By the editorial board
Big investment firms, including those managing billions of dollars in public servants’ retirement accounts, are being sanctioned by various state legislatures simply for refusing to place their investments in fossil fuel companies that contribute to global warming. climatic. Investment firms aptly describe these ventures as a long-term economic risk. But legislatures in politically red states with fossil fuel-heavy economies are fighting back, refusing to let these investment firms handle the portfolios of their state employees.
Essentially, these states are boycotting investment firms that recognize the realities of climate change. They claim that climate-conscious investing is just a virtual “woke” signal that puts their clients at a financial disadvantage. “It’s for pop culture,” was the dismissive assessment of Sen. Kevin Cramer, R-N.D., Politico reported earlier this year. “From a fiduciary perspective, it has nothing to do with the markets or the viability of the markets.”
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Bad. What happens to the climate is intrinsically important for the future of financial markets. The irony is that it is these conservative politicians who introduce the ideological fight where it does not belong, and do so at the expense of sound investment decisions. This is because, whether they recognize it or not, climate change is real and is already having major economic impacts on coastal regions and other areas. To ignore this fact is the height of irresponsibility, with potential downsides not only to the planet, but to business returns on investment.
Rising sea levels, increased floods and droughts, and less predictable hurricane seasons have direct impacts on real estate markets and commodity prices. Diverting investment from industries that contribute to these problems is a wise long-term strategy. Moreover, society is moving inexorably (albeit too slowly) towards alternative energy sources like solar and wind, making fossil fuels a dubious long-term investment in itself.
Yet Texas, Oklahoma, West Virginia and other red states have decided or are about to sever ties with investment firms that have divested from fossil fuels. The conservative politicians driving this trend invariably present themselves as clear-eyed fiscal realists breaking away from starry-eyed entities that merely pander to liberal sensibilities. Never mind that science – and, ultimately, economics – is entirely on the side of those opting out of fossil fuels.
Those on the other side include entities like the Heartland Institute, a fossil fuel industry front organization that has for years been a leading purveyor of climate misinformation aimed at preventing policies that mitigate global warming. climatic. The involvement of Heartland and other similar groups in promoting these red state policies to punish climate-conscious investment firms speaks volumes about what is really going on.
In the end, Texas and the rest can choose the investment firms they want, based on the criteria they want. But by betting on fossil fuels, they are betting against the planet – and ultimately hurting their own wallets.