a resolution proposed by sustainability-focused Mercy Investment Services. The proposal called for the banking giant to adopt a policy by the end of the year to fund fossil fuels in a way that lines up with the International Energy Agency’s (IEA) goal of achieving zero carbon dioxide emissions by 2050, which would make it so JPMorgan cannot fund entities that add more fossil fuel development.
“To diversified investors, continued support for fossil fuel development threatens longterm portfolio value,” the proposal states.
Oil, gas and consumable fuel firms are “slow to transition to a low-carbon economy, thus posing a long-term financial risk,” according to ISS. Pension funds rely on ISS advisory to “maximize value creation for all stakeholders,” according to the investment advisory giant’s website.
Funds that invest in green energy firms and products worldwide experienced investment outflows totaling $4.8 billion during the first quarter of 2024, Reuters recently reported, citing analysis conducted by a firm called LSEG Lipper. Meanwhile, the S&P Global Clean Energy Index has plunged by around 10% while the S&P 500 Energy Index, which features many oil and gas firms, is up by over 12% in 2024.
Critics assert ESG investments are not in the best fiduciary interest of shareholders.
“I have sat on the LASERS board as the Treasurer’s designee, and am aware of LASERS proxy voting and the use of ISS. I can assure you neither the LASERS staff nor the Board are what you would call ‘woke,'” Broussard told the DCNF. “As an investment professional of over 40 years, I can assure you that me and my staff are not fans of ESG investing. Why? Mainly because it underperforms, it just doesn’t do as well as broad market indices.”
Asset managers also used Nevadans’ pension funds to push for similar proposals, the DCNF previously reported based on another public records request by AAF. Nevada Public Employee Retirement System enlists the services of asset managers like BlackRock, AllianceBernstein, Mellon Capital and State Street Global Advisors, who collectively manage over $30 billion of the system’s stock portfolio.
LASERS and ISS did not respond to the DCNF’s multiple requests for comment.
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