It goes by its acronym, ESG (environmental, social, governance). That’s when managers of public money are directed to set aside their concerns about rate of return and, instead, strike a blow for whatever social cause seems popular.
The latest is HB 0280, a pending bill that would prohibit Illinois pensions from investing in any company contracting with the federal government to build a wall on the Mexican border. It’s sponsored by Rep. Will Guzzardi (D-Chicago). To enforce the prohibition, the bill would require the state to compile a list of all companies contracting to do any work on the wall, for inclusion on a blacklist.
Professional fund managers generally hate ESG restrictions. They are trained to make money, which you’d think taxpayers and pensioners would want as well, not virtue signalling by lawmakers. If it passed, it would have no impact on whether the wall gets built. An Illinois employer like Caterpillar or U.S. Steel could well end up on the blacklist.
Maybe it’s just a bill and won’t go anywhere – maybe the bill itself is just virtue signalling. But with the far left rapidly ascending in Illinois, efforts like this are expanding. We wrote earlier about Chicago City Treasurer Kurt Summers’ ESG proposal for all $7 billion he manages. Illinois Treasurer Michael Frerichs has gone further. He’s already playing social justice activist with no authorization or oversight, with stock he doesn’t even own – stock owned by 529 college savings plan owners.
It’s nice to know some folks will feel good about themselves as Illinois’ pensions bleed dry.
–Mark Glennon is founder of Wirepoints.