MT AG Sues National AGs Organization over ESG Investments

Montana Attorney General Austin Knudsen is taking the National Association of Attorneys General (NAAG) to court after discovering that taxpayer dollars were invested by the NAAG using ESG (environmental, social, and governance) interests. As The Federalist has reported, ESG has increasingly become part investing considerations as businesses and other organizations have drifted left:

BlackRock, State Street, and others are using their stock to force companies to adopt policies and social causes promoted by elites, many of which align with left-wing goals.

The most important tool for accomplishing this strategy is environmental, social, and governance (ESG) standards, a new framework for evaluating businesses. Under an ESG model, which has already been widely adopted by corporate America, companies are rewarded or punished based on how they score on dozens of metrics developed by bankers, investors, activists, and, in some cases, government officials.

For example, one influential ESG model developed by the International Business Council of the World Economic Forum — one of the leaders of the international “Great Reset” movement — evaluates businesses based on their commitment to the Paris Climate Accords, water use, “ecological sensitivity,” and, among many other things, the “Percentage of employees per employee category, by age group, gender and other indicators of diversity (e.g. ethnicity).”

Attorney General Knudsen's lawsuit, filed earlier this month, explains that state policy prevents Montana from investing based off of an ESG model:

[Ea]rlier this year, Governor Gianforte and the Board of Investments announced that “the State of Montana has reaffirmed its commitment to maximizing returns on the over $26 billion in investments of the state’s financial assets, not advancing a political agenda through Environmental, Social, and Governance (ESG) investing.” Governor Gianforte, Board of Investments Block ESG Investing of State Funds (Jan. 18, 2023), Office/Governor_Gianforte_Board_of_Investments_Block_ESG_Investing_of_State_Funds. “Late last year, the Board of Investments revoked the ability of the state’s investment managers to vote the state’s proxies which align with ESG investment decisions.” Id. “The use of ESG prioritizes environmental, social, and governance investment principles over traditional investment principles designed to maximize shareholder returns,” and the Board of Investments reaffirmed that it will seek to “‘grow Montana’s wealth without bias and based solely on what is in the best interest of the beneficiaries of the assets we invest.’” Id.

The Washington Examiner explained:

Knudsen's lawsuit comes after he delivered NAAG an ultimatum in February, giving the group 90 days to return Montana's funds or face a lawsuit.

Citing the 2022 loss of $37 million in public funds, spending money sending attorneys general and their families on European trips, and the revelation that the group invests public money into ESG interests, Knudsen's letter to NAAG said, "I have come to the conclusion that NAAG can no longer be trusted to hold assets on behalf of Montana."

"There is no doubt in my mind now that NAAG is an unreliable and improper financial steward, and that Montana's share of the money at NAAG needs to come home," the letter continued. "Return the money in your accounts that belongs to Montana within 90 days or I will go to court and sue to ensure that the money is safely and legally brought back within the four corners of Montana law."

Attorney General Knudsen's lawsuit is part of a broader effort by Republican attorneys general fighting back against ESG. In January, a coalition of mostly-Republican attorneys general sued the Biden Administration over a Labor Department Rule that allows for ESG considerations when making investments for retirement funds.

Republican attorneys general are the first line of defense against woke policies that lead to the misuse of taxpayer resources.