Callaway Climate Insights

Callaway Climate Insights

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Callaway Climate Insights
Florida’s and Texas’s futile attempts at doing away with ESG
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Florida’s and Texas’s futile attempts at doing away with ESG

Political backlash is all messaging, no teeth

Mark Hulbert's avatar
Mark Hulbert
Mar 15, 2023
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Callaway Climate Insights
Callaway Climate Insights
Florida’s and Texas’s futile attempts at doing away with ESG
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This column is for Callaway Climate Insights subscribers only, but it’s OK to share once in a while. Was it shared with you? Please subscribe.

Forcing investments advisers to fall in line with political ideas is hard.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — Ready for today’s climate investing pop quiz?

How can you tell the real-world difference between:

  • A “woke capitalist” who avoids fossil fuel companies because they contribute to global warming, and 

  • A “Milton Friedman-loving capitalist” who avoids fossil fuel companies because he thinks they won’t beat the market?

Give up? The answer is that you can’t. Their portfolios could be identical.

Nevertheless, Florida and Texas, along with a growing number of other states, are trying to prevent the first of my hypothetical pair from doing business with their pension funds, without simultaneously preventing the second. The states are destined to fail, since there is no objective definition that can do the trick.

Consider the definition that the Texas legislature came up with when banning investment advisers from managing any state pension funds if they boycott fossil fuel companies. Section 809.001 of the Texas Government Code defines “boycott energy company” to mean:

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