The ESG Initiative at the Wharton School
Ohio, Like Other GOP-Led States, Would Limit Considering Climate Change in Pension Investments
Outlet: The Allegheny Front
In the face of a new proposed bill to limit ESG investments, Witold Henisz, vice dean and faculty director of the ESG Initiative at the Wharton School, explains why investors may care about ESG and the negative impacts of this kind of legislation.
A bill moving through the Ohio legislature is among the latest that would prevent state pension boards from considering ESG (environmental, social and governance) investments. Sixteen states have already passed laws to limit this kind of investing, and there have been over 150 bills on this issue in 37 states.
In 2021, Texas banned state entities and municipalities from doing business with banks that have ESG policies against fossil fuels and firearms.
“What that meant is you couldn’t use the biggest, most sophisticated financial institutions to issue your bonds because they all take ESG factors into account,” explained Wharton’s Witold Henisz.
In response, five of the largest underwriters left Texas: JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America, and Fidelity.
Local governments have had to work with smaller banks, which has meant higher fees. According to a study by the Wharton School, in the first eight months of the anti-ESG measure, Texas cities would pay an additional $300 to $540 million dollars in interest on bonds.