Members of the State Financial Officers Foundation gathered in Plano on Tuesday to discuss efforts to push back against the apparent weaponization of capital through ideologically driven investing.
The SFOF comprises several dozen members from more than half of U.S. states who have joined together “to drive fiscally sound public policy, by partnering with key stakeholders and educating Americans on the role of responsible financial management in a free market economy,” according to the group’s website.
“SFOF is founded on the belief that state financial officers nationally are playing a much greater role in promoting fiscally responsible public policy,” the website states. “SFOF continues to organize a select group of leaders from the public and private sectors to help state financial officers develop and implement free-market, pro-growth policies.”
Primarily, the organization has led the push to move state funds, such as pensions and permanent school accounts, away from financial firms like BlackRock that openly invest according to environmental, social, and governance (ESG) principles. ESG investing focuses on issues such as “green energy,” “racial equity,” and other similar concerns.
Derek Kreifels, the CEO of the State Financial Officers Foundation, explained at the Texas meeting attended by The Dallas Express that the group’s members are “some of the most trusted elected officials when it comes to money in the States.”
“These are the men and women in the trenches of their budgets, of their tax policy,” he added.
Describing the reason for SFOF’s existence, Kreifels noted that “up until just a few years ago,” the role of the state treasurers, auditors, or comptrollers “was all pretty benign.” But “suddenly, capital has been weaponized,” he asserted.
Altogether, SFOF members manage roughly $3 trillion in public assets, including state pension funds, debt management contracts, banking contracts, and permanent school funds.
“These men and women have become the top of the spear in the fight against environmental, social, and governance investing,” Kreifels said. “We’ve continued to bring the fight to those that want to leverage capital and create social policy by circumventing the democratic process.”
Texas Comptroller Glenn Hegar, Louisiana Treasurer John Schroder, Missouri Auditor Scott Fitzpatrick, West Virginia Treasurer Riley Moore, Kentucky Treasurer Allison Ball, Utah Treasurer Marlo Oaks, and Oklahoma State Auditor Cindy Byrd all shared some of their observations with the media.
Treasurer Schroder, the outgoing SFOF national chairman, explained, “In Louisiana, we just want to do our thing without outside influence.” As the treasurer in Louisiana, he was responsible for moving nearly $800 million of public money out of BlackRock due to its anti-oil and gas investment policies.
“The federal government and corporate America have really enforced their will on to the states, especially the small states of this country,” he suggested. “So we banded together and made a strong statement, and we will continue to fight.”
Similarly, Missouri Auditor Fitzpatrick added that over the past few years, “the politicization of capital became … pervasive across the country.” In 2022, he pulled around $500 million from BlackRock while serving as the state’s treasurer.
“It really wasn’t until after the election in 2020, when the Biden administration took over the executive branch of the federal government, [that it] really began using a wholistic government approach to try to advance ESG-type principles and capital markets,” he explained.
“The pressure was coming from the administration on financial institutions [and] on participants in the capital markets to begin using ESG standards in how they were making decisions with people’s money,” Fitzpatrick said.
“States became the first line of defense against what was happening in D.C. and in New York City or Wall Street,” the Missouri auditor continued. “The first line of defense for taxpayers.”
In his role as treasurer of West Virginia, Riley Moore led the state as the first to divest from BlackRock over ESG concerns.
He told attendees that the coercive nature of capital investing “really started to accelerate with Joe Biden coming into the White House.”
Comparing the current situation to the “war on coal” during Barack Obama’s presidency, Moore suggested, “It was not through overt government action this time to come after the fossil fuel industry; it was done in a more ‘collusionary’ manner through political, corporate, and government power being exercised in trying to shape society through this ESG paradigm.”
“All of it done without one ballot cast in favor of it,” he added.
Several other speakers also argued that ESG-based investments with taxpayer money by firms such as BlackRock are undemocratic.
Kentucky Treasurer Allison Ball noted, “In the course of the last couple of years, it has become very aggressively pushed … to really shift that mentality from investing to make sure you’re getting returns to using investments as leverage to push certain political ideas.”
“To reward companies, punish companies, and just push certain agendas,” she added. Ball claimed that the coal and oil companies, the “signature industries in Kentucky,” were “targeted very strongly by the ‘E’ part of ESG.”
“I began to see the real impacts on the economy of Kentucky,” she continued, commenting that pushing back against the initiatives became a necessity.
Oklahoma Auditor Cindy Byrd also remarked that people would “be surprised at how much is pushed down from the federal government with mandates that couldn’t be passed into law, that are pushed down through executive order.”
Utah Treasurer Marlo Oaks likewise pushed back against ESG, which he said takes “subjective criteria and objectifies it with a single score.”
“ESG is really trying to push one answer on the marketplace,” he said.
Political opponents have criticized the SFOF for its work to shift away from using public money for ESG investing that might undermine local industries and raise the cost of living.
U.S. Rep. Sean Casten (D-IL) claimed, “The State Financial Officers Foundation (SFOF) is a dark money group that has been weaponizing state treasurers and lawmakers against climate-related financial risk management by coordinating to cancel contracts and otherwise sever ties with financial firms that consider climate change in their business strategies.”
He asserted that SFOF was “making our financial system more dangerous” by “promoting harmful legislation that is driving financial risk and costing the public hundreds of millions of dollars.”
Similarly, the Center for Media and Democracy alleged that the group is “a key player in the Right’s campaign to use the power of state governments to blacklist companies that embrace environmental, social, and governance factors (ESG) in their business and investing practices.”
However, the issue is fairly straightforward for members like Louisiana Treasurer Schroder.
“We just want to be left alone,” he explained. “I didn’t bring a fight to anybody, but corporate America has engaged us in a way that we have to push back on behalf of our taxpayers and our states.”
“This organization has done that and in a big way,” he added.