Green America released the following media release on May 10, 2023 in support of socially and environmentally responsible investing as the Republican House Oversight Committee holds a hearing on environmental, social, and governance practices.
“This Is How The Free Market Works”: Leading Green Economy Organization to Conservative AGs Opposing The Freedom to Invest Responsibly
WASHINGTON, DC – MAY 10, 2023 – This morning, Republican House Oversight Committee will hold a hearing on Environmental, Social, and Governance (ESG) practices at 10 a.m. The hearing is the result of a letter sent from 21 state attorney generals to top asset managers throughout the country, warning them against using ESG considerations in their investment decisions.
Green America is the nation’s leading green economy organization with 300,000 individual members and supporters as well as nearly 2,000 companies in its Green Business Network. It released the following statement in support of ESG investment practices.
Cathy Cowan Becker, Responsible Finance Campaign Director at Green America, said:
“Research shows that returns on socially responsible investing are on par or better than investing not based on ESG principles, especially over the long term.
“The reason ESG investing works is that it seeks out information about risk and opportunity that is not necessarily reflected on a company’s balance sheet. For example, if a company routinely dumps toxic chemicals into communities, underpays and overworks its employees, and skirts basic safety practices, that poses a financial risk. Eventually these poor practices will catch up with that company, and investors and shareholders will be caught holding the bag. On the flip side, if a company takes advantage of burgeoning markets in clean energy, provides fair pay and benefits for its workers, and contributes to its community, that company is positioned for stable growth and greater profitability.
“Using ESG principles to help inform investing is not a breach of fiduciary duty. On the contrary, not taking all factors related to risk and opportunity into account can be seen as a breach of fiduciary duty. Individual, institutional, and public asset managers should be free to consider all information when making critical investment decisions. This is how the free market works. It is not the role of government on the federal or state level to tell asset managers how to manage investments for their clients.”
Additional data/resources:
- According to Morningstar’s 2022 Sustainable Funds US Landscape Report, most sustainable funds delivered stronger total and risk-adjusted returns than their respective Morningstar Category indexes. Over half of sustainable funds finished in the top half of their Morningstar Category, led by equity funds. Data for the previous five years showed even better results – the returns of 74 percent ranked in the top half and 49 percent in the top quartile returns.
- The Morgan Stanley Institute for Sustainable Investing released a study, Sustainable Funds Outperform Peers during 2020 Coronavirus, that found that in a year of extreme volatility and recession, funds focused on “on environmental, social and governance (ESG) factors, across both stocks and bonds, weathered the year better than non-ESG portfolios.” The research analyzed more than 3,000 US mutual funds and ETFs, finding that sustainable equity funds outperformed non-ESG peer funds by a median of 4.3 percent in 2020.
- The NYU Stern Center for Sustainable Business released a 2021 meta-study aggregating over 1,000 studies on ESG and performance. The report found that 59 percent of studies showed that ESG investments had a similar or better performance relative to conventional investment approaches, while only 14 percent found negative results. It also concluded that “ESG investing appears to provide downside protection, especially during social or economic crises.”
- Two 2021 Texas laws banning cities from contracting with banks with ESG policies cost an extra $303 million to $532 million in higher municipal bond interest rates.
- Taxpayers in Florida, Kentucky, Louisiana, Missouri, Oklahoma, and West Virginia could owe up to $708 million in additional interest charges on municipal bonds due to anti-ESG laws and bills.
- Texas is paying 19 basis points more and Florida is paying 43 basis points more than California in interest rates on the bond market because they prohibit contracts with lenders that consider ESG.
To speak with a representative of Green America, contact Max Karlin at (703) 276-3255 or mkarlin@hastingsgroupmedia.com.
ABOUT GREEN AMERICA
Green America is the nation’s leading green economy organization. Founded in 1982, Green America provides the economic strategies, organizing power and practical tools for businesses and individuals to solve today’s social and environmental problems. http://www.GreenAmerica.org
