Protecting Mississippi Finances – The Oxford Eagle

Protecting Mississippi Finances

Posted at 4:00 p.m. on Friday, October 28, 2022

By Treasurer David McRae

Over the past few years, “environmental, social and governance” (ESG) investment strategies have captured the attention of the powers that be on Wall Street, but not because ESG funds make more money for anyone. Instead, ESG’s only promise is to apply the “cancellation culture” to corporate actions.

This is why I got involved in this debate. As Treasurer, I manage the state’s financial assets and programs, which includes helping decide where taxpayers’ money is held. These are huge accounts, and even a small change in investments can have significant ripple effects on the state pension system, college savings programs, and overall finances. So when New York bankers start forcing Mississippi taxpayers’ money into “woke” funds with low yields, I have some issues with that.

First and foremost, ESG standards are applied subjectively, often based on perceived political ideology rather than hard facts. Consider this: you’d think that Tesla, the world’s largest electric vehicle maker, would get a high ESG rating for its environmental stewardship. But no, it was removed from the S&P ESG Index earlier this year, likely because of Elon Musk’s personal politics.

Who stays ? Left-wing Apple and Nike (both of which have been accused of human rights abuses that directly contradict the ESG’s stated mission). Oil juggernaut Exxon also earns a spot on the ESG list, and investments in the world’s biggest polluter and human rights violator, China, are still permitted.

Second, in the absence of strong standards, ESG investors pick industry winners and losers, and consumers pay a heavy price. Today, the main ESG target is US energy, particularly oil and coal. Do not expect gas prices or heating costs to fall if the big banks continue to withdraw their investments from these industries.

And will they stop at oil and gas? No. The agricultural industry has already become a target for methane production. What will happen to our beef, pork and chicken producers? And when the Mississippi lumber industry is blacklisted by the ESG mob, what will that mean for the thousands of Mississippi jobs it supports? Could Mississippi State’s credit rating even be in jeopardy? Some are already warning that Mississippi’s conservative laws are making us a target, costing taxpayers millions.

Third, and perhaps most importantly, when investment firms tax public assets in ESG funds, I believe they are failing in their fundamental fiduciary responsibilities. While almost no sector of the economy performed brightly in 2022, ESG funds were weaker overall.

According to analysis by wealth manager Detlif Glow, “Overall, ESG has underperformed by 250 basis points over the past five years. Another long-term study noted that “ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and charge higher fees.” Moreover, the adoption of ESG policies does not lead to an improvement in the company’s financial performance. This means that asset managers have no financial basis to pressure companies to adopt ESG.

Whatever your opinion on climate change, inclusion, or human rights, Mississippi’s retirement system, taxpayers’ money, and college savings programs are the wrong place to experiment with strategies. investments that push balance sheets aside. Additionally, many of the policies promoted by the ESG are directly linked to higher consumer costs, a weaker Mississippi labor market, higher inflation, and lower investment returns, while undermining the free market and our economic freedom. With all of this in mind, I remain firmly opposed to the ESG movement and will do all I can to protect Mississippi from its impact.

Mississippi Treasurer David McRae is the 55th Mississippi State Treasurer. In this role, he helps manage the state’s cash flow, oversees College Savings Mississippi, and has returned more than $60 million in unclaimed money to Mississippians. For more information, visit Cash.MS.gov.