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The ESG Culture Wars In Wyoming

The ESG Culture Wars In Wyoming
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Wyoming, the Cowboy State, is the smallest one in terms of population (580,817 people), the 10th largest in terms of land area (the first three, in order, are Alaska, Texas, and California), and ranks fifth in terms of cattle per capita (2.18) but is dominated by South Dakota (4.32). The state fish is the Cutthroat Trout, the state bird is the Western Meadowlark, the state butterfly is Sheridan’s Green Hairstreak Butterfly, and the state flower is the Indian Paintbrush.

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A more obscure fact is that Wyoming’s state dinosaur is the Triceratops, my third favorite dinosaur after Brontosaurus and Tyrannosaurus Rex, in that order. With a life span of 25-30 years, at 12,000-16,000 pounds, 30 feet long, and nine feet high the mighty and ferocious but vegetarian Triceratops was the toughest of all dinosaurs and could beat T-Rex in a fight.

The species prospered during the last three million years of the late Cretaceous Period from 68-65 million years ago. (To put this in historical perspective the Cretaceous Period lasted for 80 million years of the 186 million year Mesozoic Era.) Obviously, there was one last lonely Triceratops on the planet after all the others were gone. Kind of an amazing thought, right? In fact, that last one was the last dinosaur period since this species was the last one standing.

What is the relevance of all this, you are no doubt rightly asking? Fair question. The three horns symbolize the three prongs of the ESG Culture Wars in Big Wyoming. These wars have been extremely ferocious there, so rightly justifying its chosen state dinosaur. But Triceratops three million years on the planet help put the ESG Culture Wars into perspective. They will not last that long. My guess is that these wars won’t even last for the modest lifetime of this glorious plant-eating beast. Before long we will look back on another extinction with the same awe, wonder, and nostalgia as we do Triceratops. But first we can observe in real-time sadness the death of the last Triceratops in Wyoming.

Horn 1 (Experiencing Death)

Let’s begin this paleontological analysis with two bills introduced into the Wyoming Senate earlier this year by Senator Bo Biteman: “SF 159—Stop ESG-Eliminate economic boycott act” and “SF 172—Stop ESG-State funds fiduciary act.” Michigan transplant Senator Biteman has an undergraduate degree in finance from Grand Valley State University and is currently a Certified Professional Landman for Land Resources USA, LLC which helps companies and investors find land to drill for oil and gas. (Being a Landman is a good job to have in a state with a lot of land.) Those seem to be his ESG credentials in his sweet Wyoming home.

Biteman’s SF 159 relied heavily on the “Eliminate Political Boycotts Act” developed by the American Legislative Exchange Council (ALEC) which was rejected by its own board. SF 159 starts with “Legislative Findings” copied verbatim from the ALEC model, with such profound claims (with my comments in italics) as follows:

· “Numerous essential American industries, including fossil fuel production, agriculture, timber production and firearms, are being targeted for boycotting, divesting and sanctioning by large corporations and public and private institutional investors;” The usual claims about fictitious boycotting. Okay, I can see the sensitivities since most of Wyoming’s top 10 industries are related to fossil fuels. But firearms are not on the full list of all industries in Wyoming. Sounds to me like Mr. Biteman is trying to sneak in some Second Amendment claims as a hidden rider in the bill. ·

· “The goal of these colluding parties is to starve targeted legal industries of capital, restrict their productivity and redirect that capital to favored industries;” I always appreciate the strong hint of conspiracy theory in the anti-ESG crowd. In reality, capital is going for risk-adjusted returns and this bill wants to play industrial policy—which is what the right accuses the left of doing.

· “These parties are working in concert with many state and federal lawmakers and regulators, as evidenced by new climate disclosure rules from the United States securities and exchange commission;” More conspiracy theory of the Deep State but if it’s so dangerous doesn’t the SEC deserve the proper capitalization of its name 🐥?

The bill attempted to give the state attorney general discretion in enforcing the provisions of the bill, with a penalty of three times the size of a contract if he or she determines guilt. The bill contained an insufficient escape clause in case it increased contract costs and fees or lowered investment returns. It confounded ESG with public policy issues like access to abortion and transgender health services. No examination of the economic consequences of the bill was attempted, simply due to “insufficient time,” according to its fiscal note. The same was true for its companion legislation, SF 172.

More entertaining is to watch the videos of the Senate committee hearing in late January and the House committee hearing in late February, where you can see how Horn 1 was put to death. Grab some popcorn and a couple of beers to watch thoughtful cowboys who make such economically relevant points as:

· Wyoming has a 10-year private equity contract with BlackRock and getting out of that could be difficult and expensive, according to State Treasurer Curtis Meier (0:08:38).

· Patrick Fleming from the State Treasurer’s office expressed concern about “potential unintended consequences,” (0:11:05) that the state will lose contractors out of fear of the 3x liability clause and concludes that “Bottom line on it is [the bill] would probably cause us to sell just about everything other than U.S. Treasuries” (0:15:21).

· Fleming later warned that “JP Morgan is only really one of two large managers that could do the work that we do, for a $26 billion entity [the Wyoming Treasury]. It’s not like just going out and getting somebody else to do this” (1:08:56).

· Fleming noted that the bill could even prohibit investments in one of the state’s largest coal mine operators, Peabody Energy (1:18:26). One of Peabody’s front groups (ironically) supported the bill in the same hearing.

· Scott Meier of the Wyoming Banking Association similarly warned that, “When it comes to state banking, there’s just not a bank around that can handle the activity of the state of Wyoming” (0:43:55) and this could result lead to “cut our nose off to spite our face” (0:36:06).

· Pete Obermueller of the Petroleum Association of Wyoming (PAW) expressed concern that ESG commitments by several of PAW’s oil and gas company members could result in their being targeted by the legislation and “curtailing the types of investments we all might want” (0:45:57).

· Sam Masoudi and Ben Brandes of the Wisconsin Retirement System warned that “Over the last three and half years we’ve produced about $550 million of outperformance, and three quarters of that was from manager selection versus asset allocation. So anything that is going to restrict the number of managers we can select is potentially going to have a negative cost, and potentially pretty substantial.” (1:19:59)

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The essence of SF 172 is “Investment of state funds; consideration of only financial purposes.” Since materiality isn’t discussed, it ignores the issue of ESG factors being material and mostly natters on about divesting and proxy voting. No more need be said so I’ll just let you enjoy the the portion of the Senate Revenue Committee hearing which starts at 1:12:33.

In summary, Certified Professional Landman Biteman got pushback from the State Treasury, the Wyoming Banking Association, the Petroleum Association, and the Wisconsin Retirement System. Horn 1 on the Triceratops is the main attack one, right above the snout so losing it is very damaging indeed to the animal’s viability. It is no wonder that Mr. Biteman vented his frustration in his heartfelt comments at 2:00:42, after the House committee unexpectedly gutted his bill with substitute language:

“Mr. Chairman, Members of the Committee. I have never seen this happen before. To say I’m disappointed is an understatement. To treat a sitting fellow legislator like this in a public committee—which is actually a public execution, not a public committee—but nonetheless, to spring a substitute bill on me in committee without me even knowing about it, seeing it…I just say shame on you.”

Horn 2 (Defying Death)

Even with the main horn down, the Triceratops is not the kind of dinosaur that gives up without a muscular fight and Horn 2 defiantly enters the fray. There is a reason why it was the last standing dinosaur 🦖 🦕. Two months after the hearing, on March 21, 2023 in The Cowboy State Daily Kevin Killough declared that “As Biden Vetoes Anti-ESG Bill, Wyoming Works Against ‘Woke Capitalism’.”

Like all Big (even if nonsensical) Ideas, people scramble to take credit for them. Mr. Killough asserts that the Texas Policy Foundation credited former Treasurer Mark Gordon with starting the national movement against Woke-Capitalism. Republican Presidential candidate Vivek Ramaswamy doesn’t have a single reference to Mr. Gordon in his best-selling book “Woke, Inc.: Inside Corporate America’s Social Justice Scam.” Nor did former Vice President Mike Pence, seeking credit for the idea himself, acknowledge Mr. Gordon in his rhetorically powerful and intellectually vapid May 26, 2022 letter to The Wall Street Journal. Life is so unfair 🥲.

For a dinosaur, Triceratops was a smart one and knew the advantage of foraging in packs (since they were vegan). Mr. Killough approving notes that “Gov. Mark Gordon signed a letter written by Florida Gov. Ron DeSantis, to fight back against ESG, which is sometimes called ‘woke capitalism.’ The letter says ESG is “a direct threat” to the American economy and way of life.”

Not wanting to be left out of the fight against death, three days later BigFoot99News bravely declared, “Two anti-ESG bills died during the 2023 legislative session, but Wyoming has joined Florida and 17 other states to fight so-called ‘Woke Capitalism.’” It also celebrated “a 25-state lawsuit against the Labor Department and Joe Biden over the administration’s ESG rule is continuing in the courts.”

Why let economic rationale from local institutions get in the way of way maintaining your relevance in the ESG Culture Wars and paying in homage to the tragically underrecognized Mr. Gordon?

Horn 3 (Accepting Death)

As Governor DeSantis slips in the polls and anti-ESG legislation continues to run into serious headwinds in other states (stay tuned for more on this) it is clear that Horn 2’s days are numbered. Just how numbered is hard to say with a presidential election coming up. But in the sweep of the three million Tremendous Triceratops Years of the late Cretaceous Period even a few election cycles are a pretty short period of time.

Horn 3 is the Wisdom Horn. When it sees that Horn 1 is gone and that Horn 2 is a lost cause, it humbly acknowledges destiny. In a long and thoughtful April 11,2023 essay in WyoFile, veteran Wyoming journalist Kerry Drake opens by saying, “Wyoming’s state government is hurtling toward a financial crossroads: Either the state will continue fighting “woke capitalism,” or it will embrace legitimate conservative principles and the free market’s efforts to combat climate change, promote justice and treat workers with dignity.”

Mr. Drake further points out that “apparently the only thing that matters now to Wyoming’s ‘freedom’ loving ‘true Republicans’ is winning the culture wars.” He notes with appreciation the ubiquity of ESG factors and their role in free markets. Citing some of the economic pushback that appeared in the hearings, he wryly observes that “That’s a pretty hefty price to pay for “’owning the libs.’”

Mr. Drake concludes: “If Wyoming truly believes the health and well-being of future generations is what matters most, the more people working to improve the world on the road to state prosperity — whether you call them woke or not — the better.”

I care as much about the future generations in Wyoming and the other Red states as I do in my home state of Massachusetts and all the other Blue states. For that to happen, the ESG Culture Wars will have to go the way of the Triceratops. As is happening in Wyoming even as its death throes still have some reptilian rattle in them.

Requiem

There is no better way to honorably acknowledge the amazing species survival of the Triceratops and the death of the final one on earth posing as the ESG Culture Wars in Wyoming than with “Requiem para un triceratops.” Sit ESG Culture Bella in pace.

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