‘Anti-ESG Godfather’ Misleads on Free Market Restrictions

‘Anti-ESG Godfather’ Misleads on Free Market Restrictions • April 12, 2023

“One year returns…great for oil executives and they're great for grifting 2024 presidential candidates, but they're not great for first year teachers” - NYC Comptroller Brad Lander

Last night, New York City Comptroller Brad Lander and Vivek Ramaswamy appeared on CNBC’s Last Call to discuss ESG risk considerations in pension fund investments. When pressed on his support for anti-ESG legislation that restricts investor choices, Ramaswamy claimed that the sentiment was false, that there were no restrictions in the bills and attacked Comptroller Lander as a political actor advancing an agenda.

But anti-ESG legislation across the country restricts fund managers' choices when making investment decisions by outlawing them from doing business with certain financial firms that have chosen not to invest in industries of legislators’ choosing — mostly big fossil fuel corporations.

Comptroller Lander pushed back on Ramaswamy’s statement and highlighted Ramaswamy’s misunderstanding, or misrepresentation, of how the New York City pension funds work — with 70 trustees elected by the beneficiaries to serve as good stewards of their retirement accounts.

Ramaswamy also lauded the one-year returns of oil and gas corporations as proof that considering ESG risks should be illegal for fund managers of public retirement accounts. After Comptroller Lander stressed that his investment decisions are in pursuit of long-term returns to support millions of retirees and that investments in oil and gas came with long-term financial risk, Ramaswamy responded by again lauding the one-year returns from oil and gas corporations.

When Comptroller Lander asked Ramaswamy why he wants to deny “teachers and cops and firefighters who govern the New York City pension fund boards the freedom to invest as they see fit and to judge risks as they see fit” Ramaswamy said "no" and repeated his claim that Comptroller Lander’s argument was false.

As the interview was wrapping up, Ramaswamy tried to connect the issue to China, inferring that Comptroller Lander was avoiding discussing China-based risks. Comptroller Lander responded frankly that he believes “China-related investment risks are appropriate to be disclosed and debated” and reminded Ramaswamy that the anti-ESG legislation he supports “would deny us the freedom to make those very investment decisions.”

Key Quotes:


Ramaswamy: I'm frankly worried about the pension fund plan…fossil fuel companies dramatically outperformed the S&P by over 80% last year. They outperformed the very ESG funds that divested from fossil fuel companies by nearly 100%. And yet these ESG plans, including…the one released by New York City, calls for divesting from exactly the sectors that even just over the last 12 months have dramatically outperformed…

…right now you have political actors in blue state pension funds that are using OPM, other people's money, to advance agendas…And I think that's a devious and dangerous game both for capitalism and for democracy.


Lander: So I think maybe Vivek just doesn't know how the New York City pension funds are structured. We've got five separate funds. They've got 70 trustees. Those trustees are cops and firefighters and teachers, in many cases elected by the very workers and retirees whose money this is, whose retirement security this is. And they actually make different decisions…Teachers and public sector workers voted for this net zero plan. Cops and firefighters didn't…

And look, I understand why fossil fuel executives and 2024 presidential candidates are worried about short term one year returns. But I am thinking about a teacher who started teaching this year who is going to work for a couple of decades and expect her or his pension to be there a couple of decades beyond that, long after climate change continues to raise sea levels and temperatures.

…my job is to help those trustees put together a pension portfolio that guarantees those returns over the long term…I understand why Vivek's trying to focus on the short term, but that's just not my job. And I don't know why he and others would deny investors would deny our trustees the freedom to invest as they see appropriate.


Ramaswamy: That's really funny because I think that the reality is, let's talk about the long run. You want to know the very projects that the ESG funds and even large pension funds that are making the ESG push are divesting from…who’s picking up those projects? PetroChina…You want to know who makes more money as a consequence? Just look at their latest financial reports last year. PetroChina makes more money.


Lander: Why do you want to deny the teachers and cops and firefighters who govern the New York City pension fund boards the freedom to invest as they see fit and to judge risks as they see fit? And it seems to me that you do if you're telling people who they can and can’t invest with.


Ramaswamy: I don’t..I think the plan that you put in place today explicitly calls on making your portfolio companies and asset managers align that’s your word align their behaviors with net zero standards by 2050, when in fact


Lander: It’s the choice of our funds to invest that money as we see fit. But the laws that you support…deny investors the freedom to invest, as we see fit. You want to tell me you want to tell me which stocks I should be responsible for picking?

Ramaswamy: No 


Ramaswamy: …everyone's free to invest wherever they want. But if you're managing somebody else's…

Lander: Not according to the laws that you're supporting, that wouldn't let me make the decisions that our boards would want to make. I'll give you an example…

Ramaswamy: That’s not true.

Lander: Last year, our boards brought shareholder resolutions at pharmaceutical companies that we believed had insider trading rules were allowing us that were now enabling them basically to steal from our retirees. But the legislation that you and others support would prevent us from bringing shareholder resolutions…on behalf of our shareholders.

Ramaswamy: That's false.


Sullivan: I don't want to speak for Vivek, but I think I think some of the frustration of some people, maybe some of your constituents are watching right now from New York are saying, well, gosh, if we had bought, you know, like a basket of oil and gas stocks last year, we would have made 30 or 40% in our money.

Lander: Again, one year returns?

Sullivan: No I agree, I agree.

Lander: They’re great for oil executives and they're great for grifting 2024 presidential candidates, but they're not great for first year teachers who are worried about whether their retirement security will be their money.

Sullivan: What is the connection? I don't fully understand the connection of long term because you view ExxonMobil, you say it's going away, basically.

Lander: But first, I think there's a big risk to stranded assets. Second, I think there’s serious liability that an enormous number of companies have, and we — that's why we need to see disclosure. A huge amount of what actually “ESG” or responsible investing is, is just getting more disclosure from portfolio companies about what are the assets they're holding and what are the risks they're facing…

Sullivan: 100%

Lander: …and the legislation that President Biden vetoed, so much of what it does is just provides that information to investors. It used to be a Republican principle to provide information to investors and to allow trustees the freedom to invest…and I just don’t understand why that's changed. 


Ramaswamy: You can't have it both ways. Where's the China-related investment risks? Note the pin drop silence on that.

Lander: No, no, I actually think China-related investment risks are appropriate to be disclosed and debated by investors, but this legislation would deny us the freedom to make those very investment decisions.

**Some parts of the transcript may be slightly off due to show guests speaking over each other and simultaneously.**

About For The Long Term: For the Long Term is a 501(c)(3) organization that supports state and municipal financial officers in leveraging the power of their offices to deliver long-term economic growth and prosperity for their beneficiaries, their constituents, and our country by advocating for more sustainable, just, and inclusive firms and markets. Learn more at ForTheLongTerm.org.