Sununu’s anti-ESG order is ‘an unfortunate exchange of responsible management for political expediency’
NH Businesses for Social Responsibility exec director calls directive misguided
Last week, in the midst of weighing a presidential bid, Gov. Chris Sununu issued an executive order limiting the assessment of ESG (environmental, social and governance) factors for state fund investments. Although it is unclear if the new order will have any practical effect, the message it sends from our state’s chief executive is clear: responsible business practices and long-term value creation don’t matter as much as short-term profits.
Let’s take a step back. If you’ve purchased a home, did you even consider signing on the dotted line before having a home inspector verify no lead or leaks, mold or mice, or the like? How about a title search and professional home appraisal? Chances are you did all these things and more because most banks require them before they approve a mortgage.
Now imagine that instead of buying a home you are responsible for investing millions, even billions, of dollars on behalf of other people. Not just any dollars for any people: the retirement savings of hardworking public employees in a state pension fund. Is it enough to assemble a stock portfolio based on short-term profits alone? Or should you take into consideration the risks a company might face in the future or other factors known to materially impact a firm’s long-term financial performance and ability to thrive in a rapidly changing world?
ESG is a fast-growing movement among investors to consider the complex environmental, social and governance factors that drive long-term success, alongside conventional measures of profitability. In 2022, professional investors who apply ESG criteria to gauge the risk and value of their portfolios controlled $8.4 trillion in assets. Over 90 percent of S&P 500 companies now publish ESG reports in some form.
The logic of ESG is simple. Just as you would avoid buying a home with mold or lead – not only for your family’s health but also for long-term value creation, a responsible investor seeking to minimize risk and maximize returns should have the freedom and ability to consider how a company is governed. Understanding a company’s environmental track record, how it treats its workforce, and the transparency of its financial controls allows for both responsible and profitable investing.
As leaders in New Hampshire’s fast-growing business community, we cannot help seeing the governor’s anti-ESG actions as an unfortunate exchange of responsible management for political expediency. Surely we can do better than to bar the professional managers of the NH Retirement System from investing with any firm that will invest “in funds that follow ESG criteria,” as the governor’s new order seeks to do. Our public employees, our business community, and our planet deserve better than that.
Michelle Veasey is executive director of NH New Hampshire Businesses for Social Responsibility.