Friday, November 24, 2023

Call it Anti-Anti-ESG

The big corpgov news this week is obviously L’Affaire du OpenAI, but I have no idea what I think about that so instead I’m quickly going to highlight an interesting new lawsuit filed by a retired Oklahoma pensioner, alleging that the state’s anti-ESG law violates the First Amendment, as well as both state and federal requirements.

You can find all the relevant documents at this link, but the backstory is that Oklahoma passed a law prohibiting state agencies from contracting with financial institutions that “boycott” oil and gas interests.  OPERS – the state retirement system – took advantage of an exception that allowed continued investment if necessary to fulfill fiduciary responsibilities, which then prompted some nastygrams back and forth between the State Pension Commission (headed by the Treasurer, who is on the OPERS board, but was outvoted) with OPERS itself, regarding whether OPERS qualified for the exception.

And now, a former officer of the Oklahoma Public Employees Association has sued, claiming that the state is using his retirement assets to make an (illegitimate) political statement instead of protecting retiree savings.  The lawsuit is backed by the Oklahoma Public Employees Association.

Anyway, I’m not going to express an opinion on the merits of the suit but I am fascinated by the political economy here, given that OPERS’s board appears to be mainly political appointees.  Despite that fact, the Treasurer stood alone in his insistence on severing ties with “boycotting” institutions.  And I’m constantly trying to wrap my mind around how the First Amendment issues should play out, given the Supreme Court’s insistence that corporate speech may be controlled by shareholders through “the procedures of corporate democracy” – which of course should include shareholders like, say, state pension funds.

https://lawprofessors.typepad.com/business_law/2023/11/call-it-anti-anti-esg.html

Ann Lipton | Permalink

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