California Governor Newsom: “Ideological attacks on ESG investments challenge the free market and taxpayers are losing ground. That’s why we consistently beat Republican states in almost every economic category.”

Environmental, social and governance (or ESG) investments are the ultimate goal of Republicans who want to push their backward agenda at the expense of taxpayers. It is an investment method that prioritizes sustainability, invests in the technologies of the future and takes into account the risks associated with climate change: fires, floods, hurricanes and droughts.

According to Bloomberg’s analysis, ESG returns have “outpaced” fossil fuel stocks and other investment strategies and are “crushing traditional investment benchmarks” leading to large returns. The largest exchange-traded fund investing in ESG “has increased its assets 4,700 times to $ 24 billion since its inception in 2016 and 80 times in the past three years” while investor appetite “has increased 56 times. in the last three years “. The Global Sustainable Investment Alliance estimates that ESG investments have reached $ 35 trillion.

Despite the proven results, some Republicans have targeted the ESG because it disagrees with their agenda, once again attacking private industry when it disagrees with them. And the real losers here are the taxpayers, as state funds lose higher returns because politicians are trying to score political points.

Ignoring the interests of people whose livelihoods depend on public pension funds, states like Texas, Florida, West Virginia and Oklahoma have restricted or even banned ESG investments. They have prevented state and local pension funds from performing their duties of considering the best investments for their state and simply assessing the climate risk in their investment portfolios, a risk that clearly impacts each state in different ways.

Ignoring the danger posed by climate change is a clear financial risk for investments. We’re talking about catastrophic power outages in Texas caused by unusual winter storms, wildfires across the West that wiped entire communities and critical infrastructure off the map, record-breaking heat straining power grids, and more. These increasingly common events account for billions of dollars in insured and uninsured damages.

Many of the larger investment firms are taking this seriously. As Cyrus Taraporevala, CEO of State Street Global Advisors said, “… we have a fiduciary responsibility to our clients to maximize the likelihood of attractive long-term returns and will never hesitate to use our voice and vote to deliver performance. This is why we are so focused on financially relevant ESG issues. ”

Blackrock CEO Larry Fink noted, “Stakeholder capitalism is not about politics. It is not a social or ideological agenda. He is not ‘awakened’. It is capitalismdriven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your business relies on thrive. This is the power of capitalism ”.

With $ 700 billion in assets, California’s largest public pension funds – CalSTRS, CalPERS and UC Retirement Savings Program – are managing the risks climate change poses to producing returns by charting paths to net zero and moving from investment in fossil fuels. Using ESG is part of how we get there.

No one can afford to continue burying their heads in the sand. We must invest in the future, act quickly to reduce pollution and accelerate the transition to clean and renewable energy to meet this challenge.

The pattern of behavior of Republican governors like Ron DeSantis of Florida is clear: to punish free enterprise and capitalism for profit. When Disney came out against the Don’t Say Gay bill, DeSantis revoked Disney’s tax status, increasing costs for local taxpayers. He blocked money for the Tampa Bay Rays training facility after the baseball team spoke out against gun violence following the deadly mass shootings in Uvalde, Texas, and Buffalo, New York. DeSantis has tried to limit what companies can and cannot tell their employees – and even chased the Special Olympics for its COVID-19 measures.

In California, we’ve consistently beaten Florida and other Republican-led states in nearly every economic category, from GDP growth to job creation to starting new businesses.

We have also chosen a different path to invest and produce returns for taxpayers. Yes, we continue to invest in traditional energy companies. But we also prioritize investments in renewable energy and new technologies that recognize the real dangers of climate change and accelerate our clean energy transition. We fulfill our obligation to guarantee retirement to our teachers, police officers and firefighters, not by engaging in politics, but by adhering to fundamental investment principles and values ​​that put people first.

These are just the facts. Sacrificing financial gains and economic growth for politics only hurts taxpayers and their pensions.

Gavin Newsom is the governor of California.

The views expressed in Fortune.com comments are solely the views of their authors and do not necessarily reflect the views and beliefs of Fortune.

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