The congressmember extending an ESG olive branch
Rep. Sean Casten’s desire to help create rules of the road for the massive and rapidly expanding world of environmental, social and governance investing has thrust him into an uphill battle to find common ground between financial firms and GOP lawmakers accusing them of bias against fossil fuel interests.
As co-founder of the Congressional Sustainable Investment Caucus, the Illinois Democrat is trying to promote ESG policymaking that provides protections and transparency for market participants at a time when many of his colleagues are more interested in pushing political agendas. His stated goal of working across the aisle “to progress past the distortion of facts and have robust, open-minded discussions about sustainable investing” seems almost quixotic at a moment when bipartisanship is in short supply and documented facts are interpreted in wildly different ways.
We spoke with Casten recently about the goals for his group, his hopes for working with Republicans and the major obstacles that loom ahead of the 2024 presidential campaign.
This interview has been condensed and edited for clarity.
How would you describe the policy platform of the Sustainable Investment Caucus?
Pro-capitalism. We’re not saying everybody should invest in ESG. We’re saying ESG is a tool. There’s a huge market demand for it. We need to quantify what the rules are. And we need to make sure that investors who want to participate in a free and unfettered market are protected from people who have some more sort of Stalinist ideas about how our economy should operate. And I’m not saying that to name names. That’s the reality of what they’re doing. I wish we didn’t have to play defense. But in this moment, we have been forced to become defensive.
What about opportunities for bipartisanship here? Are there any?
Every single Republican voted for this CRA. We can pretend that’s not true, but it’s the reality. There’s some structural problems in the Republican Party, but I think the backlash against ESG is better understood not as a Democratic versus Republican issue and rather as an energy-extractive of parts of the country versus energy-consuming parts of the country issue.
So are you saying you empathize with their position, but you just don’t agree?
When we had the agricultural revolution, we left a lot of small farmers behind. When we went through the automation revolution, we left a lot of Detroit factory workers behind. This transition is not fundamentally different. The question is, having been through enough of those transitions before to have the wisdom, are we going to acknowledge that there’s pain and that in these transitions historically, if we do nothing legislatively, it’s not going to stop? But it’s going to mean that the gains from this transition accrue first to consumers in the form of cheaper energy costs, and second to the owners of capital who produce that cheaper energy.
What kind of effect did the CRA have in terms of the anti-ESG movement getting mainstream and national coverage and Biden having to issue his first veto?
There’s always a platform for reactionaries who are afraid of change. If you were brought up to believe that Thomas Jefferson was a saint and all of a sudden you found out that he had children with one of his slaves and sold them, that doesn’t make it not true. I think history is going to look back no more charitably on people who somehow think that the 1619 project is bad than it is on people who said that ESG was bad. But in the moment, it’s not remotely surprising that when there is rapid change coming, there are platforms for people who would stand to thwart history yelling “stop.”
So how much of this is about climate denialism cloaked as something else? How much of it is about culture war issues pertaining to abortion, attacks on LGBTQ people, the fact that we live in a post-George Floyd era? Is this stuff all related?
I wish it wasn’t political.
If the Republican Party of my youth was the Republican Party of today, I would not be in Congress. I was content to be in the energy industry. I was content to be a guy who was helping my customers save money by lowering CO2 emissions. Not because I was an ESG guy, because I was a capitalist. And it worked.
But the reason I ran for Congress is because I sat there saying, you know, the Republican Party that once upon a time stood for free markets. All that’s left is culture wars and grievance.
What is left? What is the intellectual idea? There’s no intellectual meat to any of this other than stoking up the culture wars. And I realize that all sounds political, but prove me wrong.
House Financial Services Chair Patrick McHenry has announced an ESG working group. What do you make of that and his committee chairmanship in general on this issue?
I think it’ll be interesting to see what happens there. Some of the initial comments that McHenry made were encouraging because it suggested that he was trying to tamp down some of the crazy wing. I know with certainty that committee was not set up because Mr. McHenry reached out to [Congressional Sustainable Investment Caucus Co-Chair] Juan Vargas [D-Calif.] and I and said, ‘I’m really, really persuaded by some of the stuff you’re talking about. We need to elevate that spirit.’[Rep.] Andy Barr [R-Ky.] has had this bone in his teeth for a long time. I suspect that’s the reason for it.
What even is there for Congress to do on this issue – both from the anti- side and your side? What is even the universe of policy options here?
I’m always concerned that it is always legislatively possible to slow progress. That’s the entire purpose of the United States Senate. And it’s possible to move forward much more slowly than the market wants. That’s what their purpose is – to gum up the works and slow things down. You can underfund agencies and you can tie things up in courts.
On the positive side, there is a legitimate concern that we don’t have ESG metrics. And if we agree that this is an important thing, if we agree that not only individuals who want to invest in ESG should have a clear definition of what that is, but also that the underlying drivers they’re trying to capture are material and need to be quantified, then we need we need some consistent rules for how to do that.
What do you make of companies like BlackRock sort of openly admitting that they may have gone too far in their messaging of ESG, even if they aren’t walking back the economics of it all?
My interpretation is that in a world where you have $20 trillion of assets under management – one of the fastest growing asset classes in the market right now – it is in your economic interest to advocate for ESG, to make sure you have a portfolio, to be involved in all the rulemakings to make sure this is done the right way.
I give Larry Fink a lot of credit for being consistent on this. I give some of the other players in financial services less credit because I think when the going got tough, they got panicky.
I was in a meeting with the CEO of one of the bigger banks, and he said, “What can I do? He said, I want to make sure that this ESG thing gets solved quickly. What can I do to help?” And I said, “You can stand up.” And he said, “Well, you understand that’s hard for me.” And I said, “I’m sorry, it was hard for Rosa Parks to stand up. You’re the CEO of a fucking bank.”
Do you worry that higher profile politicians who might be or are running for president like Vivek Ramaswamy and Ron DeSantis and Mike Pence could weaponize this issue in a way that could gain political support?
If you lie on television, some number of people will believe you. Yeah, I always worry about lies infecting the body politic. I had an old board member of mine used to tell us when things got contentious at board meetings that the only thing that really matters is if your grandkids respect you.
So, yes, I worry because we have a long history of lying to voters in this country and telling you things that will make you feel happier and let you hold your head under the sand because the truth is uncomfortable.
Do you have to step up your messaging to counter higher profile politicians like Ron DeSantis and Mike Pence zeroing in on this?
It has increased the responsibility of what we’re doing. And I think it also increases the responsibility of people like the Jamie Dimons of the world. Because he has to ask himself the same question. Did I do the right thing in this moment, or did I do the easy thing? And I think it’s on all of us, not just members of Congress. Like we don’t have a big enough platform between us. What are we doing to make the world a better place, even if that’s hard?
By: Jordan Wolman
Source: Politico