By Sam Metz in Salt Lake City

SALT LAKE CITY (AP) — Republicans are coming out swinging against Wall Street’s growing efforts to consider factors like long-term environmental risk in investment decisions, the latest indication that the GOP is willing to damage its relationship with big business to score culture war points.

Many are targeting a concept known as ESG — which stands for environmental, social and governance — a sustainable investment trend sweeping the financial world. Red state officials deride it as politically correct and woke and are trying to stop investors who contract with states from adopting it on any level.

For right-wing activists who previously brought criticisms of critical race theory (CRT), diversity, equity and inclusion (DEI) and social emotional learning (SEL) to the forefront, it’s the latest acronym-based source of outrage to find a home at rallies, in conservative media and in legislatures.

ESG has yet to take hold as mainstream political messaging, but backlash against it is gaining steam. Last week, former Vice President Mike Pence attacked the concept during a speech in Houston. And on Wednesday, the same day he said on Twitter he planned to vote Republican, Elon Musk attacked it after Tesla lost its place on the S&P 500′s ESG Index. He called it a scam “weaponized by phony social justice warriors.”

The concept calls on investors to consider criteria such as environmental risk, pay equity or how transparent companies are in their accounting practices. Aided by recently proposed disclosure requirements and analysis from ratings agencies, they have adopted the principles to such an extent that those who use them control $16.6 trillion in investments held in the U.S.

In response, Republicans — historically known for supporting fewer regulations — are in many places attempting to impose new rules on investors. Their efforts reflect how members of the party are willing to distance themselves from big business to push back against those they see as ideological foes.

“I don’t think we’re the party of big business anymore. We’re the party of people — more specifically, we’re the party of working people. And the problem that we have is with big banks and corporations right now trying to dictate how we’re going to live our lives,” West Virginia Treasurer Riley Moore said.

Opponents criticize ESG as politicized and a potentially costly diversion from purely financial investment principles, while advocates say considering the criteria more accurately accounts for risk and promises steadier returns.

“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,” Larry Fink, CEO of investment firm BlackRock and a leading proponent, told clients in a letter this year.

But Moore and others including Utah’s Republican state treasurer Marlo Oaks argue favoring green investment over fossil fuels denies key industries access to the financial system and capital. They have targeted S&P Global Ratings for appending ESG scores to their traditional state credit ratings. They worry that without changes, their scores could make borrowing for projects like schools or roads costlier.

In an April letter, Oaks demanded S&P retract analysis that rated Utah as “moderately negative” in terms of environmental risk due to “long-term challenges regarding water supply, which could remain a constraint for its economy … given pervasive drought conditions in the western U.S.”

The letter was co-signed by the governor, legislative leaders and the state’s congressional delegation, including Sen. Mitt Romney, whose former firm Bain Capital calls ESG factors “strategic, fact-based and diligence-driven.” It said ratings system “attempts to legitimize a dubious and unproven exercise” and attacks the “unreliability and inherently political nature of ESG factors in investment decisions.”

Though he likened ESG to critical race theory, Oaks said he was mostly concerned with capital markets and what he called attempts by fossil fuel opponents to manipulate them by pressuring investors to pick businesses with high ESG scores.

“DEI, CRT, SEL. It can be hard to keep up with the acronyms,” he wrote on an economics blog last month, “but there’s a relatively new one you need to know: ESG.”

Investors making carbon neutral or net zero criteria common were, in effect, Oaks said, limiting access to capital for oil and gas businesses, hurting their returns and potentially contributing to gas price spikes.

In more than a dozen red states, officials dispute the idea that the energy transition underway could make fossil fuel-related investments riskier in the long term. They argue employing asset managers with a preference for green investments uses state funds to further agendas out of sync with constituents.

In statehouses, anti-green investing efforts are backed by conservative groups such as the American Legislative Exchange Council and the Heartland Institute, a think-tank skeptical of scientific consensus on human-caused climate change that has backed bills that either divest state funds from financial institutions that use ESG or forbid them from using it to score businesses or individuals.

In Texas, West Virginia and Kentucky, lawmakers have passed bills requiring state funds limit transactions with companies that shun fossil fuels. Wyoming considered banning “social credit scores” that evaluate businesses using criteria that differ from accounting and other financial metrics, like ESG

After conservative talk show host Glenn Beck visited the Idaho Statehouse and referred to ESG as critical race theory “on steroids,” the Legislature passed a law in March prohibiting investment of state funds in companies that prioritize commitments to ESG over returns.

The American Legislative Exchange Council recently published model policy that would subject banks managing state pensions to new regulations limiting investments driven by what it calls “social, political and ideological” goals.

Though the policy doesn’t mention it outright, Jonathan Williams, the group’s chief economist, said ESG’s mainstreaming amid broader trends of political correctness was a driving force. He said his research shows that incorporating factors beyond traditional financial metrics can lower the rate of return for already underfunded state pensions.

Sustainable investing advocates deny that charge and say considering the risks and realities of climate change amounts to responsible investing.

West Virginia and Arkansas recently divested their pension funds from BlackRock in response to the asset manager adding businesses with smaller carbon footprints to its portfolios. Moore, West Virginia’s treasurer, hopes more will follow.

Though it’s drawing enthusiasm, the green investment discourse differs from recurring debates over gender and sexuality or how history is taught. Both proponents and detractors acknowledged they’re surprised pensions, credit ratings and investment decisions have become campaign rally fodder.

Last month at the Utah state party’s convention, thousands of Republicans roared when Sen. Mike Lee described green investment in similar terms to critical race theory — another acronym-based foil: “Between CRT and ESG and MSNBC, we get way too much B.S.,” Lee said.

Bryan McGannon, a lobbyist with US SIF: The Forum for Sustainable and Responsible Investment, said opponents were wrong in framing sustainable investing trends as political. If states refuse to reckon with how the future will likely rely less on fossil fuels and limit how environmental risk can be considered, he said, they’re making decisions with incomplete information.

“If a state’s not considering those risks, it may be a signal to an investor that this might not be a wise government to be putting our money with,” McGannon said. “Investors use a huge swath of information, and ESG is a piece of that mosaic.”

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Associated Press writers Stan Choe in New York and Lindsay Whitehurst in Salt Lake City contributed to this report.

By Adina Bresge in Toronto

Experts and advocates anticipate that more Canadians could be at risk of going hungry as inflation continues to outpace many consumers’ grocery budgets.

Valerie Tarasuk, a professor of nutritional sciences at University of Toronto, said steepening inflation rates are likely to increase the prevalence and severity of food insecurity in Canada. That could mean financial concerns will prompt people to reduce meal sizes, skip meals or even go a day or more without eating.

Overall food costs rose 8.8 per cent compared with a year ago, while Canadians paid 9.7 per cent more for food at stores in April, the largest increase since September 1981, Statistics Canada reported Wednesday.

Compared with a year ago, the cost of fresh fruit was up 10 per cent, fresh vegetables gained 8.2 per cent and meat rose 10.1 per cent. The cost of bread rose 12.2 per cent, while pasta gained 19.6 per cent and rice increased 7.4 per cent.

While all consumers are prone feel the pinch at the checkout aisle, these numbers pose particular concern for low-income people who are less able to absorb the price hikes, forcing some to make compromises at a detriment to their dietary needs, Tarasuk said.

“As prices of basic commodities rise, it’s very worrisome to think that we have such a large swath of the Canadian population sitting in circumstances are insufficient to come up with the costs.”

The 2020 Canadian Income Survey found that 11.2 per cent of Canadians lived in households that had experienced moderate and severe food insecurity, and 4.6 per cent more had experienced marginal food insecurity.

Concerns over being able to consistently put food on the table is a pervasive and persistent problem in Canada, said Tarasuk, and as income levels lag farther behind inflation, the situation looks to get worse with far-reaching impacts.

Food insecurity is a “toxic condition” that has been linked to physical and mental health problems, Tarasuk said. As mounting costs threaten to draw more people into food security and compound the stress on those who are already struggling, inaction on this issue could have consequences for the health-care system and life expectancy, she said.

Tarasuk said only a fraction of food-insecure people turn to charity. But a couple of food banks reported that soaring food prices have accelerated the surge in demand for their services during the COVID-19 crisis.

“This is a crisis on a crisis,” said Neil Hetherington, CEO of Daily Bread Food Bank. “These (inflation) numbers are meals that people will be going without.”

The Toronto-based food charity saw 160,000 client visits in March, up from 123,000 in March 2021, said Hetherington.

He projected that number will increase to 225,000 visits per month by this time next year, but said he hopes that’s an overestimate.

“I’m an incredibly optimistic guy, but I am very concerned about the next couple of years,” said Hetherington.

In the first three months of 2022, the Calgary Food Bank logged a 29 per cent year-over-year increase in demand for its food hampers, said communications co-ordinator Betty Jo Kaiser.

Last month, the organization distributed food support to nearly 9,500 people, 75 per cent of whom were first-time clients, said Kaiser.

“We do not expect a slowdown in demand,” she said. “We brace ourselves for continued and rising need.”

This report by The Canadian Press was first published May 19, 2022.