A New Trump Rule Could Help Big Oil Crush the Climate Movement

By David Sirota, Too Much Information

05 August 20

A rule backed by oil interests tries to keep retirees’ savings locked in climate-threatened assets. Meanwhile, the government says the military must avoid those kind climate-threatened investments.

f you’ve ever seen Tom Cruise force Jack Nicholson to admit that he ordered the code red, then you know that one of the best ways to expose lies and uncover the truth is to spotlight glaring discrepancies between public statements.

If you want to know how companies are misleading regulators, look at the difference between what they tell government officials and what they tell their own shareholders. 

If you want to know how corporations swindle tax collectors, look at the difference between their boastful earnings statements to shareholders, and their miserly profit reports to the IRS.

It’s the same thing with the climate crisis — if you want to see how the system of climate denial imperceptibly defrauds the public on a day-to-day basis, look at the difference between what the federal government is saying to retirees and workers, and what the same federal government just told the Pentagon. 

Then look at how the bait-and-switch ultimately serves the fossil fuel industry — which is now asking the government for protection from the environmental movement that has been successfully pressing pension funds, endowments, governments and other institutional investors to divest from fossil fuels.

Labor Department Moves To Ignore Climate Risks

This emblematic two-part story of climate deception starts with a new rule from Donald Trump’s Labor Department. Coming at a moment when fossil fuel companies and their investors are facing huge losses, the Trump rule aims to make it more difficult for pension and 401k administrators to shift workers’ savings out of fossil fuel assets and into so-called ESG investments, which factor in environmental, social and corporate governance considerations. 

The proposal is supported by Koch-linked conservative thinktanks; the Republican-leaning National Association of Manufacturers; a group of climate-denying GOP lawmakers; and fossil fuel interests such as the North American Coal Company and the Western Energy Alliance. 

The Western Energy Alliance says it “represents over 300 companies engaged in all aspects of environmentally responsible exploration and production of oil and natural gas,” and its comment letter supporting the rule underscores the real agenda behind the Labor Department proposal. 

“We have observed how ESG advocacy has negatively affected the industry’s access to capital over the last few years, and greatly appreciate that (the Labor Department) is addressing the larger issue through this rule,” the alliance wrote. “The rule will help ensure that activism regarding pension plans does not morph into a halt to investment in the sector that provides nearly 70 percent of American energy.”

In other words: Big Oil is effectively arguing that the climate movement’s push to shift investors’ money out of fossil fuel assets and into renewables has been too successful, and so polluters are asking the government to intervene with a special rule to staunch the bleeding.  

Trump officials aren’t explicitly admitting that this is their real motivation. Instead, they purport to be concerned that “a lack of precision and rigor in the ESG investment marketplace” means “there is no consensus about what constitutes a genuine ESG investment.” And yet, that’s a problem that Trump’s government is actively creating: His administration’s Securities and Exchange Commission is refusing to use its power to require corporations to more thoroughly disclose their exposure to climate risks, consequently making it harder for financial managers to evaluate investments’ environmental impacts. 

Of course, despite that regulatory inaction, there remain easy ways to make ESG investments, and trillions of dollars have been flowing into those investments as the public becomes more alarmed by the climate crisis. So that’s where the more radical part of Trump’s new ESG rule intervenes -- the proposal argues that in investing in green companies, pension and 401k administrators may be making “investment decisions for purposes distinct from their responsibility to provide benefits to participants and beneficiaries.” 

Translated into layman’s terms: The Labor Department is claiming to be worried that retirement systems are inappropriately prioritizing environmental concerns over generating good investment gains for workers and retirees. 

Indeed, as Trump’s Labor Secretary Eugene Scalia argued: “Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan. Rather, (pension) plans should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers.”

Government Says Pentagon Must Consider Climate Risks

Undergirding the Labor Department’s rule is the insinuation that environmental considerations are inherently at odds with corporate earnings and maximizing investors’ returns. That presumption is unsupported by investment data and particularly absurd at a time of oil industry losses. It is also an insidious form of climate denial, as evidenced by a separate government study of one of the planet’s largest economic players: The United States Defense Department. 

In that recent report, the Government Accountability Office’s (GAO) apolitical auditors note that the Pentagon acknowledges that it “has identified climate change as a threat to its operations and installations.” Those GAO officials then point out that the military “has not systematically incorporated consideration of climate change into its acquisition and supply processes” — a situation which has ended up “limiting the military departments’ ability to best consider the potential effects on their own operations from climate-related risks faced by their contractors.”

The report concludes by recommending that the Pentagon take immediate steps to factor in climate-related risks when deciding how to successfully invest in its contractors and supply chain. 

“Excluding climate change and extreme weather considerations will limit DOD’s ability to anticipate and manage climate-related risks so as to build resilience into its processes, and could jeopardize its ability to carry out its missions,” GAO wrote.

A Gift of Climate Denial For the GOP Coalition

So let’s review: The Labor Department is trying to help Big Oil prevent retirees’ money from flowing out of the fossil fuel industry and into investments that factor in climate risks. Trump officials claim (without proof) that those green investments jeopardize returns and therefore imperil retirees’ economic security. 

At the same time, the GAO asserts that the Pentagon should go in the opposite direction and diligently factor in climate risks in its contracting decisions, because failing to do so endangers the Defense Department’s supply chain.

Now we see the discrepancy in all its hideous glory — and how it illustrates the kind of climate denial that continues to course through our political system. 

Clearly, the non-political GAO auditors’ are promoting undeniable scientific facts about the Pentagon’s climate-threatened supply-chain investments. 

Clearly, Trump appointees’ ESG rule is designed to continue subjecting retirees’ savings to the very same climate risks that the GAO says the Pentagon must avoid. 

And clearly, those Trump officials are not motivated by any earnest concern for workers. They are motivated by an anti-science ideology of climate denial and corporate fealty that just so happens to serve the interests of the fossil fuel industry, right-wing think tanks, GOP legislators and the Republican Party’s political coalition.