By Julie O’Donoghue, Louisiana Illuminator
Louisiana’s three treasurer candidates may have different approaches to financial firms that use climate- and socially-conscious investing strategies.
Former Republican Congressman John Fleming, Democratic financial adviser Dustin Granger and Republican state Rep. Scott McKnight, an insurance broker from Baton Rouge, are running for the office. Incumbent Treasurer John Schroder is not because he has decided to run for governor instead.
The treasurer position comes with a limited amount of authority. The person who holds the office supervises the state’s financial accounts but doesn’t get much of a say over how the money is spent or generated.
The treasurer also leads the State Bond Commission that oversees the state’s debt and financial-borrowing schedule, but ultimately gets just one vote on that 14-member panel.
As such, the practices and policies of the treasurer tend to fly under the public radar – until now.
New national scrutiny of environmental, social and governance investing strategies – typically referred to as ESG – has brought recent attention to the bond commission and the treasurer’s office. Conservative politicians across the country have balked at the country’s biggest financial firms embracing a wealth management approach that takes into account climate change, social policies and public health crises such as gun violence.
In Louisiana, the bond commission has occasionally refused to do business with banks that boycott gun manufacturers selling military-style weapons. Schroder, a Republican, yanked nearly $900 million of the state’s investments from BlackRock Inc. over the investment firm’s climate change considerations.
Financial analysts believe such strategies could end up costing state taxpayers more money in the long run. If Louisiana refuses to do business with several firms over their environmental and social policies, the state runs the risk of losing out on competitive bids for its financial business.
A study from the Wharton School of the University of Pennsylvania estimated that Texas taxpayers will be expected to pay an additional $302 million to $532 million in interest on $32 billion in bonds because the Texas government banned cities and counties from working with banks that embrace climate change and gun restrictions.
Republican Attorney General Jeff Landry, who is running for governor, has also suggested the State Bond Commission wield its authority on other social issues.
As a commission member, Landry has pushed his colleagues to block infrastructure and building projects in New Orleans over the city’s more left-leaning stances on COVID-19 restrictions and abortion.
Landry is also backing legislation that would block the bond commission from approving library building projects if the libraries didn’t submit to a review of material deemed “inappropriate” for minors. A disproportionate amount of the material the attorney general and his allies identify as inappropriate touches upon lesbian, gay, bisexual and transgender themes.
The Illuminator asked the treasurer candidates how they would handle calls to boycott financial firms or pull projects from Louisiana localities over social issues.
Fleming, a physician who worked in President Donald Trump’s administration, said that he would ensure Louisiana received the “highest return on investments it can possibly have.” But he also would have concerns about financial firms who use ESG strategies or embrace diversity, equity and inclusion policies.
Fleming said his personal political ideology would not dictate how he would handle the state’s investments, but added that the state needs to consider avoiding banks that refuse to do business with firearms companies.
“If they are unfairly targeting commerce – firearms manufacturers and natural gas and energy production – we need to consider what their role is,” he said. “We don’t want to take away precious capital from the oil and gas industry.”
“Until green energy progresses, we should not invest in it,” Fleming said.
The former congressman said he shares many conservatives’ concerns over what materials are available in libraries and vaccine mandates. But as treasurer, he doesn’t believe he will have much authority to influence local government policies.
Granger, the only Democrat in the race, has said he intends to shift Louisiana’s public investments away from the oil and gas industry and create a more diverse financial portfolio if elected.
“We have been making bad investment decisions for far too long,” he said. “There are so many red flags and no one is doing anything about it.”
Granger would not exclude financial firms from handling the state’s business based on their policies toward gun manufacturers or climate change, he said. If elected, he would immediately lift any prohibition Schroder has put in place on working with companies who favor alternative energy.
Granger may want to take a more “green” approach to the state’s finances as treasurer, but he could be limited by opposition from GOP members on the bond commission. Most of Louisiana’s elected officials are conservative, and they could overrule Granger on several financial issues the bond commission handles.
McKnight, a Baton Rouge native, said he would generally take the same approach to the state’s investment portfolio as Schroder, though he implied that the oil and gas industry – contrary to the views of some conservatives – might benefit from ESG.
“A lot of them are leading the energy transformation right now,” McKnight said of energy companies with operations in Louisiana. “Those same oil and gas companies are moving forward with different types of investments.”
“As treasurer, I think my duty is to keep prudent investment of state funds and to get the highest returns for Louisiana taxpayers,” he said.
McKnight also said he would find it difficult to work with financial firms that don’t support oil and gas companies that provide jobs to Louisiana residents. He said he would have made the same decision as Schroder to pull Louisiana’s investments from BlackRock over the firm’s climate change considerations.
“I would have taken the same stance on [BlackRock] because it is in direct conflict to what’s best for our state,” McKnight said.
When it comes to disputes over the policies of local governments – such as New Orleans’ left-leaning stance on abortion or COVID-19 restrictions – McKnight said he would remain neutral as the leader of the bond commission.
“Historically the treasurer … has been very neutral on bond commission,” McKnight said. “I think the chairman of that bond commission’s job is to make sure it stays compliant with the process and to manage the rest of the committee.”
“Again, Treasurer Schroder has done a great job in being the neutral party,” he said. “I look to continue to be a neutral party to help run the commission.”