Former Vice President Mike Pence criticized investor-activist campaigns to pressure firms similar to Exxon Mobil Corp. to comply with socially aware investing rules, saying they elevate left-wing objectives over the pursuits of companies and their workers.
Pence, a possible 2024 Republican presidential candidate, delivered an power coverage speech Tuesday in Houston and known as for states similar to Texas to “rein in” the push for worker pension funds to make use of environmental, social and governance rules in investing.
The previous vp cited activist investor Engine No. 1, which was backed by corporations together with BlackRock Inc. final 12 months because it mounted a profitable proxy marketing campaign that led to the substitute of three administrators on Exxon’s board. “These three at the moment are working to undermine the corporate from the within,” Pence mentioned.
ESG investing — using environmental, social and governance components in choice making — has change into one of many hottest areas in finance in recent times, with the worldwide market including as a lot as $40 trillion in property, based on estimates from Bloomberg Intelligence.
But the technique has drawn the ire of lawmakers in some states. Officers in Utah and West Virginia have pressed S&P International Scores to scrap a system that scores states primarily based on their ESG-related credentials. In Texas, officers are asking finance corporations to reveal their local weather insurance policies, together with whether or not they’re limiting enterprise with power firms.
Finance was at all times meant to facilitate funding and spur financial development that advantages your complete U.S., Pence mentioned. However President Biden and authorities regulators are “weaponizing the monetary system to do the precise reverse,” together with via “capricious new ESG rules that enable left-wing radicals to destroy American power producers from inside.”
Comparable accusations have been circulating in Texas for a while, however Pence’s feedback are among the many most aggressive but. The expansion of ESG investing has pushed a few of Wall Road’s largest buyers to change into far more energetic in proxy campaigns.
However the notion that such campaigns damage firms is unproven, particularly in Exxon’s case. Engine No. 1’s success got here from persuading giant shareholders that an improved local weather technique would additionally assist the oil large’s monetary returns.
After the vote, Chairman and Chief Govt Darren Woods rapidly made peace with the three new administrators and introduced a sequence of inexperienced measures, together with eliminating emissions from its operations by mid-century and locking in decrease spending on fossil fuels. Buoyed by greater oil costs, Exxon’s inventory is up 36% within the final 12 months.
GOP lawmakers and highly effective business teams, together with the U.S. Chamber of Commerce, have opposed elevated exercise by monetary watchdogs on ESG points through the Biden administration, even because the White Home has known as for elevated oil and fuel manufacturing to assist cut back gas costs.
Biden has additionally made preventing local weather change a centerpiece of his presidency, and final 12 months ordered regulators to develop stronger plans for measuring and mitigating the dangers local weather change poses to the monetary system.
One proposal by the Securities and Alternate Fee would require companies to disclose the dangers a warming planet poses to their operations once they file regulatory statements.
Bloomberg writers Saijel Kishan and Jennifer A. Dlouhy contributed to this report.