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There’s only one problem with this week’s Big Oil politics – price

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Source: ronniechua / iStock via Getty Images

Time was that production cuts by OPEC would shake world markets. I remember my journalist colleagues at Bloomberg in Europe chasing OPEC members around Vienna twice a year during meetings in the ‘90s, looking for any sort of utterance that would indicate a cut was coming, because of how much the news meant to clients.

No more. This week’s 2-million-barrel cut, or about 2% of global supply, while generating ferocious political headlines about OPEC and Russia teaming up against President Joe Biden, barely moved the needle in oil markets. West Texas Crude remains below $90 a barrel — far below its peak above $120 earlier this year.

Part of it is that Europe has worked hard to lessen its dependence on Russian oil. The European Commission announced Thursday that because of increases in imports of liquid natural gas and oil and gas from other pipelines, it has reduced its supplies from Russia to 7.5% from 41% this past spring when Russia invaded Ukraine.

Part of it stems from people driving less, or even switching to electric vehicles, to move away from oil as the economy weakens and recession looms. And part comes from the fact that renewable energy continues to surge. Growth in solar, battery and wind power has more than tripled in the past decade, according to a new report today by the Environment America Research & Policy Center and Frontier Group, with battery and solar leading the way.

The outlook for oil, despite continued politics and international intrigue, is not good. All of which makes it even more frustrating to be a state pension employee in Louisiana this week, after its state treasurer pulled $794 million out of BlackRock $BLK , saying the world’s largest asset manager is “anti-fossil fuel.”

Doubling down on a losing bet is no way to run a retirement fund.

More insights below . . . .

Zeus: Corporate ESG momentum threatened by first recession of the climate era

. . . . Faced with the first recession since the rise of ESG, many CEOs are putting environmental, social and governance initiatives on the back burner as they face cost cuts and budget reductions, according to a new KPMG study. David Callaway argues that the removal of ESG from corporate priorities is a direct result of the lack of regulation and reporting around climate risk, the types of which authorities in Europe and the U.S. have so far been unsuccessful in accomplishing. Climate change, meanwhile, chugs along. . . .

Read the full Zeus column

A selection of this week’s subscriber-only insights

. . . . Cervest, the London-based climate intelligence firm run by Iggy Bassi, launched a ratings system this week to promote its climate risk software, which can rank as many as 500 million global assets — from individual buildings to roads, bridges and cities — by their vulnerability to climate events such as drought, floods or fires. The new product is a natural evolution for Cervest as it evolves its technology into tools financial professionals can easily use to measure the climate risk of their portfolios. . . .

. . . . Could this inspire a trend? A 100% solar-powered community near the area hardest-hit by Hurricane Ian came through the devastating storm in good shape, with the power still on. An advantage: Little to none of the electricity-transmission infrastructure that gets wrecked by fierce weather events. Read more. . . .

. . . . The headline reads positive — “Most electric car buyers don’t switch back to gas” — but the numbers, though improving, do not seem particularly great. After all, if EV ownership is that great, why are the figures not at about 90%? We look into the reasons. Read more here. . . .

. . . . Despite market turmoil, the clean energy deals just keep on coming. The latest is a potential purchase by Blackstone $BX of Emerson Electric’s $EMR commercial and residential solutions business, which could be worth up to $10 billion, according to Bloomberg, which first reported the talks. The sudden increase in merger and takeover activity comes after the signing of the Inflation Reduction Act last month sparked huge interest in U.S. assets tied to clean energy. . . .

Editor’s picks: Ian’s insurance impact; EV credits

Ian’s double-whammy in Florida: insurance

Even before Hurricane’s Ian estimated $60 billion worth of devastation, the residential insurance market in Florida was struggling under billions in losses, legal costs and fraud, the Associated Press reports. “The difficult environment has put many insurers out of business and caused others to raise their prices or tighten their restrictions, making it harder for Floridians to obtain insurance.” The report cites the Insurance Information Institute as saying about 12% of Florida homeowners don’t have property insurance — or more than double the U.S. average of 5%. The report also notes that Florida’s insurance industry has had two consecutive years of net underwriting losses exceeding $1 billion each year. A string of property insurers have become insolvent, while others are leaving the state.

Renewable fuel credits could boost EVs

EVs could become eligible for renewable fuel credits, if the EPA is successful in proposing the benefit, as indicated in several published reports. The plan, first reported by Reuters, would be for the agency to add the credits element to an upcoming proposal on biofuel blending mandates. According to the report, which cited sources familiar with the matter, the EPA is expected to send the proposal, which will address mandates for after 2022, to the White House for approval by the end of next week. U.S. News and World Report said the EPA did not confirm details, but quoted EPA spokesperson Tim Carroll as saying the agency intends to meet the deadlines to implement the RFS program. Sources told U.S. News and World Report that electric vehicles would likely qualify for credits under the program’s “D3” mandate pool.

Stress-testing economies for climate shocks

In an effort to stress-test the global economy to extreme climate change-related shocks on large and interconnected economies, this IMF working paper identifies large and interconnected economies vulnerable to climate change-related shocks, estimates these economies’ external financing needs-at-risk due to these shocks, and quantifies the spillovers to the global economy using a global network model. The authors of Stress Testing the Global Economy to Climate Change-Related Shocks in Large and Interconnected Economies write in the abstract, “We show that large and interconnected economies vulnerable to climate change could trigger a drain of $1.8 trillion in international reserves (2% of 2019’s global GDP). Domestic and multilateral macroeconomic policies can help reduce these global losses to about $0.8 trillion. The scenario highlights the importance of considering global spillovers when assessing the impact of climate change-related shocks.” Authors: Yeu Jin Jung, Independent; Camilo E. Tovar, International Monetary Fund; Yiqun Wu, IMF; Tianxiao Zheng, IMF. 

Words to live by . . . .

“Over-dependence on finite resources, like oil, ignores the ability of our great minds to develop alternative energy for the masses, and in doing so ignores climate change and sets up our students and workforce for failure by not educating them about the needs of our future.” — Deb Haaland, U.S. Secretary of the Interior.

By David Callaway

The Most Destructive Storms in US History

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Source: Michael Bocchieri / Getty Images News via Getty Images

Residents along the coasts of Florida, Georgia, and South Carolina faced hurricane-force winds and life-threatening storm surge this week after Hurricane Ian made its first landfall west of Fort Myers, Florida, on Wednesday. The Tampa Bay and St. Petersburg areas are also experiencing severe flooding and hurricane winds. 

Many of the region’s more than 4 million residents live in low-lying neighborhoods that are vulnerable to storm surge. According to the American Red Cross, more than 33,000 people sought refuge in 260 evacuation shelters across Florida to escape Ian on Wednesday night.

Hurricane Ian follows after a series of recent horrific climate disasters. Since the start of June and the hurricane season, unusually heavy monsoon rains caused historic floods in Pakistan, Hurricane Fiona brought destruction to Puerto Rico and Atlantic Canada, the worst drought in 500 years started wreaking havoc in Europe, and unprecedented heat waves dried up rivers in China, affecting 900 million people.

Due in large part to atmospheric warming caused by emissions from human activities, once-in-a-life-time weather events are occurring regularly and with increasing frequency all around the world, including the United States. (These are countries facing the worst climate emergencies.)

According to a July study by international scientists in Nature Climate Change, the annual number of cyclones forming globally is decreasing significantly under global warming. However, the intensity of tropical storms is rising, and some are moving at slower speeds, elevating the risk of damage to coastal communities. And while enforcing building codes, investing in hurricane resistant design techniques, and other infrastructure improvements can help mitigate storm damage — there is no such thing as a hurricane-proof home. 

Of the 51 most costly storms in U.S. history, 28 – including the top 10 – have occurred in the last 20 years. Based on recent estimates that Hurricane Ian has already caused over $100 billion in damage, the Category 4 storm is likely to also rank among the most costly tropical cyclones in U.S. history. Hurricane Katrina, which caused over 1,800 fatalities and $186.3 billion in damages to New Orleans and the surrounding area in August 2005, is the most costly storm in U.S. history. (Find out if Hurricane Katrina is among the deadliest billion dollar natural disasters in U.S. history.)

To identify the costliest U.S. tropical cyclones, 24/7 Wall St. reviewed the cost of hurricanes throughout history, estimated by the National Oceanic and Atmospheric Administration’s National Centers for Environmental Information. Both the inflation-adjusted (using 2022 consumer price index) and unadjusted cost of each storm came from the report. The estimated number of deaths associated with each storm was obtained from news reports.

Click here to see the costliest U.S. tropical cyclones in the US.

Famous People Who Have Turned Down Major Awards or Nominations

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Source: Spencer Platt / Getty Images

The Oscars, the Grammys, and the Golden Globes are some of the most renowned annual celebrity events, where a select few artists receive awards for their exemplary work. Although the vast majority of recipients gladly accept their trophies, there are rare occasions when an honoree decides to turn down an award, as Marlon Brando famously did in 1973 when he rejected an Oscar for Best Actor, for his role in “The Godfather.”

As Brando did not attend the ceremony, Apache actress Sacheen Littlefeather refused the award in his stead, citing Brando’s desire to draw attention to Hollywood’s negative portrayals of Native Americans. (See this famous moment and more by looking back at some of the most iconic photos from the Oscars.)

To compile a list of 30 famous people who have turned down major awards or nominations, 24/7 Tempo reviewed multiple biographical and internet sources, including History.com and the Los Angeles Times, as well as entertainment industry media, and other general-interest sites.

Click here to see famous people who’ve turned down major awards or nominations

Like Brando, many honorees have rejected their awards or nominations as a form of protest or boycott to highlight an issue they care about. Another reason people may turn down the opportunity for prestige is because they simply harbor disdain for the pageantry or commercialism of award ceremonies. Pacifism or disagreement with a government’s policies or actions are also reasons for rejecting honors. 

Nobel Peace Prizes have been rejected, as have Olympic medals. Many celebrities have said no thanks to British honors including knighthood and various Order of the British Empire (OBE) awards. (Some people, on the other hand, may deserve an award that never materializes. Here are 25 of the Oscars’ most egregious snubs.)

Zeus: Corporate ESG momentum threatened by first recession of the climate era

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Source: Maxiphoto / iStock via Getty Images

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc.)

SAN FRANCISCO (Callaway Climate Insights) — The standard CEO playbook when facing a recession is to begin by reducing marketing costs. Scale back events, travel, new hires, anything that falls in the category of “like-to-have,” vs. “must have,” such as legal, sales, or finance. Where does ESG fall in this scenario?

For the first time since the rise of environmental, social and governance (ESG) strategies among public companies four years ago, global economies face recession. Unfortunately, and due in part to the lack of solid regulation tying ESG principles to material reporting, ESG looks to be coming out on the losing end…

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By David Callaway

18 States With the Worst Drought Right Now

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Source: David McNew / Getty Images

As Hurricane Ian lashes the west coast of Florida with drenching rains, it is easy to forget that many states have the opposite problem – nowhere near enough rainfall. While torrential rain can cause flooding, too little rain can cause a drought. (These are the most powerful hurricanes of all time.)

The National Weather Service describes drought as a prolonged period of usually dry weather, causing water shortages and/or crop damage. But unlike other natural disasters such as floods and hurricanes, droughts are harder to define as a natural disaster, points out the U.S. Geological Service. Droughts, the agency notes, are more subjective because they “do not have the immediate effects of floods, but sustained droughts can cause economic stress throughout an area.” See the deadliest billion-dollar natural disasters in U.S. history.

Plus, average yearly rainfall naturally varies across the U.S. In the southwestern deserts, average precipitation is less than 3 inches a year, while in Atlanta it is about 50 inches, according to USGS.

To identify the states with the worst drought, 24/7 Wall St. reviewed drought data for the most recent week (Sept. 23) from the U.S. Drought Monitor, a joint program between the National Drought Mitigation Center at the University of Nebraska-Lincoln, the National Oceanic and Atmospheric Administration, and the U.S. Department of Agriculture. The 18 states currently dealing with drought were ranked by their percentage of land area in extreme or exceptional drought. 

The driest county in each state is the county where the largest portion of land is in extreme or exceptional drought. We also added the percentage of the state population living in areas with extreme or exceptional drought, all from the report. Total population comes from the American Community Survey 2020 five-year estimates.

On this list, Kansas is the driest state. More than 70% of its land area is deemed drought-stricken. More than 1.1 million people live in those drought areas. Oklahoma and Utah come in at No. 2 and No. 3, respectively.

No. 4 shouldn’t come as much of a surprise, considering the wildfires that have hit the state in recent years. Nearly 58% of California is classified as being in extreme or exceptional drought conditions. That leaves more than 11 million people – the most in the U.S. – on rain-parched lands.

Click here to see 18 states with the worst drought right now.

Climate played no role in Brazil’s election, but Amazon’s future hinges on runoff

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Source: luoman / Getty Images

More than 50 years ago, when I was in seventh grade, a teacher introduced my geography class to a new concept: “the environment.” No mention of climate change or global warming. Just “the environment.” And his example was an area that was fascinating for the boys assembled before him: The Amazon, with its vast expanse of trees and rivers, its piranha fish and uncontacted tribes. He also explained that the huge forest was of great importance because it sucked carbon dioxide from the air and replaced it with oxygen.

Memories of this class were revived about a year ago when a study by the Monitoring of the Andean Amazon Project (MAAP) revealed that the Brazilian portion of the Amazon — by far the largest — now emits more carbon into the atmosphere than it absorbs. This is largely due to the large-scale deforestation of the area by small- and large-scale farmers, much of it by burning.

And now the recollections have been rekindled by the current presidential race in Brazil between the incumbent, right-winger Jair Bolsonaro, and a former leftist president, Luiz Inácio “Lula” da Silva, a contest that has now gone to a runoff later this month after neither candidate topped 50% of the votes on Sunday. For the Brazilian Amazon, it could be a life-or-death decision…

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By David Callaway

The Worst Hurricanes in US History: Before and After Pictures

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Source: Chris Graythen / Getty Images

Hurricane Ian made landfall in South Florida, not far from the city of Fort Myers. at 2:24 PM EDT. The storm had intensified rapidly, with recorded sustained winds of 155 mph, just 2 mph under becoming a Category 5 event. Meteorologists say that in addition to heavy winds and rain, Ian’s storm surge poses a serious risk for loss of life, with some estimates saying the water could rise as much as 18 feet above sea level. At the time of this story, some 800,000 Floridians were reportedly without power.

A hurricane is a large, swirling tropical storm, with wind speeds than can exceed 150 miles an hour. Either from personal experience or from the visceral imagery provided by national news outlets, most Americans are familiar with the results of these savage tempests: boats overturned and smashed together, cars and trucks picked up and dropped upside down miles away, city streets filled with shattered glass or turned into torrential rivers, rural villages razed into piles of sticks, and so on.

Sometimes, the devastation is so vast that we nearly forget what the places looked like before they were struck by major hurricanes. That is why 24/7 Wall St. has collected before-and-after images depicting the horrific effects of some of the worst hurricanes to strike the United States in recent history. We reviewed information from the National Hurricane Center on 18 major hurricanes since 2000 that caused at least $3 billion in damages.

Regard the peaceful scenes of life in normal weather, then the aftermaths of these violent superstorms, and remember how punishing the natural world can be.

Click here for before and after pictures of the worst hurricanes in American history

A new $7 trillion price tag on natural markets highlights transition play

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Source: Ron and Patty Thomas / E+ via Getty Images

A new report this week has slapped a value estimate on natural markets such as agriculture, carbon credits and conservation projects for the first time — a whopping $7 trillion that underscores the economic and investment potential of the coming transition to renewable energy.

The Taskforce on Nature Markets, funded by the Mava Foundation, a Swiss philanthropy started 28 years ago by the late conservationist Dr. Luc Hoffmann, co-founder of the World Wildlife Fund, said in the report titled Nature in an era of Crises, that the current value of those markets is already equivalent to 8.6% of global GDP, which would make it the third largest economy in the world after China and the U.S.

The taskforce, which includes former U.S. Treasury Secretary Hank Paulson and Kate Hampton, chair of the Children’s Investment Fund Foundation, is seeking to develop a taxonomy for these markets, which are already booming in areas of credit and commodities but lack a focus on economic prosperity as well as natural preservation.

The report is an interesting addition to dozens of private attempts by Wall Street and other financial centers to put a value on the opportunity of environmental, social, and governance (ESG) investing opportunities. But it is just a first attempt at trying to envision what a complete transition to a renewable and sustainable economy might look like two decades from now.

Still, in this current era of confusion and disinformation about climate agendas, it is a welcome reminder that ESG and environmental investing in general is more than just a trend.

More insights below . . . .

Here’s one way to solve the ESG culture wars with red states

. . . . The culture wars around ESG investing refuse to subside, even with climate change wreaking havoc on places such as Florida this week. Mark Hulbert takes a look at the folly of ignoring climate risk in investment decisions and comes up with a unique compromise that might satisfy clean tech investors and red state politicians alike. And more importantly, allow everybody to hedge climate risk and seek returns on new renewable strategies. . . .

Read the full article

New global weather report on climate change points finger at Latin America

. . . . Warming trends and extreme weather disasters made 2021 the worst year in history for climate disasters, particularly in Latin America, according to a new report out of Cartagena, Columbia. Michael Molinski looks at which insurers were most impacted, along with several other industries, from oil exploration to tourism. The report also breaks down which parts of Latin America are getting hit the hardest, and the impact of deforestation in the Amazon Basin, which doubled last year over 2020. . . .

Read the full story

Book review: The Displacements tells the story of the next hurricane to hit Florida

. . . . The destruction from Hurricane Ian is only beginning to be counted, but everybody agrees it won’t be the last hurricane to hit Florida. In his review of a timely new book called “The Displacements,” by Bruce Holsinger, our correspondent Jack Hamilton looks at how Ian’s wrath may be just a preview to what the first Category 6 hurricane might look like, and its impact on the lives of the people in its path. The story of Daphne Larsen-Hall, a wealthy Coral Gables resident left homeless and broke by a hurricane, is not one to be missed. . . .

Read the full review

A selection of this week’s subscriber-only insights

. . . . Russia’s invasion of Ukraine has been a tragedy — and an economic pain in the butt for the rest of the world. But it may have a silver lining: that it is expected, after a relatively brief turn to fossil fuels, to speed up the adoption of renewables. Here’s how it could play out. Read more. . . .

. . . . It used to be in times of war that a country’s infrastructure was pretty much self-contained and could only be taken out by bombing or, in relatively rare cases, sabotage. But now international pipelines proliferate, wind turbines and oil rigs sit in the sea and the rise of computers means facilities can be attacked remotely. With global tensions rising, is enough attention being paid to these dangers? Read more. . . .

. . . . In America, much focus lately has been on wind power, especially with the green lights given to offshore wind on the East Coast. In addition, supply chain issues and tensions with China have hampered solar. But it turns out solar is becoming the big kahuna of green energy, with, for instance, China’s sun-based renewable having now overtaken wind. And the same is true in other countries. Read more here. . . .

Editor’s picks: We’re not done with Ian yet

Ian restrengthens, heads north

Hurricane Ian was downgraded to tropical storm status Thursday morning as it continued its devastating and deadly path across Florida, but was expected to return to hurricane strength. Forecasters are now watching Ian as it moves out over the Atlantic and heads toward North Florida, Georgia and South Carolina. Ian will make another landfall near Charleston, S.C. on Friday afternoon. The hurricane has brought catastrophic flooding and wind damage across a wide swathe of Florida, and an unknown number of fatalities. A section of the Sanibel Causeway connecting Sanibel Island and Captiva with mainland Florida has been destroyed, cutting off all vehicle access. About 6,500 people live on Sanibel. More than 2.5 million people were without power statewide, with the most infrastructure damage occurring in Southwest Florida. President Joe Biden declared a major disaster for the state. Gov. Ron DeSantis, in an update from the state Emergency Operations Center in Tallahassee Thursday morning, said: “You’re looking at a storm that’s changed the character of a significant part of our state, and this is going to require, not just the emergency response now, and the days or weeks ahead, I mean this is going to require years of effort, to be able to rebuild, to come back.” Ian is expected to inflict as much as $40 billion in property damage claims and much more in total economic losses, RBC Capital Markets analysts calculated. The National Hurricane Center said Thursday that Ian is expected to move off the east-central coast of Florida later today and then approach the coast of South Carolina on Friday. “The center will move farther inland across the Carolinas Friday night and Saturday. … Some slight re-intensification is forecast, and Ian could be near hurricane strength when it approaches the coast of South Carolina on Friday.”

Green tourism or dirty dancing?

Tourism was one of the fastest-growing sectors before the pandemic, accounting for about 10% of global GDP. But it has also created a number of challenges including environmental degradation, especially in small island countries where the carbon footprint of tourism constitutes a substantial share of carbon dioxide emissions, according to a new IMF paper titled Dirty Dance: Tourism and Environment. This study empirically investigates the impact of tourism on CO₂ emissions in a relatively homogenous panel of 15 Caribbean countries over the period 1960–2019. The results show that international tourist arrivals have a statistically and economically significant effect on CO₂ emissions, after controlling for other economic, institutional and social factors. Therefore, managing tourism sustainably requires a comprehensive set of policies and reforms aimed at reducing its impact on environmental quality and curbing excessive dependency on fossil fuel-based energy consumption. Author: Serhan Cevik, International Monetary Fund.

Words to live by . . . .

“Hurricane season brings a humbling reminder that, despite our technologies, most of nature remains unpredictable.” – Diane Ackerman, author.

By David Callaway

Countries Facing the Worst Climate Emergencies

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Source: Paula Bronstein / Getty Images

Climate scientists have warned that immediate and substantial action is necessary to cut greenhouse gas emissions in half by 2030 in order to limit global warming to 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial levels. This goal was hammered out at the 2015 U.N. Climate Change Conference in Paris.

“Without increased and urgent mitigation ambition in the coming years, leading to a sharp decline in greenhouse gas emissions by 2030, global warming will surpass 1.5 C in the following decades, leading to irreversible loss of the most fragile ecosystems, and crisis after crisis for the most vulnerable people and societies,” the IPCC said in a special report in 2019.

Indeed, the punishing effects of global warming will not be dished out equally. To identify the counties most vulnerable to climate change, 24/7 Wall St. reviewed the Notre Dame Global Adaptation Initiative that measures the vulnerability to climate change and readiness of 182 different countries. Countries are ranked by their overall index score, which itself consists of a vulnerability index and a readiness index. 

The vulnerability index “measures a country’s exposure, sensitivity and capacity to adapt to the negative effects of climate change,” considering indicators in six life-supporting sectors: food, water, health, ecosystem service, human habitat, and infrastructure. The readiness index “measures a country’s ability to leverage investments and convert them to adaptation actions” and considers different indicators in three components: economic readiness, governance readiness, and social readiness. 

We also added GDP per capita and total population from the World Bank World Development Indicators for 2020. Ties were broken by GDP per capita.

The countries most vulnerable to climate change, including Bangladesh, Ethiopia, and Myanmar, are the ones least responsible for global warming. Meanwhile countries like Germany, Japan, and the United States that have economically prospered partly by releasing greenhouse gasses are far better prepared and developed to mitigate the effects of global warming.

For example, the United States recently committed to spending $369 billion on a climate plan that aims to reduce carbon emissions through a series of incentives that would promote clean energy, improve energy efficiency in housing, and provide tax credits for the purchase of electric cars and energy efficient appliances. (Earth’s CO2 level rose every year since climate change became a national issue.)

But the 30 countries most vulnerable to global warming lack the economic resources to dish out tax breaks for electric cars and green home appliances. These impoverished countries are home to more than a billion people, many of them living off subsistence-level, rain-fed agriculture in states wreaked with political instability and poor public infrastructure.

Twenty-three of these countries are African nations dispersed across the continent, including in arid North Africa and in the world’s second-largest rainforest of Central African. The tiny Caribbean country of Haiti is the most vulnerable in the Western Hemisphere. (These are the worst cities to live as climate change gets worse.)

Rising temperatures and rising sea levels, increased variability in precipitation, and increased risk of droughts and floods are the biggest threats from climate change. They will exacerbate existing problems, such as soil erosion caused by deforestation, salt water intrusion into freshwater aquifers, and food insecurity.

Paradoxically, global warming is causing both floods and droughts as higher temperatures suck up more water from the surface into the atmosphere, causing changes to global weather patterns that billions of people rely on for food production. 

Here is the country most vulnerable to global warming.

Here’s one way to solve the ESG culture wars with red states

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Source: Joe Raedle / Getty Images News via Getty Images

(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) — The culture wars have taken on a new enemy — ESG investing.

I’m referring to the efforts in more and more states to prevent managers of their state pension systems from taking “ideological” considerations such as ESG into account. Florida was the most recent state to adopt such rules, requiring that pension fund managers’ investment decisions “be based only on pecuniary factors” with the goal of maximizing investment return.

In announcing the new rules, Florida Gov. Ron DeSantis declared: “Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance…”

The problem with Florida’s and other states’ similar proposals is that there’s no surefire way of knowing whether a manager is violating them. Consider the following three hypothetical situations:…

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By David Callaway

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