joining us now to discuss this further is john Hale
, director of sustainability research at Morningstar, john just
want to start off with with those anti E.
S. G. Steps, what they are exactly
, you know, the ones that were taken by
leaders in texas and in florida and what's behind this
broader anti E. S. G push? Yeah
, well, in texas, what we've seen is
kind as they attempted blacklisting of asset managers that supposedly
are boycotting fossil fuels. Uh it's based on a
law that was passed last year that required texas comptroller
Hager to send letters essentially to asset managers asking them
what their position is on that issue. And the
results have come back. And last week controller Hagar
announced that I think 10 asset managers would be forbidden
from doing business with Texas, you know, pension
plans and other investment plans run by the state or
for the benefit of state participants like former employees and
so forth. Now, Governor de Santis on the
other hand, is just pushed through a rule that
would ban um you know, the use of E
. S. G. Criteria in florida at their
pension plans and other state type of investment plans and
also restrict their ability to vote on E. S
. G. Related proxy votes in favor of those
issues. Do you think this is something that could
come back to kind of bite Republican leaders more broadly
sooner than later, especially when you think of the
context that E. S. G. Is the
future, that this is one of the fastest growing
sectors, especially for investors. Well, you know
, that's the thing. it's it's this is really
just kind of a rearguard action to protect fossil fuel
interests on the one hand. And in the case
of Governor de Santis, especially, it's kind of
a, you know, a salvo against, uh
, so called corporate America. You know, and
I think what's really happening here is that investors,
almost all investors and, and, and by that
, I mean, both and investors, individuals institutions
that own, uh, foundations or run foundations and
endowments as well as professional investors want to see climate
risks, you know, incorporated in the investment decision
. That's really all this is about. In fact
, there's not, uh, there is a divestment
movement out there among some investors to avoid fossil fuels
completely. But it's not really the stance of the
asset management industry in general. That stance is that
we want to know how you're thinking about the risks
to your business that are posed by climate change.
So in terms of states that are seeing this the
most, what are those states? Well, mostly
red states. We're seeing it in texas and florida
. We're seeing also efforts in, I think West
Virginia Oklahoma Utah. But this is the kind of
thing that could spread essentially to any and all republicans
states because a lot of the impetus for it comes
from, you know, organizations, dark money organizations
frankly, that help disseminate this kind of information to
policymakers and officeholders in all those states, when we
look at E. S. G. Right now
, we know that investors pay a premium. Um
, you know, for shares of companies with the
best TsG scores over those with the worst E.
S. G score ratings. And as you noted
a moment ago, a lot of that factoring risk
that can be costly, that can have dramatic effects
on the company and profitability kind of moving forward.
But when you look at the rhetoric from republicans,
republicans have, have also kind of accused investors to
try to that they're trying to force companies to follow
these liberal agendas at the expense of a pursuit of
profit. Can you talk about the veracity of that
argument and perhaps how antiquated that thought process is that
you try to mutually exclude profits and TSG efforts?
Yeah, it's it's really, nothing could be further
from the truth. I mean, really, what's
happening here on the just taking the sort of climate
issue first is that, you know, investors just
very reasonably want to see climate considered in their investment
decision making. And and so investors are asking companies
, what are the, what do you think are
the effects of climate change? What are those gonna
be on your business? You know? But both
in terms of how you operate and the demand for
your products going forward? And in terms of the
your assets, your plants and equipment and customers and
employee base, what are they going to be the
effects of climate on on them as well? And
you know, they just want answers for this.
They want companies to um to to come to grips
with that and companies are doing that. I mean
partly because of so much investor pressure for them to
do so now on the broader issue of let's just
call it diversity like diversity, equity and inclusion because
this is something that's really, you know, often
railed against by republicans. Um diversity isn't an ideology
, it's a fact, It's the facts on the
ground. The american workforce is almost half women today
. Women get earn more college degrees than men.
There's more workers that are L G B T Q
plus out at work. They don't want to hide
that fact anymore. There's more hispanic workers asian black
people of color. That is a fact and all
companies want to do today is recognize that fact in
the way that they run their human resources departments.
You know, they understand that to be competitive in
a global economy, they need to attract the best
the most talented workforce and retain that workforce because it
does, it does matter to the bottom line.
There has been data that has proven this time and
time again yet we can't have this conversation data that
has debunked the idea that E. S. G
. Is not a profitable strategy. In fact it
is, and to your point earlier, it really
focuses on risk and having companies assess that risk so
that investors can make a better decision in investing in
a company. JohN really appreciate your time and your
insight, john Hale, director of sustainability research at 00:06:28.043 --> Morningstar.