Another to Wyoming elected official is pushing back against the influence of progressive politics in the state’s financial dealings.
Secretary of State Chuck Gray has requested an administrative rule that, if approved by Gov. Mark Gordon, will require investment brokers, broker dealers and securities agents doing business in Wyoming to disclose to their clients if they are using environmental, social and governance (ESG) principles in the course of their business.
“With an increasing trend of mutual funds and brokerage firms being pressured by woke politicians to push ESG principles that are totally in opposition with our Wyoming values, we must take an active role to protect our state and consumers,” Gray said in a statement.
What Is ESG?
Sometimes called “woke investing,” ESG rates funds on various markers of progressive-friendly policies related to protecting the environment, diversity in the workplace and community relations.
Any association with fossil fuel industries quickly gets a fund rated down. Timber industries, gun manufacturers and agricultural businesses also face pressure from the movement.
Critics of the ESG movement say it has become a formidable mechanism in pushing progressive political policies by financially starving companies that don’t comply with ESG standards. In this way, ESG has been able to circumnavigate democratic processes.
Administrative Rulemaking Process
The rule Gray is proposing is different from statutes passed through the Legislature and has a different process.
State agencies may draft rules in consultation with the Wyoming attorney general. Before the rule becomes finalized, the agency must ask the governor for permission to proceed with the rulemaking.
Once the governor grants permission for the process to proceed, there’s a public comment period and the agency may hold public hearings on the proposed rule. The requesting agency may modify or withdraw the rule based on public comments before the agency adopts the rule.
The adopted rule then goes to the governor for a final process in which the attorney general and Wyoming Legislature provide feedback.
After a 75-day period, the governor can approve or veto the rule.
The total process can take four months.
Last week, Wyoming Treasurer Curt Meier updated his office’s ESG policy and presented it at Thursday’s meeting of the State Loan and Investment Board. The board may incorporate an ESG policy into its Investment Policy Statement.
Those policies would work separately than the rules Gray is proposing.
“Although the proposal before SLIB is separate, I look forward to working with the treasurer and other members of the State Loan and Investment Board to strengthen the position of the proposed statement and take on ESG,” Gray told Cowboy State Daily.
According to a statement of principles submitted as part of the administrative rulemaking process, clients are owed the disclosure because “entities that use ESG investment strategies do not focus on maximizing investment returns,” which is contrary to Wyoming law.
Michael Pearlman, communications director for the office of governor, told Cowboy State Daily the office had received Gray’s proposed rule packet, which initiates the process.
“Secretary Gray’s proposed rules will be reviewed according to the statutory and regulatory requirements and timelines uniformly applied to all agency rule reviews under Wyoming law,” Pearlman said.
Failed ESG Bills
The state Legislature considered two bills during its 2023 session. Both were sponsored by Sen. Bo Biteman, R-Ranchester, and sought to prohibit Wyoming from doing business with firms that engage in ESG practices.
Among the concerns critics of the bills expressed was that the regulations would severely limit the companies Wyoming could legally work with and thereby hurt Wyoming financially.
There also was concern that the penalties levied against fund managers for violation of the law would leave companies wary of working with the state.
The treasurer’s updated policies avoided these issues, and Gray’s proposed administrative rule would only require disclosures.
"So far, the Legislature has declined to act — hopefully that changes in the future," Gray told Cowboy State Daily. "But this rulemaking will advance the ball considerably in taking on woke clown show ESG investments."
Kevin Killough can be reached at Kevin@CowboyStateDaily.com.