Secretary of State Chuck Gray left no doubt about where he stands on ESG policies during a State Loans and Investments Board (SLIB) meeting on Thursday morning, saying he won't tolerate them. He quizzed financial advisors trying to get a contract with the State of Wyoming to help manage the state's investments.
ESG, also called "woke capitalism" by critics, rates funds on various markers of progressive-friendly policies related to protecting the environment, diversity in the workplace and community relations.
Gray mentioned early testimony given by a handful of University of Wyoming students who said there are new investment opportunities opening up in fields that ESG-friendly investors have shunned.
"There's this enormous opportunity in oil and gas created by, if you will, this clown show woke ideology that is out there, this ESG deal," Gray said.
Gray grilled Kevin Alexander, a partner with private credit investment firm Ares Management, about whether he's opposed to ESG-driven investing and how he plans to take advantage of new competitive opportunities opened by the ideological-driven investing.
Ares staff came before SLIB on Thursday seeking an approval to enter into a contract with the state to manage $100 million of its investments.
"We're fundamentally investors in cash-flows," Alexander answered Gray. "Our view of ESG is, we want to provide a risk adjusted return on a predictable, contractual cash-flow. We do not have any limitations with respect to our investing that are guided from an ESG perspective."
Gov. Mark Gordon said he appreciates the nonpartisan approach Ares takes.
"Any kind of negative screen, either ESG or anti-ESG, has complications that can arise," Gordon said. "Our interest is always what we can do that makes the best return for Wyoming."
Gordon, the former State Treasurer, mentioned how other states like Alaska, Texas and Louisiana are still embracing traditional energy sources with their investments.
"It's sort of stupid to say we're going to do it because of this or because of that," Gordon said. "It always bothers me that folks who have no skin in the game for Wyoming, are telling us how to do things."
'ESG Agnostic'
Certain state legislators have argued that it is exceptionally difficult for the state to completely avoid supporting ESG-friendly companies due to the broad support these policies are receiving in numerous industries.
Alexander said his company invests in many oil and gas companies without any other outside guiding perspective beyond the income return those companies generate.
"When we're investing, something might not qualify from a cash-flow perspective," he said.
State Treasurer Curt Meier did not ask any questions about ESG and described Ares staff as "a good group of capitalists." He has spoken against ESG investing in the past, but like Gordon, espoused a commitment to investing in what provides the state the highest rate of return.
The topic of managing the state's investments falls more in the purview of Meier's department than Gray's on a day-to-day basis. The secretary of state oversees the state's business filings. But every member of SLIB gets a say in how the state's investments are handled.
The state's current Investment Policy Statement (IPS) doesn't mention ESG or provide any guidelines to fund managers as to whether or not they can invest in funds supportive of ESG policies.
The treasurer provides a statement on the office's website saying that, from an investment perspective, Wyoming is "ESG agnostic."
Meier is now drafting an ESG investment statement similar to what has been implemented in Florida that requires investment managers to manage the state's funds strictly in a manner that provides the highest rate of return.
Although he previously told Cowboy State Daily this statement would likely be approved at Thursday's meeting, Meier said it is now more likely it won't be handled until June.
The Contract
SLIB voted unanimously to approve the Ares contract.
Meier told Cowboy State Daily the state will receive the first 7% of returns garnered from the Ares investments. After that, Ares will receive 20% of the remaining investment returns, while the state will get 80%.
The state also entered into a contract with Kennedy Lewis Investment Management, to manage $75 million of the state's investments.
Leo Wolfson can be reached at: Leo@CowboyStateDaily.com
