Biden's quiet 'Green New Deal' in corporate America

Two valuable lessons can be taken from over a year of living and working under a globalist-leaning government. First, the United States’ system of Constitutional Republicanism and free-market capitalism is under siege unlike at any other time. Second, the Founding Father’s idea of federalism is more valuable today than ever before.

These two lessons are best demonstrated in the Biden administration’s new obsession: the Environmental, Social and Governance, or ESG, rating system.

ESG is a political score created by social and environmental activists, the United Nations, European and global interests and now supported by many of the largest U.S. financial services companies. ESG measures how compliant an entity needing capital is to a subjective set of political factors.

In theory, it is an investment strategy. In practice, it is an invisible fist that bypasses the legislative process to force a political agenda on society. It is the epitome of the saying, "He who has the gold makes the rules."

Therein lies the problem. ESG intermediates outside interests into the decisions of private corporations, and now even state and local governments, to coerce behavior. It is an effort that uses backdoor channels to implement public policy that could never make it through Congress because Americans would reject it.

For example, the Green New Deal didn’t pass in Congress, but that didn’t stop those advocating its passage from pushing forward their radical agenda. They simply changed the forum from Congress to corporate America.

ESG is more powerful than legislation because activists force behavior by cutting off necessary capital or insurance from disfavored companies and industries or using their influence to cancel those who don’t comport with their politics. This is happening in Utah.

An insurance company recently decided it would no longer bid to insure the fleet vehicles owned by a Utah-based generation and transmission power company. The insurer has signed onto a net zero climate initiative originating in Europe.

ELECTRIC CAR SURVEY FINDS THIS AS THE BIGGEST REASON PREVENTING PEOPLE FROM BUYING THEM

Why did the insurer decide it didn’t want to do business with the company? Because the power generated is derived from coal. If we follow this to its natural conclusion, insurance companies committed to net zero climate initiatives will stop serving certain power companies through the implementation of economic sanctions. If this agenda is successful and the activists and NGOs behind these actions can convince enough insurance providers to play along, which many of them have, power could be shut off to large portions of the population.

ESG is coercive capitalism, the use of capital and insurance to drive a political agenda. S&P Global recently began publishing ESG ratings on states. The analysis includes ambiguous and open-ended categories such as how a state scores on "managing carbon," "political unrest stemming from community and social issues" and "adverse publicity that results in reputational risk." What other state historically has suffered more "adverse publicity…result[ing] in reputational risk" than Utah?

 Investors could point to an ESG rating and decide Utah is undeserving of the lowest market rates because we have the wrong policies. Beyond that, will we now have to coddle the press for fear of adverse publicity damaging our reputation and thereby hurting our borrowing costs?

To our knowledge, such subjective criteria have not previously factored into borrowing costs. Utah has methodically and carefully managed revenues and debts over decades to maintain the best credit rating in the world, which allows the state to borrow money at the lowest rates in the market and save taxpayer dollars on necessary infrastructure projects. But that may not matter if organizations like S&P continue to publish a subjective political rating. Investors could point to an ESG rating and decide Utah is undeserving of the lowest market rates because we have the wrong policies. Beyond that, will we now have to coddle the press for fear of adverse publicity damaging our reputation and thereby hurting our borrowing costs?

Regardless of which party holds your allegiance, we hope all Americans can see how dangerous this system of coercive capitalism is. As Americans, we have a history of rejecting tyrannical systems. Sadly, this version is wrapped in an agenda that sounds positive and needed. Even if one concludes that is the case, we hope reasonable people of all backgrounds will reject this Trojan horse designed to achieve political outcomes using economic force.

Our ancestors left European monarchies, powerful elites, and state religions to found a system of individual freedom and equality. ESG represents the greatest threat to our American systems of Constitutional Republicanism and economic freedom in our lifetimes. We are not arguing against the ESG agenda per se. We are arguing against a system that uses economic coercion to achieve its goals. Coercion and force without public accountability are antithetical to the American ethos.

Those with a free-market perspective may be tempted to sit back and allow the markets to take care of the problem. Sadly, when ESG takes hold, free markets do not exist. That is because for ESG to be effective, it must drive large amounts of capital to act in the same way. 

ESG takes the market out of the market. The markets only work when different players have different views about the future. This leads to the buying and selling of the same security on any given day. When views converge, markets disappear, as was the case in 2008-2009 when buyers disappeared and sellers desperately dumped securities at any price.

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Insurance companies committed to net zero climate initiatives and backed by activists and global interests, along with the Biden administration, would shut down a power plant in Utah. If all insurance companies that provide such policies to power systems think the same way, our system of free-market capitalism is in jeopardy, to say nothing of the costs borne by those whose power is shut off. In such a case, competitors that would normally step in to provide a policy share the same views and commitments and so do not step into the void. It is not an easy endeavor to create massive insurance companies that can compete.

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This brings us to the wisdom of our Founding Fathers. The solution to this rapidly developing crisis may very well require the states to exercise their rights to reign in a federal government that has declared war on its citizens. The Founding Fathers understood the states created the federal government, not the other way around. It will likely be the states that will have to stand up and save our nation from the tyrannical global elites pushing ESG.

Republican Chris Stewart represents Utah's 2nd congressional district.

Republican Marlo Oaks is the 26th Treasurer of Utah.