Nebraska AG Doug Peterson says ESG violates investment firms’ duty
LINCOLN, Neb. (KLKN) – Nebraska Attorney General Doug Peterson released a report this week warning state and federal policymakers about environmental, social and governance investing.
Peterson said ESG investing violates an investment firm’s duty to seek financial returns above other factors.
“There are fiduciary standards, legal standards that those asset management companies have, that they need to have the best interest of the investors and not apply some of these outside interests that aren’t in the best interest of [state] employees,” he said.
Peterson said the general public has the power though to decide where they want to invest their money.
But he is concerned about asset managers choosing to not invest into certain companies because they don’t meet ESG standards.
“As the asset manager, if you think that there should be a carbon reduction plan developed by these companies that are a part of your portfolio, you may take an oil company out of that because you don’t agree with their environmental policies,” he said. “And in doing that, those who have their funds in the retirement fund do not receive the benefits in this particular case.”
He noted that several oil companies have had gains of over 30% this year.
Peterson said it’s the responsibility of asset managers to seek the best results for investors.
But University of Nebraska law professor James Tierney told the Nebraska Examiner that the AG’s report ignored the “Prudent Investment Rule,” which according to the Nebraska Supreme Court, doesn’t require investing only for the highest return possible.
Tierney thinks the report was inspired by interest groups that are seeing investments flow away from their companies to those embracing ESG.
Peterson said the goal of the report wasn’t necessarily to spark change or lawsuits, but to inform policymakers of what ESG is and why they should be aware of it.