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The New York Times reported that the State Financial Officers Association has “pushed[ed] Republican state treasurers, who are mostly elected officials and tasked with managing their state’s finances, are using their power to promote oil and gas interests and thwart Mr. Biden’s climate agenda. These efforts have taken many forms, including: (1) enacting laws that “prohibit state agencies to invest in companies that have severed ties with fossil fuel companies”; (2) criticize the efforts of rating agencies “to integrate climate risk into their credit ratings of States”; (3) withdrawing funds from certain investment managers based on their “stance on environmental issues”; (4) effectively opposing and blocking federal candidates who believed that “financial regulators should control climate risks more diligently”; and (5) oppose proposed federal rules regarding climate risk, including not only the proposed SEC rule on mandatory climate disclosures, but even a Department of Labor rule that “would allow retirement to take into account the risks linked to global warming in their investment strategy”.
Overall, it’s no surprise that a coordinated political effort exists among elected Republicans to counter the climate policies promoted by the Biden administration. Climate change and the public response to it have become an increasingly partisan issue in recent years, and these efforts by Republican state officials are consistent with the Republican Party’s broader policy agenda. And the arena in which this action takes place — financial markets — has become an increasingly powerful arena for environmental policy, as evidenced by the Biden administration’s SEC agenda.
But the impact of this concerted effort by Republican state treasurers could have significant consequences beyond their apparent immediate goal of pushing back on efforts to integrate climate risk and environmental goals into corporate financial planning. As one commentator put it, by choosing to “we[e] the public finance market to make political statements. . . the costs can potentially be quite significant”, especially since if financial institutions exit certain markets – whether voluntarily or not – due to incompatibilities with a regulatory regime, then interest costs can increase in those markets (eg, states and localities penalizing companies with an environmental agenda) because reduced competition can increase the cost of obtaining capital (eg, higher interest rates). could lead to a division of American companies according to the set of states to which they intend to market their services, with potentially important consequences for the global economy.
Nearly two dozen Republican state treasurers across the country are working to thwart climate action at the state and federal levels, fighting regulations that would clarify the economic risks posed by a warming world, lobbying against climate-conscious candidates for top federal positions and using the tax dollars they control to punish companies that want to reduce greenhouse gas emissions.
Over the past year, treasurers from nearly half of the United States have coordinated tactics and talking points, met privately and cheered each other on publicly in a well-funded campaign to protect fossil fuel companies that strengthen their local economies.
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