Louisiana announces ESG investigation into major climate fund

Louisiana Attorney General Jeff Landry is taking aim at a major investor-led coalition that seeks to combat climate change through the financial sector. The Climate Action 100+ Steering Committee, specifically Franklin Templeton and the California Public Employees’ Retirement System, are under investigation to determine if they breached their obligations to investors by prioritizing climate initiatives. This move is just the latest in the GOP’s fight against the environmental, social, and governance movement, or ESG.

“ESG investing puts politics over people and raises significant concerns that companies guided by these green-energy fantasies may be engaging in unfair and deceptive practices that harm Louisiana consumers,” Landry said. “Franklin Templeton is deeply embedded in Climate Action 100+; and we are troubled that, by focusing on the radical ESG agenda, it may be violating its fiduciary duties to shareholders in our state.”

Climate Action 100+ bills itself as “an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.” It uses a benchmark to measure corporate progress on ESG criteria and achieving net-zero emissions by 2050 or sooner.

Franklin Templeton has some $1.5 trillion in assets under management, while CalPERS, the country’s largest public pension fund, had more than $440 billion in assets under management as of last year.

Landry’s investigation is yet another broadside against ESG, which proponents view as a way for finance and business to cause social change, for example, by mitigating climate change. Critics, though, view it as an attempt to distort the free market and the culture of the country through capital and influence.

ESG has been an increasingly salient political issue, not only among state attorneys general and state treasurers but on the national stage. Last week, Rep. Andy Barr (R-KY) introduced legislation that would prevent big banks from refusing or limiting financial services to certain businesses, such as those in the fossil fuel industry.

The bill would mandate banks with over $100 billion in total consolidated assets to provide fair access to banking services, capital, and credit to industries. The goal is to prevent banks from choking off financial services to politically divisive companies such as gun manufacturers and oil and gas companies.

It’s clear that ESG is a hot-button issue, and it remains to be seen how Landry’s investigation will play out. Stay tuned for updates.