Deep red state proposal triggers ESG concerns: 'Raises a lot of questions'

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Oklahoma State Treasurer Todd Russ explains the risks of legislative proposal on oil and gas industry

One Oklahoma bill is facing scrutiny for possibly posing harm to the state's energy industry, and the treasurer is raising concerns.

Oklahoma's state treasurer is raising concerns about legislation he says could open the door further for the controversial practice of "environmental, social and governance" in the deep red state.

Senate Bill 714 would amend the Energy Discrimination Elimination Act of 2022 to take away the treasurer’s "enforcement authority" of the law and give it to the state Attorney General’s office.

The treasurer maintains a list of several banks that cannot do business with the state government of Oklahoma if the institution has publicly expressed opposition to oil and gas companies. 

Critics argue that wording in the legislation would lower the standards necessary for an institution to be on the list and how agencies enforce it.

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The BlackRock logo outside its offices in New York City. (Reuters/Brendan McDermid/File Photo)

"The bill actually removes the treasurer from oversight of the investment behaviors of big financial institutions and proposes to put it under the attorney general's office," Oklahoma State Treasurer Todd Russ told Fox News Digital regarding Senate Bill 714. "So, I mean, that alone raises a lot of questions.

"As a constitutional officer in the state treasurer in Oklahoma, why would you want someone that doesn't have the constitutional commitment and obligation to oversee the financial investments and affairs of the state to be under the treasury and move it to a different constitutional office?" he continued.

The 2022 state law is facing "ongoing" legal challenges, which makes its fate unclear. The law is meant to avoid supporting institutions some leaders see as looking to harm the state's energy industry.

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"Over the years, those subject matters have become very politicized. I mean, it's not a financial issue. It's a social agenda that they've woven into the investments," Russ said of ESG.

"The state of Oklahoma's not trying to get on the other side of that behavior. We're trying to take a stand to say, ‘Look, stay out of the political arena with my investments. Our investments.’ We are solely concerned about the financial performance and profits of our investment, and we don't want outside people using it for political leverage. So, when it comes to environmental issues, oil and gas is very important to Oklahoma. We don't want them acting against the interests of the oil and gas industry."

Republican Wyoming Gov. Mark Gordon discouraged increased spending as oil and gas revenues and a budget surplus leave the state in optimal financial standing. (AP Photo/J. David Ake, File)

Fox Business reported in 2023 that the list from Russ resulted from inquiries about energy investment practices to numerous banks, and it bars the banks on the list from partaking in key state investments like pension funds.

Oklahoma Attorney General Gentner Drummond's office said, "This bill is only necessary because of the treasurer’s dismal failure to successfully defend the Oklahoma Energy Discrimination Act of 2022. That was the real slap in the face to the oil and gas industry.

"The act prohibits state contracts and pension system investments with financial institutions that discriminate against the oil and gas industry."

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An oil worker walks toward a drill rig after placing ground monitoring equipment in the vicinity of the underground horizontal drill in Loving County, Texas. (Reuters/Angus Mordant)

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Republican state Sen. Dave Rader, the bill's sponsor, told Fox News Digital in an email he plans on making some amendments to the legislation, including "further clarifying the definition of boycott energy company to include voting on shareholder proposals which penalize or inflict harm, adding legislative intent to make clear that the purpose of the bill is to protect retirement systems, eliminate the word ‘predominantly’ in the definition of ordinary business purpose to make clear that any pro-ESG action is not allowable [and] eliminate the inclusion of transaction costs when determining a loss which presumably could keep delay divestment indefinitely." 

However, Rader's suggested amendments in the email have not yet been made official, according to the Oklahoma State Legislature's website, where the legislative text is shown.

The legislation would need to go to a vote in the full Senate by March 27 before potentially heading to the state House of Representatives.