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What the Movement for Divestment Misses
Yes, schools and other institutions should divest from companies involved in war crimes or fueling the climate crisis. But individuals can also divest. Here's how.
Jul 08, 2024
On Sunday, May 26—as graduating students at my school, Wesleyan University, tossed their caps into the air—bombs rained down on a tent camp for displaced Palestinians in the southern Gaza city of Rafah, killing 45 people, including a number of women and children. The weapons that killed them, GBU-39 bombs, were made by Boeing and supplied by the U.S.
"Many of the dead bodies were severely burned, had amputated limbs, and were torn to pieces," according to a local physician. In addition, the bomb blasts and ensuing fires wounded another 249 people.
The next day, Israel's prime minister, Benjamin Netanyahu, called the bombing a "tragic accident," but by Tuesday, Israeli shelling and airstrikes killed another 37 Palestinians in the area, most of them sheltering in tents. "We will enter Rafah because we have no other choice," Mr. Netanyahu had warned earlier, in his campaign to defeat Hamas after last year's heinous October 7 attack on Israel.
In American terms, this concentration of explosive force would be like dropping five Hiroshima-size bombs over a land mass one quarter the area of Oklahoma City, with triple its population.
It is this mounting civilian death toll—carried out with U.S. weapons—that spurred students to protest and set up encampments in the spring on nearly 140 college campuses, including Wesleyan. Although each encampment was different, student protesters were largely united in calling on their school to divest any holdings in companies supporting the war. The divestment they were calling for was strictly institutional, but as I will explain later, it's also possible for individuals to carry out acts of divestment on their own.
In the first three months of the war alone, Israel dropped 45,000 bombs on Gaza, the majority of which were designed or manufactured by the United States. Perhaps the most controversial of these weapons is the 2,000-pound "bunker busting" Mark-84 bomb, which has a lethality area equivalent to 58 soccer fields. In the first month of the war, Israel dropped more than 500 Mark-84 bombs, often in densely populated areas, according to a CNN analysis (and these 500 bombs, made by General Dynamics, are only a small fraction of at least 5,000 that the U.S. sent to Israel after the Hamas attack).
As described in a United Nations Human Rights Council report, the explosive blast from a Mark-84 bomb "can rupture lungs, burst sinus cavities, and tear off limbs hundreds of feet from the blast site, according to trauma physicians. When it hits, the [bomb] generates an 8,500-degree fireball, gouges a 20-foot crater as it displaces 10,000 pounds of dirt and rock and generates enough wind to knock down walls blocks away and hurl metal fragments a mile or more."
All told, the explosive force of munitions Israel has used on Gaza since October 7 is estimated to be 75 kilotons—five times larger than the nuclear bomb dropped on Hiroshima. In the case of Gaza, though, its 141 square-mile territory is less than half the size of Hiroshima. In American terms, this concentration of explosive force would be like dropping five Hiroshima-size bombs over a land mass one quarter the area of Oklahoma City, with triple its population.
One of the most catastrophic results of this bombing is that roughly 1 out of every 133 Palestinian children in Gaza has now been killed—a number which, when scaled to match the U.S. population, would translate into the deaths of more than half a million American children.
It is hard to imagine the bitterness and hatred that such a death toll would generate in the United States, yet only three days into the war, Israel Defense Forces spokesperson Daniel Hagari publicly acknowledged that Israel's bombing campaign was "focused on what causes maximum damage"—not on the accuracy of where bombs land or the need to minimize collateral damage.
In keeping with that focus, nearly half of all bombs Israel used in Gaza during the first two months of war were unguided, and even U.S. President Joe Biden warned that Israel risked losing international support due to its "indiscriminate bombing."
Calls for Divestment
Wesleyan student protesters began sleeping in tents on April 28, and their encampment ultimately grew to more than 100 tents by the time it disbanded on May 20. The tent community was peaceful and advanced a set of demands, the foremost of which was that the university administration disclose its financial investments and then divest from companies and institutions which are supporting or profiting from the war and occupation of Palestinian territory.
As someone with Israeli family members, it pains me to say that I agree with the call for divestment. My agreement is not only because of the profound loss of life on both sides of the war, but for three additional reasons.
(1) Israeli leaders are violating international humanitarian law. Put simply, it's illegal to starve civilians or willfully impede relief supplies as a method of war. Nonetheless, Israeli Prime Minister Netanyahu announced on October 18 that "we will not allow humanitarian assistance in the form of food and medicines from our territory to the Gaza Strip." As a result of that policy, "full-blown famine" hit Northern Gaza by May, according to the executive director of the U.N. World Food Program. Even worse, the program predicts that if the war continues, more than 1 million people (half the population of Gaza) will face life-threatening levels of starvation by mid-July.
Here is what Article 8(2)(b)(xxv) of the Rome Statute of the International Criminal Court says about starving civilians and impeding relief efforts:
For the purpose of this Statute, "war crimes"... [includes] Intentionally using starvation of civilians as a method of warfare by depriving them of objects indispensable to their survival, including wilfully impeding relief supplies.
To be sure, one could argue that Mr. Netanyahu's statement doesn't accurately represent the Israeli government's official position, but several other top leaders have also publicly called for withholding food and humanitarian relief. For instance, Defense Minister Yoav Gallant said on October 9: "I have ordered a complete siege on the Gaza Strip. There will be no electricity, no food, no fuel, everything is closed... We are fighting human animals and we are acting accordingly."
Likewise, on October 12 Energy Minister Israel Katz posted this statement on social media: "No electrical switch will be turned on, no water hydrant will be opened, and no fuel truck will enter until the Israeli abductees are returned home."
And National Security Minister Itamar Ben-Gvir has gone on record as saying that it would be a "grave mistake" for the Israeli government to allow "the transfer of humanitarian aid" into Gaza unless Hamas frees Israeli hostages.
There's a relatively quick and simple step that individual citizens can take, not as a substitute for institutional divestment, but as a complement to it. They can make sure their own financial holdings are divested.
In other words, the starvation of civilians and suspension of humanitarian aid is explicit, sustained, and willful. Even Israel's closest military ally and defender, the United States, issued a report on May 10 concluding that Israel has "contributed significantly to a lack of sustained and predictable delivery of needed assistance" and likely violated international humanitarian law (for more on that report, and claims by a former U.S. State Department official that it understated violations of international law, see coverage in The Guardian and PBS NewsHour).
Along similar lines, many Americans believe that laws have been broken. A national poll of Americans by The Economist/YouGov in May asked the following question: "Do you think Israel has violated any international laws in Gaza?" Only 28% of respondents answered, "No."
Indeed, on May 20, the International Criminal Court (ICC) prosecutor requested arrest warrants for Benjamin Netanyahu and Yoav Gallant, charging them with war crimes and crimes against humanity, and citing violations of Article 8(2)(b)(xxv) of the Rome Statute. (The prosecutor also sought to arrest three Hamas leaders for a list of crimes that included rape, torture, and kidnapping.)
In addition, the ICC appointed an independent Panel of Experts in International Law to render an opinion on whether there were "reasonable grounds" to believe that crimes had been committed. In its report, the panel unanimously concluded:
[T]here are reasonable grounds to believe that Netanyahu and Gallant formed a common plan, together with others, to jointly perpetrate the crime of using starvation of civilians as a method of warfare. The Panel has concluded that the acts through which this war crime was committed include... cutting off supplies of electricity and water, and severely restricting food, medicine, and fuel supplies.
Although President Biden called the ICC prosecutor's charges "outrageous," the next day a report documented that Israeli soldiers and police officers were tipping off far-right activists about the location of aid trucks delivering vital supplies to Gaza, colluding with vigilantes to block the trucks from reaching their destination. Then, on June 12, a commission established by the U.N. Human Rights Council released a finding that "Israel has committed war crimes, crimes against humanity, and violations of international humanitarian law and human rights law."
(2) U.S. taxpayers are funding Israel's activities in Gaza. Since its founding in 1948, Israel has been the world's largest recipient of U.S. foreign aid, totaling more than $300 billion in American taxpayer money, adjusted for inflation. Moreover, military aid to Israel shows no sign of slowing down. Between 2019 and 2023, nearly 70% of Israeli arms imports came from the U.S., and since the Israel-Hamas war began last year, the U.S. has supplied Israel with weapons via more than 100 arms transfers.
Even after the U.S. State Department released its May 10 report concluding that Israel was likely committing crimes, the U.S. has continued to underwrite Israel's actions in Gaza with $12.5 billion in military aid during fiscal year 2024—the second-highest level of U.S. military aid ever provided to Israel.
In a very real sense, then, Israel's war in the Middle East has become America's war—a joint project, as reflected in the results of a national poll conducted in April. When Americans were asked whether they thought the U.S. was at war in the Middle East, 56% said either yes or they weren't sure.
By supplying most of the bombs dropped in Gaza while knowing that humanitarian assistance is being withheld, the U.S. is not only morally culpable—it is breaking federal law. Providing military aid to Israel under such circumstances violates Section 620I of the 1961 U.S. Foreign Assistance Act, which bans foreign aid to any country that "prohibits or otherwise restricts, directly or indirectly, the transport or delivery of United States humanitarian assistance."
On March 11, eight U.S. senators sent a letter to President Biden raising precisely this concern, and on March 27, six additional members of Congress sent a similar letter reiterating the point:
It is apparent that the Netanyahu government is repeatedly interfering in U.S. humanitarian operations in direct violation of the Humanitarian Aid Corridor Act—Section 620I of the Foreign Assistance Act of 1961... We [are] imploring you to enforce U.S. law with the Netanyahu government.
Providing Israel with weapons used in the commission of war crimes also violates Article Seven of the Arms Trade Treaty, adopted by the U.N. General Assembly, ratified by 113 states, signed by 28 others (including the U.S. and Israel), and supported by several Nobel Peace Prize recipients, notable among them Holocaust survivor Elie Wiesel.
Nor is the problem limited to the 2,000-pound bombs made by the United States. On June 6, Israel killed at least 40 people—including women and children—with American-made GBU-39 small diameter bombs in an attack on a school where Palestinians were sheltering. One day later, the U.N. publicly announced that it was adding the Israel Defense Forces (as well as Hamas and Palestinian Islamic Jihad) to a global list of offenders that violate the rights of children. Because the United States is still supplying Israel with lethal weapons while being aware of how the weapons are being used, many people around the world regard the U.S. as complicit.
(3) Divestment can promote political change and moral alignment. Divestment movements have been around since at least 1783, when Quakers urged members of their community to divest their holdings from the slave trade. As explained by sociology professor David S. Meyer:
[T]he idea wasn't to financially cripple the slave trade. The idea was to get their [own] conduct in line with their beliefs so they could advocate more effectively, sort of a strike against hypocrisy.
Consistent with this explanation, modern-day divestment campaigns rarely have a major financial effect on the targeted countries or businesses, but they can raise public awareness about an issue, signal its urgency, and generate political action. One such political campaign was the global movement to divest from South Africa, which is widely credited as having hastened the end of apartheid in that country and provided a model for the movement to divest from Israel.
When I asked Wesleyan student protesters why they were calling for divestment, some said that they hoped it would help publicize the plight of Palestinians and contribute to political change. Others spoke of moral alignment, saying that they didn't want Wesleyan to fund or support war crimes. And still others felt that schools should not profit from war, arms sales, or the death of civilians. As climate activist Bill McKibben famously said when explaining the logic behind divesting from fossil fuel companies, "If it is wrong to wreck the climate, then it is wrong to profit from the wreckage."
Joining the call for divestment also offers a way for student voices to be heard, for protesters to network within and across campuses, and for students to exert more collective leverage than if they act alone. In the case of Wesleyan, for example, students were able to secure a promise from the administration to have the Board of Trustees consider a proposal later this year to divest Wesleyan's $1.5 billion endowment, $25-30 million of which is currently invested in aerospace and defense businesses.
The Missing Element: Personal Divestment
One of the most powerful aspects of university divestment is that it makes a statement from a respected institution known for its erudition and scholarly expertise. At the same time, a promise to consider divestment is not the same as a promise to divest, and even if a school were to opt for divestment—as Wesleyan has with respect to fossil fuels, and as it may in the future with respect to defense contractors—the process could take months or years to complete, by which time the war in Gaza would presumably have ended.
In the meanwhile, there's a relatively quick and simple step that individual citizens can take, not as a substitute for institutional divestment, but as a complement to it. They can make sure their own financial holdings are divested.
This is no small thing. American college and university endowments total an estimated $839 billion—an astronomical amount that would have far-reaching political effects if it were divested—but the divestment campaigns on college campuses miss a source of funds 45 times larger: $38.4 trillion in U.S. retirement accounts held by individual employees.
Even after the current war is over, we will be better off in a world that divests from companies selling weapons of mass destruction, fossil fuels, and tobacco products than in a world that financially invests in their growth.
In a matter of minutes, many employees with retirement accounts can divest by moving their assets into environmental, social, and governance (ESG) funds that exclude defense contractors. ESG funds also typically exclude fossil fuel companies, the tobacco industry, and corporations known for worker abuses.
In days gone by, these "socially responsible" or "sustainable" investment funds tended to perform more poorly than broad mutual funds set up to mirror market indexes such as the S&P 500. Not anymore. In fact, according to a New York University meta-analysis of more than 1,000 research papers, today's ESG funds often outperform other funds.
To take just one example, the Statista Research Department compared the classic S&P 500 index and an ESG S&P 500 index between 2021 and 2024, and it found that by the fourth quarter of 2021, "the S&P 500 ESG index began to steadily outperform the S&P 500 by four points on average."
A Morgan Stanley study of more than 10,000 mutual funds from 2004 to 2018 also found that ESG funds tend to be less risky than other mutual funds, especially when markets are turbulent. The conclusion, according to the Morgan Stanley Institute for Sustainable Investing, is that "incorporating ESG criteria into investment decisions makes good sense financially."
Of course, not everyone has a retirement fund, but for those who do, these results are reassuring. What they suggest is that individual employees can divest from defense contractors like Boeing and General Dynamics—makers of the GBU-39 and Mark-84 bombs discussed earlier—without compromising retirement savings.
This divestment option applies to a broad range of retirement accounts, including traditional and Roth IRAs, 401(k) plans, 403(b) plans, and 457(b) plans. For further details on how to divest, see these tips on how to divest retirement accounts.
All well and good, you might say, but what about after a cease-fire or the war ends—would it still be worth the effort to divest? Without question, my answer is yes. First, cease-fires are often fragile. In the 2014, for example, Israel and Hamas had nine truces, during which more than 2,000 people were killed, before there was a relatively lasting agreement to stop the fighting. And even after the current war is over, we will be better off in a world that divests from companies selling weapons of mass destruction, fossil fuels, and tobacco products than in a world that financially invests in their growth.
Admittedly, personal and institutional divestment are both blunt instruments, and ESG investing has its critics. Nevertheless, ESG investments are growing worldwide and estimated to reach $53 trillion by next year (one third of all global assets under management). The reason for this meteoric growth is not just that ESG investment strategies exclude certain industries. They also embrace prosocial values and goals that are aligned with emergent global regulations, priorities, and needs.
In short, ESG investing is here to stay, and personal divestment can serve as a refusal to support or profit from the use of American-made weapons in Gaza—a small but significant statement. As Mahatma Gandhi reportedly said with respect to the impact of individual actions, "Almost anything you do will be insignificant, but it is very important that you do it."
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Gilead's ESG Awards Are Worthless. What About Drug Prices?
Diversifying your workforce represents a worthy goal. Yet, corporate social responsibility awards distract from what really matters to pharmaceutical company customers: whether or not they can afford life-saving medicines.
Feb 24, 2024
Corporate “Environmental and Social Governance” (ESG) performance ratings are less than worthless. Yet, companies cannot wait to show off when they make the cut.
Giddy communications shops rush out press releases boasting their inclusion on lists that purportedly showcase a commitment to ethical business practices. Many variables determine the gold star awardees that peacock for the public and shareholders. The common-sense metrics include how well a corporation treats its employees and customers. Others weigh how well companies reduce carbon emissions or strive for diversity in hiring practices.
While monitoring the carbon emissions of a natural gas company seems worthy, does it matter how much a pharmaceutical giant commits to climate change initiatives? What if the drug maker went all-in on diversity, but raised many of its drug prices 30 percent or more in under a year? In the end, who cares how much a drug company “greens” its production if sky-high price hikes make its products unaffordable to many Americans.
People living with HIV likely care more about sticker shock at the pharmacy counter than the diversity of Gilead’s sales force and research & development team.
Take Gilead Sciences as one example. In 2022, the California-headquartered drug maker cleaned up at the ESG awards ceremony. Gilead took home the Best Diversity, Equity & Inclusion (DE&I) Prize at Corporate Secretary and IR Magazine’s ESG Integration Awards. The company also earned the nod from the Association of Corporate Citizen Professionals as its first Corporate Social Impact Team of the Year designee. Fierce Pharma, a news outlet dedicated to reporting on the drug industry, ranked Gilead #2 on its Big Pharma list for corporate DEI efforts. Finally, JUST Capital and CNBC recognized Gilead as one of America’s most just companies, ranking it fifth overall in the pharmaceuticals and biotech industry. Paeans to DEI pay dividends.
Diversifying your workforce represents a worthy goal. Yet, corporate social responsibility awards distract from what really matters to pharmaceutical company customers: Can they afford their prescriptions, often in Gilead’s case, for life-saving HIV therapeutics?
The awards committees must have missed Gilead’s recent unsavory business practices. A 2023 New York Times story revealed how Gilead gamed the patent system, keeping Americans living with HIV on the less effective and not as safe Truvada to maximize profits before its patent expired. Gilead had already started researching the safer and more effective design of tenofovir (tenofovir alafenamide), but shelved it in favor of monopolistic profits for the older version. Then, just before the patent expired, Gilead brought the successor drug Descovy to market.
The shenanigans with Descovy don’t stop with mere patent profiteering. In under two years, Gilead doubled the price of its HIV-prevention drug. In the third quarter of 2020, Gilead charged healthcare safety net providers $445.11 for the PrEP medication; by the second quarter of 2022, the price hit $987.55. Pandemic-related inflation caused price hikes for innumerable goods and services, but inflation did not double pharmaceutical ingredient and manufacturing costs.
2022 marked a banner year in charity claw-backs from one of America’s supposed “most just” companies. According to its most recent financial report, Gilead generated over $27 billion in revenue, netting $4.59 billion in profit. Domestic sales of HIV medications accounted for $13.8 billion in sales. Despite beaucoup revenues with healthy profits for the year, Gilead made drastic changes to its Advancing Access Medication Assistance Program, a vital patient assistance program. Gilead reduced reimbursements to nonprofit healthcare providers that rely on the program for their low-income, uninsured patients living with HIV.
What if the drug maker went all-in on diversity, but raised many of its drug prices 30 percent or more in under a year?
The drug maker announced the changes would “support the long-term sustainability” of the initiative—code for trimming expenditures so the company generates greater profits. Just as troubling, the Gilead Foundation—the drug maker’s philanthropic arm—made substantial cuts to its charitable giving from the prior year. In 2021, Gilead donated equity securities to the foundation totaling $212 million. The following year, the drug maker slashed such donations by 59 percent, providing only $85 million in funds. The drop-off came despite no change in revenues.
ESG awards for corporate culture and commitment to diversity disregard the real ethical concerns in the pharmaceutical industry. People living with HIV likely care more about sticker shock at the pharmacy counter than the diversity of Gilead’s sales force and research & development team. The following metrics for drug companies make much more sense: Monitor patent manipulation that emphasizes profits at the expense of health outcomes; evaluate whether the company made it harder to access patient assistance programs; and, above all, highlight the affordability of prescription drugs. Have prices increased beyond inflation and costs from the previous year?
When an ESG award for the pharmaceutical industry focuses on these standards, then the recipient drug maker will actually have something to brag about.
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What Harm Did ALEC Plot at Its 2nd Big 2023 Summit?
ALEC politicians considered model policies and resolutions related to an Article V constitutional convention, so-called “woke” capitalism, school curricula, the environment, gutting regulations, and more.
Dec 10, 2023
State lawmakers, corporate lobbyists, and right-wing operatives got together in Scottsdale, Arizona, last week for the 2023 States and Nation Policy Summit hosted by the American Legislative Exchange Council, or ALEC. The summit—one of the largest annual gatherings of the ALEC faithful, along with the summer meeting—caps off ALEC’s 50th anniversary year.
Following its 50th Annual Meeting in July, ALEC held a formal gala on October 4 at the National Portrait Gallery in Washington, D.C., where attendees were met with protests highlighting the pay-to-play group’s “50 Years of Harm.” ALEC also organized a “50th Anniversary Policy Day” at the U.S. Capitol that featured discussions on artificial intelligence; environmental, social, and corporate governance (ESG) investment strategies; school privatization; and the “state tax cut revolution,” as an agenda obtained by the Center for Media and Democracy (CMD) details.
Meeting at the four-star Westin Kierland Resort & Spa in Scottsdale, ALEC politicians considered model policies and resolutions related to an Article V constitutional convention, so-called “woke” capitalism, school curricula, the environment, gutting regulations, and more.
Among the slate of Republican politicians and other right-wing speakers were former Arizona Governor Doug Ducey, U.S. Speaker of the House Mike Johnson (via video), former U.S. Speaker of the House Newt Gingrich, Arizona State Supreme Court Justice Clint Bolick, and many others.
Major Push for a Constitutional Convention
ALEC prioritized its push for an Article V constitutional convention early in the opening session with multiple speakers who advocated for the radical move to rewrite our nation’s founding document.
In his address, the new House speaker (and ALEC alumnus) called the size of the federal debt “the greatest present threat to our national security” and announced “plans for a bipartisan debt commission to study and propose solutions to begin reducing our debt and putting America back on a path to fiscal responsibility.”
Johnson has long supported the Convention of States, one of the right-wing groups lobbying for state resolutions to hold a constitutional convention. The group relies on ALEC as a tool to reach state legislators to back its extreme plan to rewrite the U.S. Constitution in order to drastically curtail federal powers and lock in minority rule.
He noted that several states are considering whether to file a case against Congress with the goal being “to get a case before the Supreme Court to force the Congress to discharge its constitutional responsibilities.”
ALEC used this most recent policy summit to double down on a strategy first presented in 2020 claiming that unrelated and outdated state resolutions should be counted to meet the threshold of the 34 state calls needed to hold a constitutional convention. Using this rationale, the threshold was reached in 1979, making Congress legally required to convene a constitutional convention immediately.
U.S. Rep. Jodey Arrington (R-Texas) presented the bill he has introduced (HCR 24) to do just that, claiming Congress has “failed in its constitutional duty to count applications and call a ‘Convention for proposing Amendments.’”
“Working with my friend and our fearless leader in the House, Speaker Mike Johnson, I’m going to continue to push to pass this important legislation to stave off a sovereign debt crisis, to rein in the reckless and wasteful spending in Washington, and to return power back to the sovereign states,” Arrington said.
David Walker, former comptroller general of the U.S., discussed steps being taken to force the issue in the courts. “The Federal Fiscal Sustainability Foundation (of which I’m a board member) has financed the drafting of a declaratory judgment filing by a prominent D.C. firm with significant Supreme Court experience,” Walker explained. He noted that several states are considering whether to file a case against Congress with the goal being “to get a case before the Supreme Court to force the Congress to discharge its constitutional responsibilities. We need more states to join this effort.”
Utah State Rep. Ken Ivory (R) also called on ALEC lawmakers to urge the Supreme Court to act. “Please join us in the state of Utah as we look into the legal mechanisms that we have under the Constitution… to declare that Congress must count the applications,” Ivory implored. “And if, as we believe, we’ve already achieved 34 applications to Congress for a fiscal responsibility convention, call [it]… and hold a Convention of States.”
In a workshop titled “Article V: The People’s Voice and State’s Empowerment Tool,” ALEC lawmakers heard from “legal experts” who delved “into the merits of a Declaratory Judgment suit against Congress, specifically addressing its negligence since 1979 in calling a Convention for an inflation-fighting Fiscal Responsibility Amendment.”
Members of ALEC’s Federalism and International Relations Task Force heard a similar presentation called “Article V—Next Steps If the 34-State Threshold Was Met in 1979.”
Task force members then took a secret vote on a Resolution Demanding Congress Call the Fiscally Responsible Amendment Convention as Article V Mandated in 1979 Stipulating Ratification by State Convention, where “We the People Rule.” This resolution not only calls on Congress to hold a constitutional convention, it requires the states’ governors, attorneys general, and legislative councils “to seek judicial enforcement” if they fail to do so.
More Attacks on ‘Woke’ Capitalism and Sustainable Investing
Attacks on so-called woke capitalism and sustainable investing were featured prominently throughout the summit.
ALEC’s Tax and Fiscal Policy Task Force held a discussion on “States Keeping Politics Out of Pensions” and reconsidered the Proxy Voting Integrity and Transparency Act that failed to pass at the annual meeting in July. Now that this model bill—which seeks to prevent government entities managing public pension plans from considering ESG factors when engaging in the proxy voting process—didn’t pass this time either, it’s likely dead.
At their meeting, members of the Energy, Environment, and Agriculture Task Force voted on making adjustments to the Model Policy Amending the Prudent Management of Institutional Funds Act, but it didn’t move. The changes would have prohibited the consideration of ESG factors in the management of public institutional funds.
This model is also hosted on the Heritage Foundation website, as are most anti-ESG model policies introduced at ALEC meetings over the past few years.
At the closing session, Andy Puzder, former CEO of CKE Restaurants, the parent company of the popular fast-food chains Carl’s Jr. and Hardee’s and a visiting fellow at Heritage, once again drummed up fears about ESG as a lens for investing, calling it a “Neo-Marxist investment strategy.”
Puzder has spoken at multiple ALEC meetings and drafted many of the anti-ESG bills the corporate bill mill has circulated since the summer of 2021, when it held its annual meeting in conjunction with the State Financial Officers Foundation, an association of right-wing state treasurers and other fiscal managers that is staunchly opposed to making decisions about public policy and funds based on factors such as climate change, equity and inclusion, and social justice.
At last year’s ALEC policy summit, Puzder compared the fight against ESG to his father’s generation’s fight against Nazism.
In addition to demonizing sustainable investing in his remarks last week, Puzder promoted the only anti-ESG model bill that has been approved by ALEC’s board of directors: the State Government Employee Retirement Protection Act. The bill, which he helped draft, prohibits anyone managing state, local, or university public pensions from considering the climate emergency or other social or political factors when investing pension funds.
Puzder also promoted anti-boycott bills that he refers to as “contracting legislation.” Originally called the Eliminate Political Boycotts Act but renamed at the December 2022 summit, this model bill bars companies with 10 or more employees from receiving state contracts if they take into account any “social, political, or ideological interests” to limit their commercial relations with fossil fuel, logging, mining, or agricultural businesses—and instructs legislatures to “insert additional industries if needed,” as CMD first reported.
ALEC’s board rejected the anti-boycott model due to opposition from the American Bankers Association, state bankers associations, and others.
‘Science of Reading’
ALEC lawmakers also considered passing The Science of Reading Act. This model bill would require all schools to adopt the “science of reading” method of instruction in place of older approaches to teaching students how to read, prohibit the use of any other reading curricula, and require all new teachers to take 80 hours of additional training “aligned with the science of reading.” The training must be “provided by an organization accredited by the International Dyslexia Association”—which offers a clue as to which special interests likely drafted the model bill, something ALEC keeps secret. This is totally at odds with the National Center on Improving Literacy, which maintains that the “science of reading” is a body of research and not “a program, an intervention, or a product you can buy.”The bill does not include language on funding.
The unfunded “science of reading” curriculum has proven to be difficult to roll out and expensive to implement for school districts in states where this new reading program is mandated by law. Education scholar Diane Ravitch argues that there is no such thing as “the science” of reading. “There are better and worse ways of teaching, but none is given the mantle of ‘science,’” Ravitch points out. “Calling something ‘science’ is a way of saying ‘my approach is right and yours is wrong.’”
Energy and the Environment
ALEC politicians in the Energy, Environment, and Agriculture Task Force meeting debated An Act to Prevent Lawsuit Abuse Regarding Ethylene Oxide Emissions, which would protect medical device manufacturers and distributors from potential lawsuits that may stem from a new rule from the Environmental Protection Agency regulating emissions of the cancer-causing chemical.
ALEC lawmakers serving on the Federalism and International Relations Task Force also heard a presentation titled “Protecting State Critical Infrastructure—A National and Homeland Security Imperative” and voted on the Statement of Principles on Securing and Protecting Public Utility Infrastructure. The model legislation makes the case that protecting public utility infrastructure is a matter of both “homeland security” and “environmental protection.”
This may also suggest a renewed interest from ALEC in pushing its 2018 model policy designed to criminalize and quell environmental protests in and around fossil fuel infrastructure.
City and Local Model Bills
ALEC’s sister organization, the American City County Exchange (ACCE) also introduced a couple of model bills to attendees.
The Homelessness Crisis Mitigation Act would prevent cities or towns within a given county from addressing the critical needs of the unhoused “without first entering into a shared services agreement with [COUNTY] to provide said services.” This would create a significant hurdle for social service agencies and possibly prevent shelters or other temporary housing options from being offered to those in need.
The Local Taxpayer Protection Act would require the vote of two-thirds of a county legislature in order to increase property taxes, raising the threshold needed and making it more difficult for counties trying to finance policies and programs unfunded by state legislatures.
Gutting Regulations
In the Commerce, Insurance, and Economic Development Task Force, members considered the Regulatory Sunset Act, which calls for any rule or regulation enacted or amended after the model’s passage to be terminated after five years and gives the legislature power to control any renewals. Regulatory agencies would have to notify the legislature a year in advance and provide a cost-benefit analysis for each regulation they wish to renew. This would create an extensive amount of additional work for state agencies and state legislatures, many of which operate part-time, and put health, environmental, workplace, and other regulations that keep Americans safe at risk of lapsing.
Other new model policies considered at the ALEC summit include:
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