You may have seen the story in The New York Times last week about the way Republican state treasurers are suddenly steering their states away from considering climate in financial decisions. The State Financial Officers Foundation appears to be the organizing force behind it all, a discovery that came as a surprise to the investigators at Documented, who provided the NYT with thousands of documents for the story. Documented's senior investigator Jesse Coleman told me this week that when he started looking into who was behind the sudden shift against ESG and climate disclosure amongst fossil fuel execs and Republican politicians, he expected to find one of the usual suspects—the Texas Public Policy Institute, maybe ALEC, the Heritage Foundation—but while they're all somewhat connected here, the little-known SFOF is the ringleader, encouraging states to push back against what they call "woke capital," and pass laws that bar firms like Black Rock, which has turned away from some fossil fuel investments, from doing business within state lines.
Here, Coleman walks us through some of the key findings from the investigation and provides a window into SFOF's strategy. (You can listen to the audio version here)
[00:02:04] Amy Westervelt: Tell me a little bit about the backstory of this investigation. What made you start looking at state treasurers and this particular group that, that wound up being central to this?
[00:02:17] Jesse Coleman, Documented: Yeah, sure. So, you know, we follow the oil and gas industry very closely at Documented. You know, our role is to kind of unveil corporate power over society and politics. And, you know, the oil and gas industry is definitely a big piece of that. So, over the last couple of years, we had really noticed that this kind of catch all term ESG, which stands for environment, social and governance reporting was really becoming a really big deal for the oil and gas industry.
And what ESG is, is, you know, large corporations have to disclose certain things about their impact on the environment and society to shareholders. And for the oil and gas industry we were, we were watching it take over agendas of meetings and everybody was talking about it.
And for most of like the end of 2020 and early 2021, we were like, well, this is, seems like a way for the oil and gas industry to access very low cost capital by sort of greenwashing themselves and saying that they're good on all of these measures and disclosing certain aspects of their business, but maybe not changing their business practices.
Not to say that, you know, it was all bad. It's great to have more disclosure and a more fulsome sort of disclosure system, which is kind of in the works right now in certain regulatory agencies would be a good thing. But at the beginning of this year, we've noticed a real shift.
Whereas before it seemed like these climate disclosures were sort of inevitable, you know, the big oil companies like Chevron and Exxon were saying we're on board for this, everybody was saying, you know, we're gonna do these climate disclosures. At the beginning of this year, we started to see like a lot of Pushback. We started to see direct sort of attacks on this idea of climate disclosure. And we started to see little brush fires pop up in different states attacking the idea of disclosing climate information like this and we thought, well, you know, that's pretty interesting.
[00:04:08] Amy Westervelt: That's really interesting.
[00:04:09] Jesse Coleman, Documented: Yeah. so, you know, it all kind of kicked off especially with a bill that became law in Texas. Which you know, is called kind of colloquially " the fossil boycott rule," which said that, you know, the state of Texas will no longer do business with any company that boycotts fossil fuels.
And that became a law in the state. And, and, you know, we said, well, that's, that's interesting, this isn't coming from nowhere, you know?
So we started kind of filing records requests around, around the states, looking for initially just communications between the Texas comptroller, which is what they call their treasurer and other sort of state officials that would be potentially pushing these boycott bills in different states.
And as we started to get some of these records back, you know, it wasn't exactly what we anticipated. We kind of anticipated that this group, the Texas Public Policy Foundation was maybe driving this in the back seat to a large degree. And it actually turns out they are really involved, but there's this other group called the State Financial Officers Foundation that was acting as this really important central node of a much wider campaign to fight climate policy in general, that included this web of dark money groups that did include, like I said, the Texas Public Policy Foundation, but other major national political players, like Heritage, the American Legislative Exchange Council, ALEC, and some of the most powerful dark money groups in the United States.
[00:05:33] Amy Westervelt: Wow. That is so interesting. Okay. So that tipped you off like that, this random, I mean, it's such a perfect innocuous sounding group, right?
[00:05:44] Jesse Coleman, Documented: yeah, exactly. Yeah. Hiding behind their very boring name. yeah. Yeah.
[00:05:49] Amy Westervelt: So what are they and what were they getting up to?
[00:05:53] Jesse Coleman, Documented: So the State Financial Officers Foundation is a nonprofit group. They kind of bill themselves as a group of state treasures that are interested in the "free market," which is usually sort of code as I'm sure you and many other people know for Republican right politics, and that's kind of what they had been since their founding about 10 years ago, but they weren't really wading into major national issues. Like the things that they were focused on were really within the realm of financial officers of states, you know, pensions, retirement plans, college savings plans, that kind of thing. But we see about a year ago, this group, the State Financial Officers Foundation, they really shift their focus and become completely obsessed with climate measures and talking about climate change and repeating , these like really old lines on climate denial, you know, CO2 isn't bad for you. It's causing a great greening of the earth and...
[00:06:46] Amy Westervelt: Oh wow. They're really hitting the way-back machine .
[00:06:51] Jesse Coleman, Documented: Yes, exactly. Yeah. We've heard all this before and kind of thought some of it had, passed into messaging that doesn't work anymore, but sure enough, here it is again at the state level.
[00:07:00] Amy Westervelt: Wow, so, okay. They had this big shift last year, starting to talk about climate and ESG all the time and whatnot. What did you find about what kind of drove that shift?
[00:07:12] Jesse Coleman, Documented: Well, so, I mean, just, just to note one more thing, about how they operate, they're really closely tied to the American Legislative Exchange Council and they have a lot of similar attributes. One of those is that they have two or more yearly meetings, where they get together, all of their Republican treasurers and all of their corporate sponsors and they go to fancy dinners and they kind of talk about how they're going to strategize on whatever the issue of the day is. Well about a year ago, that issue of the day, like I said, became opposing climate finance policy, in many different ways, but it really coalesced around attacking policies by large financial institutions like BlackRock and moves in the financial sphere by like the securities and exchange commission or the department of labor where these agencies are saying, you should disclose climate risks and that sort of thing. So, yeah, they kind of shifted from talking about more financial stuff to these really kind of hard line climate issues. And they a key turning point here is when this other dark money group called Consumers Research became a top fiscal sponsor of the State Financial Officers Foundation. And then you see the agenda of these yearly gatherings, these meetings shift.
Like almost completely over to how do we attack BlackRock? How do we stop climate finance disclosure rules? How do we take on "woke capitalism"?
[00:08:35] Amy Westervelt: It's so funny, because I was reading through the description on the Documented website. And as soon as I saw "woke capitalism," I was like, oh God. I'm sure there's like Peter Thiel, Strive Capital thing here. Sure enough, two paragraphs later, there it is. So yeah. Tell me about this, it's a thing right in the last year or two of, um, these kind of libertarian folks being all up in arms about ESG and quote unquote woke capitalism. What is that?
[00:09:06] Jesse Coleman, Documented: Well, it's a great example of how these sort of Republican dark money groups are really good at creating a fake thing to attack and really kind of driving it into reality, you know, from a very niche, off the wall issue that nobody's talking about to now, you know, you hear Mike Pence talk about it. You hear it on Fox news every day. It's really been taken up by the zeitgeist. And like I said, really, I think you can trace that back to a large degree to groups like Consumers Research, who, they kind of saw the writing on the wall. They saw that climate policy was really stalling in most places, but one place that it wasn't really stalling and was continuing to move was in this financial world.
And like I said, you know, the, the SEC was taking up rules and these large financial asset managers were saying we have to take climate change into account in our investments. And so they kind of said, this is "woke capitalism" and BlackRock is a "woke capitalist", which is, it's hilarious. It's ridiculous if you know anything about black rock, right. They're, you know, I mean, woke doesn't really have a meaning necessarily, but they're just capitalist.
[00:10:14] Amy Westervelt: "Woke capitalism" is an oxymoron. It just is.
[00:10:18] Jesse Coleman, Documented: Yeah. But it allowed them to sort of in, in this really new and interesting way meld defense of the fossil fuel industry with the culture war.
And it was way more successful than other attempts like this. And you know, this group the State Financial Officers Foundation, because they were made up of state treasures who actually have a lot of power over financial decisions in their states , they elevated this group, the state financial officers foundation into this really key weapon against climate policy.
[00:10:49] Amy Westervelt: That's so interesting, because I feel like it kind of coincides with, with a lot of folks in the climate movement... I mean, a lot of people have been very focused on the financial sector for a long time, the divestment movement and all of that. Right. But I feel like there's just in the last year or two people who had traditionally been like, uh, finance scares me , have been kind of turning towards it too. So it's, it's interesting That these guys sort of anticipated more attention in that realm. so what are some of the things that they've been able to accomplish?
[00:11:21] Jesse Coleman, Documented: Well, so they've passed laws in five states and are aimed at passing laws in 20 more states that are based off of this sort of fossil fuel boycott rule, which there's different sort of model policies that they're passing around .The end result is, is kind of all the same, which is to either scare asset managers into backing away from their climate promises or to get rid of the asset managers that have climate promises and that's been a, a really sort of big and interesting piece of this sort of wide ranging campaign. But they're also doing a lot of other things. They're opposing federal nominees to key positions in federal government that oversee, financial measures.
They're sending comments to rules that are signed by the treasurers. So they look very legitimate and look very serious, but yet they're all kind of coordinated behind the scenes by this other national group. And they're also just figuring out how to kind of scare the financial industry away from overt talk about climate change.
[00:12:25] Amy Westervelt: That is a big deal, because I feel like it's just been kind of this innocuous thing in the background for like 20 years, you know? And, and yeah, you're right for a long, long time the oil companies, it was more like something that they seemed to see as a helpful tool for them to greenwash.
[00:12:44] Jesse Coleman, Documented: Totally. Yeah. I mean, we've heard the oil industry say, you know, this is a great way to access low cost capital because all we have to do is disclose X and Y and then suddenly, we get cheaper money from it. And I think this is another really interesting thing about this. You kind of hear ALEC's leader Lisa Nelson, talk about this rec.
She talked about this recently, but you know, they did polling on BlackRock. And what they found was that Democrats don't like BlackRock, and now Republicans don't like black rock, so they were able to kinda do this great, sort of pivot to where they're the, you know, they're the people that are opposing corporate power and they're the ones that are doing corporate accountability, which, you know, I mean, it isn't really true, but it does kind of scramble their opposition in a way.
[00:13:32] Amy Westervelt: Did you get any sense of what happened that made them go from thinking, 'this is a handy tool' to, 'this is a threat'? Did you get any sense of that from any of these documents or just from, you know, being immersed in it in general?
[00:13:46] Jesse Coleman, Documented: Yeah. Sure. I mean, you have to look at who's behind the State Financial Officer's Foundation, you know, I mentioned ALEC, Heritage... So they've played really key roles in all of this. You know, they're dark money groups. So we don't actually know who's funding them behind the scenes, but we do know that these are the places that a lot of these larger" culture war" messaging campaigns come from. So I think large national groups basically saw a political advantage to going after this and as they did their thing, as they did polling, as they did the various measurements that they do, they kind of saw that it was, it was being rather successful. So I think that it was really these large national dark money political groups that saw this as a powerful tool and it kind of filtered down into the state level because of that, because you know, you have to look at this sort of incentive structure that these state treasurers have.
If they talk about "woke capitalism" suddenly they're going to the big Heritage foundation meeting with all the biggest funders in the Republican party in DC. You know, S F O F got a huge award from Heritage Foundation this last year. And they took a lot of key treasures with them, you know, to this big meeting where they were feted by, you know, some of the biggest funders around.
So politically for these treasurers it's a great deal to get attention for doing something like this. They get to go on Tucker Carlson. so, you know, they have a incentive to do this since it's being supported by Heritage and ALEC and others.
[00:15:15] Amy Westervelt: It makes me wonder too, if maybe they, they sort of realized or noticed that this was an area that would be less, I don't know, like less touched by the whole litigation strategy. I know I've heard people talk about, well, if policy fails and litigation is getting ultimately gummed up at the Supreme court, we should be leaning on the Fed to like embrace certain financial policies. And it makes me wonder if these groups were like, okay, what's the one place that's not really touched by our court strategy. And it's it's finance and insurance. I wonder if they're, if they're looking at the insurance industry as part of this too,. When I say "they," I mean like Heritage and ALEC and all of those groups.
[00:16:02] Jesse Coleman, Documented: Yeah, that's a great question. I would say, you know, they kind of are very upfront about why the treasurers, why finance and, Riley Moore, the treasurer of West Virginia, who's a real leader of all of this was actually on a podcast with the head of S F O F. And he was talking about why the state treasures are so perfect as a weapon against climate policy. And he said, " the attorneys generals, right, they have to work through the court. I speak with the taxpayer's money. With the stroke of my pen, I can change things and it doesn't have to go through the court system." And, you know, sure enough, the, the law that Riley Moore got passed in West Virginia this last year, it gave him the power, even more power than the treasurer already had, to decide who the state's gonna invest with.
And, you know, then you saw, just in the last month, Riley Moore kicked five large asset managers out of the state with that newfound power. So they see the treasurers as this sort of extra judicial power center that they can exploit a little bit and it obviously fits into a larger right wing strategy of mobilizing down ballot elected officials. So you know, it fits into this larger trend, but I think the treasurers they're in a particularly good place to kind of cause havoc here.
[00:17:15] Amy Westervelt: Yeah. So what impact is this having on the financial sector? Do you have any sense of like, you know, is JP Morgan like, oh no, maybe we should rethink this strategy because we're getting kicked out of West Virginia or are they like whatever, this is not a big deal to us?
[00:17:30] Jesse Coleman, Documented: It seems like they don't know how to handle the pressure. These giant asset managers, they're so big. They're so used to being the giant, you know, the biggest fish in the ponds, calling the shots, right?
[00:17:41] Amy Westervelt: I mean, usually it's everyone competing for their business, not them having to worry about who wants to do business with them.
[00:17:49] Jesse Coleman, Documented: Yeah, so I get the feeling that, you know, BlackRock, they just don't, they don't know what to do with this criticism. You saw them after the Texas law was passed, you saw them hire lobbyists for the first time in Texas. Who did they hire? They hired oil and gas industry lobbyists. What did they do? They went around to, you know, key Texas officials and said, you know, we love oil and gas. Here's all of our oil and gas investments. We're always gonna continue to invest in oil and gas. You saw them do that in other states as well. So, you do see a remarkable change in tone. I'd also say in West Virginia, I just mentioned that Riley Moore said that these five large asset management companies can no longer do business with the state.
Well, there were six asset management companies that were under review. But one, one company, US Bank Corp apparently walked back their climate stances enough to continue to be able to do business with the state. And Riley Moore and others, you know, consider this a huge win, obviously because they've forced US Bank Corp to change in some way.
And we don't have all the details on that yet, but you know, US Bank Corp was not put on the boycott list. So, yeah. I mean, I think that there are definitely changes happening as a response to this campaign. And I think that's why we'll see this kind of campaign continue. I don't think that this is by any means over.
[00:19:06] Amy Westervelt: And what kind of impact can this have on taxpayers in this state, if you know, a large pot of capital is suddenly not at play in their state?
[00:19:18] Jesse Coleman, Documented: Yeah. Well this is where we get to like how this is also bizarre because you know, there was a big study that just came out that was looking at the Texas law and looking at the changes that Texas is making in response to that law.
And in response to state investments and pensioners in Texas are set to lose like hundreds of millions of dollars because of. So it is actually really hurting, you know, the people that are trusting these Republican states with their pensions and, and with their investments.
[00:19:52] Amy Westervelt: Couldn't they be sued then for that under laws where the people in charge of pensions have to be acting in the best interest of returns for the people enrolled in those pensions?
[00:20:02] Jesse Coleman, Documented: Yeah. I don't know. That's a great question, but you know, that's another side of this whole campaign is that they're actually also mobilizing attorneys generals to say it is illegal.
It is against the fiduciary duty to take into account these climate disclosure rules. So if you, as a pension fund-- this happened in Kentucky-- if you, as a pension fund, you know, are talking about ESG and, and other climate disclosure rules and making decisions off that you are, you are violating your fiduciary duty.
[00:20:30] Amy Westervelt: Wow. That's so interesting. That could just be easily disproved by objective data on financial performance, right. You could say, well, actually this fund that considered these things outperformed this fund that didn't, you know, buy X percent or whatever. That's so interesting.
[00:20:50] Jesse Coleman, Documented: Well just going back to the really straight up climate science denial that undergirds a lot of this, I mean, I guess I just don't know how much reality plays into this, you know what I'm saying? I mean, and it's also just so blatantly hypocritical cause you know, that's what they're accusing these large asset management funds of doing is hurting the people that are invested in them by not investing enough in fossil fuels when you know, it's the exact opposite.
[00:21:15] Amy Westervelt: It's interesting, right? We're gonna just change this reality by pretending it's not true. I mean, that's kind of across the board a thing with, with these folks. But I think it's like particularly strange to see it in a space that's dominated by numbers and objective data.
[00:21:31] Jesse Coleman, Documented: Yeah. And, and I don't know if you feel this way, but you know, I mean, because, you've done so much amazing work on climate science denial and all the contours of that.
But you know, this feels like science denial from 10 years ago or something.
[00:21:43] Amy Westervelt: It does. It's really weird that it's working so well. I forgot to ask you, treasurers , are they appointed or are they elected?
[00:21:54] Jesse Coleman, Documented: It changes, state to state, most treasures are elected officials. Most treasurers are sort of constitutional officials where they're elected separately and you know, their job is sort of written into the state's constitution. There are a couple states that are appointed, like George's treasurer is appointed, but it that's, that's more of the exception than the rule.
[00:22:13] Amy Westervelt: Okay. So is there any effort to get more Republican treasurers elected, or on the Democrat side to try to take back some of these positions?
[00:22:25] Jesse Coleman, Documented: Well, that's certainly something that we're watching as the midterms come up. You know, there's a number of SFOF treasures that are up for reelection or trying to get elected to another position of interest.
So, you know, I think that's gonna be a really interesting space to watch.
[00:22:38] Amy Westervelt: Yeah the hot state treasurer race, not a thing we've ever really paid attention to. Now we need to, wow. Is there any kinda aspect of this we didn't talk about that you think is important to, to draw people's attention to?
[00:22:52] Jesse Coleman, Documented: Well, I think there's a couple interesting things. One, you know, you mentioned Strive asset management and Vivek Ramaswamy earlier, and we didn't really get a chance to talk about that, but it's a really kind of fascinating subtext of this is that there are these people that are really important in this greater campaign against climate disclosure, you know, so there's sort of the big talking heads of the campaign. But they also have for profit entities that are set to profit from this campaign to drive money away from BlackRock. In the case of Vivek Ramaswamy you know, he set up this group called Strive Asset Management, which is the unwoke asset management manager. So, so while VEC has spent the last two years, you know, helping orchestrate this campaign to drive West Virginia and other states to divest from BlackRock, he also set up a company that's waiting there with open arms to catch the money that he's shaking outta the tree.
[00:23:49] Amy Westervelt: Didn't like a lot of the founding capital for Strive come from Peter Thiel?
[00:23:53] Jesse Coleman, Documented: Yes. All roads lead back to Peter Thiel. He did, and he's also hired a bunch of the people that have really undergirded this anti-climate campaign for a long time. You know, he has hired people from these other dark money groups that are really well connected in this sort of network so that, you know, the circle is complete between the nonprofit, political organizations that are campaigning to push BlackRock out of these states and the, for profit side, right. That's sitting there waiting for the money, you know, they're, they're literally the same people. And I feel like with these sort of, you know, quote unquote culture, war issues, you don't see the profit motive that clearly all the time. So that's another really interesting piece about this.
And then on profit motive, I think the other thing to talk about would be the fossil fuel industry's, participation in this, right. There's been other efforts obviously to kind of mobilize, you know, sort of the culture warriors to the defense of the fossil fuel industry. I don't think it's ever been as successful as it is now, but you know, we, in our research, we saw the American petroleum Institute, the largest. , you know, fossil fuel lobbyist in the country, having meetings with SFOF helping support their messaging, giving these treasurers pats on the back for the good work that they're doing.
And, that's another instance of this obvious profit motive. Undergirding this campaign that you know is about opposing China and communism and "woke capitalism" and stuff.
[00:25:15] Amy Westervelt: Is there any sense given that this Riley Moore guy is in West Virginia . Is there any sense that this, any of this stuff has had an impact on, Joe Manchin's kind of persistent obstructionism on climate policy?
[00:25:31] Jesse Coleman, Documented: Yeah. That's a great question. I mean, you know, West Virginia, the political world there is actually kind of small, so, you know, I mean, we see people that have been closely aligned with Joe Manchin for a long time that have become lobbyists that are sort of involved in this.
You know, we obviously don't know what Joe Manchin thinks about this or how Riley Moore wants to use Joe Manchin, if he does, to help accomplish this campaign. But there is overlap in personnel there, we just don't have a ton of information on this.
[00:25:56]Amy Westervelt: Yeah. Alright. Well, I appreciate you walking me through it and also just doing all this work in general. We'll link to the investigation in the show notes, so people can go check that out.