Environmental, Social, and Governance (ESG) investing is facing a new round of criticism from American conservative leaders. Senator Ted Cruz, to offer one example, has framed BlackRock’s ESG policies as “abusing the market.”¹ More alarming to me, are the new state-level policy attacks on ESG led by elected officials from across the United States. To offer three recent examples: 

• Governor Ron DeSantis and trustees of Florida’s State Board of Administration passed a resolution barring state pension funds managers from considering ESG criteria.²
• Texas State Comptroller Glenn Hegar banned state and local entities from doing business with ten banks that the state accused of boycotting the oil and gas industry.³
• The State of West Virginia and its State Treasurer now refuse to do business with financial institutions that divest from fossil fuels.⁴

As I see it, these actions demonstrate a lack of concern for the financial performance of the pension-holders they supposedly wish to protect – as well as a lack of regard for the views of a vast majority of the American people. A recent Pew study showed that 69% of American adults want the US to focus on developing the infrastructure for wind, solar, and other alternative energy sources instead of expanding the production of oil, coal, and natural gas.⁵

I have spent the last twenty years of my career in global Impact and ESG investing, serving clients from across the political spectrum. From my perspective, these condemnations and policies designed to defend the fossil fuel industry show a deep misunderstanding of ESG investing and lack of knowledge about important megatrends that are shifting the views of Republicans and Democrats alike and shaping a future that will look very different from today.

These anti-ESG positions are, in my view, dangerously on the wrong side of history.

ESG Critics’ Biggest Mistake: Ignoring Stranded Assets

I believe the greatest mistake of policymakers enacting bans on ESG investing is that they are ignoring the risk of “stranded assets.” 

Lloyd’s defines stranded assets as those that “have suffered from unanticipated or premature write-downs, devaluation or conversion to liabilities” typically because of environmental changes caused by climate change.⁶  

By continuing to invest in fossil fuels, the pension systems of West Virginia, Texas, and Florida – and the pensioners who depend on them – will continue to be exposed to oil and gas and the risk of stranded assets.

Though fossil fuels continue to dominate the global energy system today, we are about to experience a sharp decline in their use because of new government regulations, sharp changes in consumer behavior, and the potential for legal action against emitters. Researchers have forecasted that 60% of oil and fossil methane gas, and 90% of coal will remain in the ground for the planet to not exceed a 1.5 °C carbon budget.⁷ These “assets” will remain stranded.

Stranded asset risk is not fully reflected today in the value of companies that extract fossil fuels. If this risk was priced in, as I think it will be in the future, this would result in a sudden drop in value that would affect investors and shareholders.

Whether you believe in climate change or not — as an investor, it is a dangerous bet to continue to invest in an industry which has a high probability of becoming obsolete. Returns to pensioners will most probably suffer as a result.

Error #2: Ignoring that Energy Companies are Making Net-Zero Commitments and Transition Plans

Several energy companies have now made Net-Zero commitments. Exxon-Mobil pledged net-zero carbon emissions from operations by 2050.⁸ Shell’s target is to become a net-zero emissions energy business by 2050.⁹ Why would policymakers force their states’ pensioners into investments in soon outdated energy, even while the energy companies are making these commitments and embarking on the energy transition?

In contrast, the states of Texas and Florida have yet to make a Net Zero commitment.

Error #3: Misreading *Republican* Opinion

The Republican politicians that are taking action against ESG are apparently not paying attention to the shifting views of their own voters. A Pew research study found that 88% of Republicans are supportive of specific policies to reduce climate change, such as planting a trillion trees to absorb carbon emissions, while 73% of Republicans are supportive of providing a tax credit to businesses to develop carbon capture and storage.¹⁰ My own experience supports polling data indicating that a vast majority of right and left-wing asset owners want to combat climate change.

Anti-ESG politicians should take note that voters from the opposing parties are not as far apart on this issue as it might seem. Another Pew study indicates that 77% of all Americans (including Democrats, Republicans and Independents) wish to prioritize renewables over fossil fuels.¹¹

If we look at Pew’s findings broken down by political affiliation and gender, 66% of Republican women wish to move away from fossil fuels and 60% of Republican men agree.¹² This data suggests that Republican women are more concerned about climate issues than Republican men. It is notable then that McKinsey projects that more than two-thirds of wealth in the US will be held by women by 2030.¹³ I believe this massive wealth transfer to women will cause a tidal wave of ESG investing — especially in climate solutions. Conservatives may now attack ESG investing as “woke,”¹⁴ but the data suggests that wealthy Republican women will increasingly invest in the clean energy transition.

A Majority of Americans Want Climate Solutions – More of our Leaders Need to Get on the Right Side of History 

Partisan voters and investors obviously still have polarized views on many issues, but all evidence suggests that they are now largely in agreement on climate change.

I believe that these myopic bans on ESG investing in Texas, Florida and West Virginia pose real world risks, not only to the pensioners of these state systems, but to all humanity – by supporting policies that exacerbate global warming and its catastrophic consequences.

I call on every American voter and every investor who agrees with me to send a message to the leaders who are on the wrong side of history – both with your votes and with your dollars.

Veris Wealth Partners condemns the Supreme Court’s disgraceful decision overturning Roe v. Wade.

We share the sorrow expressed by Justices Breyer, Sotomayor, and Kagan in their dissenting opinion in the case of Dobbs v. Jackson Women’s Health Organization and we find it appalling that women in the United States no longer have a federally guaranteed constitutional right to abortion access.

The Immediate and Future Impact of this Decision

At least 26 states are expected to ban abortion in the coming days.² No one is exactly certain of what may come next, but the dissenting Justices wrote, “Whatever the exact scope of the coming laws, one result of today’s decision is certain: the curtailment of women’s rights, and of their status as free and equal citizens.”

In their response to the decision, the ACLU wrote that “Forcing women and other people to carry a pregnancy against their will has life-altering consequences, including enduring serious health risks from continued pregnancy and childbirth, making it harder to escape poverty, derailing their education, career and life plans, and making it more difficult to leave an abusive partner. This decision could also lead to pregnancy losses being subject to suspicion, investigation, and arrest, and patients and doctors being thrown in jail.”³

The response issued by the Association of American Medical Colleges (AAMC) sounded the alarm that almost half of US OB-GYN residency programs are located in the 26 states where abortion is expected to be outlawed. They make the point that it will now be challenging, if not impossible, for a great number of American medical school students to get vital training not only in abortion care, but also in treating women who are suffering miscarriages and other related OB-GYN issues.⁴

Another impact of this decision is that other rights are likely at risk. In his concurring opinion to the Dobbs decision, Justice Clarence Thomas wrote that the Supreme Court “should reconsider all of this Court’s substantive due process precedents, including Griswold, Lawrence, and Obergefell”.⁵ These are the decisions that guaranteed access to contraception, struck down sodomy laws and legalized same-sex marriage.

Action Steps

The next elections will be crucial to determining what comes next. Many say that this decision to overturn Roe was the result of 50 years of activism, voting, and political maneuvering from the anti-choice movement. We believe we all must rise to this moment and do what we can to fight for women’s rights, for human rights, in the United States.

Please vote.

Please support organizations that are still providing reproductive health care and those that are fighting for reproductive rights for women in the United States including:

• ACLU
• Planned Parenthood
• NARAL Pro-Choice America
• Center for Reproductive Rights
• The National Abortion Federation (NAF)

Veris Wealth Partners reaffirms our commitment to continue to support the reproductive rights of women and girls in the United States.

Sincerely,

Veris Wealth Partners

Since 1973, American women have had a federally guaranteed constitutional right to abortion access. A leaked first draft of Justice Samuel Alito’s majority opinion has given us early warning that the Supreme Court is preparing to take that right away by overturning Roe v. Wade.²

Veris Wealth Partners affirms our support for women’s rights – including women’s right to have control over their bodies. We are unapologetically pro-choice. We believe that access to abortion is a basic right to medical care. We also condemn any effort to demonize abortion, as women often make this choice with anguish.

The Potential Consequences of the End of Roe

Striking down Roe v. Wade means the states will decide this issue. After Roe falls, over half of all states are expected to outlaw abortion³ and in some cases deem doctors, medical teams, and patients as criminals.⁴ The state of Texas, for example, has already passed a “trigger-ban” ordering that anyone arrested for performing or inducing an abortion be charged with a first-degree felony⁵ – punishable by life in prison and up to a $10,000 fine.

We believe that this decision will negatively impact millions of women in the United States – including those who are likely to resort to dangerous, and often deadly, non-medical methods of abortions. According to the World Health Organization, “unsafe abortion is a leading – but preventable – cause of maternal deaths and morbidities” globally.⁶

Our leading health institutions do not support the decision to overturn Roe v. Wade. Dr. Gerald Harmon, president of the American Medical Association, responded to Alito’s leaked draft by saying, “With deliberations underway, we strongly urge the Court to reject the premise of the draft opinion and affirm precedent that allows patients to receive the critical reproductive health care that they need. Allowing the lawmakers of Mississippi or any other state to substitute their own views for a physician’s expert medical judgment puts patients at risk and is antithetical to public health and sound medical practice.”⁷

The Outsized Impact of this Decision on Marginalized Women & Girls

Because of long-standing inequities in our country, women and girls from marginalized backgrounds are expected to experience the worst impacts of the Supreme Court’s decision.⁸ Lack of access to adequate healthcare and contraception means that women of color are more likely to experience unintended pregnancy than white women.⁹ Evidence of racial disparities in women’s access to health care can already be seen in maternal mortality data. Research compiled by the CDC in 2020 showed that the maternal death rate for Black women was 2.9 times greater than the rate for non-Hispanic white women.¹⁰ The worst negative economic impacts of this decision are also expected to disproportionately fall on BIPOC women.¹¹

Additional Support is Needed for Women and Families in the United States

Many women choose abortions because they cannot afford to raise a child.¹² In addition to full reproductive rights, we believe that women and their families also need access to:
● Affordable healthcare
● Family planning and contraceptives (including education and training)
● Policies that support mothers and families
● Paid family leave
● Affordable childcare
● Workplaces that support parents through scheduling, pay, benefits…etc.
● Tax policy that provides financial benefit to family caregivers

Actions We Are Taking

Veris made a corporate donation to Planned Parenthood Federation of America in May 2022, which was matched by Partners within the firm.

Through our investment managers, Veris clients have taken meaningful actions related to reproductive rights:

● As You Sow filed four resolutions related to sexual and reproductive health in 2022.¹³ 30 Veris clients have endorsed two separate reproductive rights resolutions “Report on risks of policies restricting reproductive rights and strategies to minimize or mitigate risks”.

 – 23 Veris clients endorsed this resolution for TJX Companies
– 7 of our clients endorsed this same resolution for Kroger.

● Another Veris investment manager has filed shareholder resolutions and engaged with portfolio companies on reproductive health & rights and political donations to organizations that are anti-abortion.¹⁴

● Another manager provided Veris with proxy voting guidelines for abortion/right to life issues.¹⁵

As we know the cost of keeping a child is sometimes prohibitive to women in a precarious financial situation, we have also taken action to support paid family leave. In support of mothers, in 2021 we worked with the Paid Leave for the United States (PL+US) campaign to advocate for a national paid family leave bill in the Build Back Better package. We signed on to the initiative and Alison Pyott met with US Senator Jeanne Shaheen’s office to voice our support. We also provided statements of support including why as a small business this was important to us and our recent paid family leave policy change at Veris. We will continue to support the PL+US network efforts.

What You Can Do

Vote.

Call your congressional representatives and urge them to act to protect women’s access to reproductive choice and health care.

Support organizations that are working to help women get the health care information and services they need while helping to protect reproductive rights for women in the United States:

● Planned Parenthood
● NARAL Pro-Choice America
● Center for Reproductive Rights
● The National Abortion Federation (NAF)