Oklahoma advances amendments to controversial anti-ESG law

March 5th, 2024

The Oklahoma legislature has advanced two bills to amend its anti-ESG law, which introduces regulations for state pension systems considering ESG factors in investment decisions.

Oklahoma’s Energy Discrimination Elimination Act prohibits state pension funds from investing in firms such as asset managers that use ESG criteria in their investment decision-making, but allows funds to take a fiduciary exemption if divesting from those blacklisted firms goes against their fiduciary responsibility.

The Senate Bill was advanced by the General Government Committee, which requires the state treasurer to obtain the opinion of the attorney general when the treasurer and state pension systems disagree over an exemption, Pensions & Investments reports.

The advancement of the bill follows a months-long battle between Oklahoma state treasurer Todd Russ and the Oklahoma Public Employees Retirement System (OPERS) after Russ challenged the fund’s decision to take an exemption back in August.

The OPERS board voted in favour of taking the exemption and argued that conforming to the rule would be inconsistent with its fiduciary responsibility. The rule would have seen the fund divest around $6.8 billion from blacklisted firms, including BlackRock and State Street, due to their ties to climate groups such as the Net Zero Asset Managers Initiative.

The House Bill was also advanced by the Banking, Financial Services and Pensions Committee in the same week. The bill would narrow the exemptions available to public pension funds and require funds seeking an exemption to illustrate how divesting from blacklisted firms would result in financial losses.

The bill would also broaden its anti-ESG stance to include timber, mining and agriculture industries as well as oil and gas.

Anti-ESG sentiment has been on the rise in the US for several years, and this month Norges Bank Investment Management (NBIM) CEO Nicolai Tangen warned it could spread to Europe.