PBS News Hour

countries this summer have cast a sharp# spotlight on the role of climate ch In recent years, those same# concerns have changed the## way that major investment firms# and some companies do business.

Economics correspondent Paul Solman has# more on the backlash that' PAUL SOLMAN: On Wall Street, New# York City Comptroller Brad Lander: BRAD LANDER, New York City Comptroller: A big part# of investing is investing across the stock marke PAUL SOLMAN: and that's how you# protect your portfolio against risk.

BRAD LANDER: Diversification protects you# against concentration your environmental and social and governance# risks protects you against systemic risks.

PAUL SOLMAN: Lander oversees over $250# billion in assets in pension funds for## 750 New York City teachers, transit# workers and other public employees.

BRAD LANDER: If you have retirement obligations,## pension obligations out decades,# then climate ris PAUL SOLMAN: In Lander's words, taking# into account a firm's environmental,## social and governance, so-called ESG, risks is his# fiduciary responsibility as a long-term investor That includes, he says, reducing greenhouse# gas emissions in the portfolio to near zero.

BRAD LANDER: We have adopted the most ambitious# net zero plan of any us public pension fund.

We're## aiming to have our -- three of our five funds# be net zero by the year 2040, so pretty soon.

PAUL SOLMAN: In 2021, three of the five New# York funds he oversees divested $4 billion## from fossil fuel stocks to mitigate risks# associated with global warming, he says.

BRAD LANDER: If we have disruption in# the food supply, if we have an increased## number of climate refugees, if we have# more real estate can't live it's underwater or it's just too hot,# all of those have big financ PAUL SOLMAN: By the end of last year, ESG# investments nationwide totaled $8.4 trillion,## 13 percent of total us assets# under professional management.

DAN ABBASI, Douglass Winthrop Advisors LLC:# Incorporating E factors within ESG for us## is something that's just a matter# of good, solid, prudent investing.

PAUL SOLMAN: Portfolio manager Dan Abbasi# applies the E, environmental metrics.

DAN ABBASI: If we have increasingly# dangerous problems like climate change,## the companies that are selling solutions to# those, there's opportunity to grow and be## competitive, but also an opportunity# to have favorable impact on society.

And we see those as flip sides# of the same coin in many cases.

SEAN REYES (R), Utah Attorney# General: It's an existential threat PAUL SOLMAN: But, these days,## there's a REP. LISA MCCLAIN (R-MI): It's not# their job to pursue political agendas.

PAUL SOLMAN: Congressional# Republicans have taken up the issue.

REP. LISA MCCLAIN: It's their job to actually# manage the account PAUL SOLMAN: A GOP bill to prevent# pension funds from considering ESG## prompted President Biden's very first veto.

So, states have taken up the anti-ESG cause.

GOV.

RON DESANTIS (R-FL), Presidential# Candidate: In Florida, we signed legislation,# nixing ESG from our pension fund, because# we don with the pensions of our teachers, our# firefighters and our police officers.

(APPLAUSE) been introduced, 22 of which have become law.

GLENN HEGAR, Texas Comptroller: Investment# outfits that a industry from here forward, they are therefore# deemed boycotting the oil and gas industry.

PAUL SOLMAN: In Texas, Comptroller Glenn# Hegar has a list of financial institutions## now banned from doing business with the state# government because they boycott energy companies.

GLENN HEGAR: If someone else can do this job,## then go with those.

Don't go with the ent PAUL SOLMAN: The Texas comptroller's# office has already pulled several## billion dollars from the likes of# investment giants BlackRock and UBS.

GLENN HEGAR: If we had no more# petroleum in this nation in this## world, you would literally would shut# down most functions of the economy.

PAUL SOLMAN: And in New Hampshire... VIVEK RAMASWAMY (R), Presidential Can and I'm on the campaign trail having some fun.

PAUL SOLMAN: One-time Harvard undergrad# rapp who went on to make mega millions# as a hedge fund and biotech honcho.

VIVEK RAMASWAMY: Fossil fuels are# a requirement for human prosperity.

PAUL SOLMAN: He's now campaigning for# president in part on an anti-ESG platform.

VIVEK RAMASWAMY: What's actually driving# it?

It's the politicized demands of asset## managers.

And I think that that is a political# agenda masquerading as value maximiza PAUL SOLMAN: And ESG backlash is# having real impact on asset managers,## including the world's largest, BlackRock,# whose CEO, Larry Fink, is on the defensive.

QUESTION: There has been a rebuke, if you# will, to what some people call woke capitalism.

LARRY FINK, CEO, BlackRock: I believe stakeholder## capitalism is not political.

It# is not woke.

It is capitalism.

PAUL SOLMAN: But, today, Fink no longer# publicly embraces ESG.

And he's far from alone,## says Harvard business school's Rebecca Henderson.

REBECCA HENDERSON, Harvard Business# School: decides that firms acting in# and is willing to use their power to# enforce that, many manager OK, OK, I'm going to be careful.

I'm not -- at the# very least, I'm not going to talk much about it.

PAUL SOLMAN: But how well have# ESG investments actually fared?

In New York, four city employees# sued the pension plans that shed## fossil fuel investments, alleging# they breached their fiduciary duties?

Fossil fuels have done quite well in recent... (CROSSTALK) PAUL SOLMAN: Yes.

they have not actually been# doing very well at all.

So, our funds are in strong position.

If you look# re turns, they're really actually very quite# strong, given all the decisions that we have made.

PAUL SOLMAN: Ramaswamy says he doesn't buy it.

VIVEK RAMASWAMY: Disguising this agenda in# PA UL SOLMAN: So, the New York# comptroller who tells me that## he's trying to invest in the long-term# interests of VIVEK RAMASWAMY: I believe he's not# telling the truth.

That's correct.

PAUL SOLMAN: But Dan Abbasi# points to official his environment-focused investing has paid off.

DAN ABBASI: Our strategy has outperformed# now benchmarks lik World for six-and-a-half years.

This idea# that it's an ideological issue, for us,## it's just a prudent investment agenda that's very# clear-eyed about the way the world is changing.

PAUL SOLMAN: So I asked Ramaswamy, is it ever# the case that a company would say in good faith## it is in the interest of our shareholders to# maximize value by taking ESG into account?

VIVEK RAMASWAMY: Maximize shareholder# value to do whatever requires taking## maximize shareholder value into# account.

But the little puzzle## at the heart of this is why these# particular three lette acronym had to be the one factor they take# into account.

Th PAUL SOLMAN: And, yes, some studies show ESG## investing in general has led to# lower returns in recen But proponents point to the long term.

REBECCA HENDERSON: It's as if# we're stuck in an ol thinking about the world and an old --# old assumptions abou and that we just haven't understood that# the world is fundamentally changing.

PAUL SOLMAN: And Henderson argues monetary# returns aren't the only metric we shoul REBECCA HENDERSON: Not to pay attention# to what's happening to the climate,## not to pay attention to the consequences# of inequality of the society we're in not to be aware of the new products# and opportunities that dealing with## these issues is going to create is# to be blinkered, and shortsighted.

PAUL SOLMAN: Yet Henderson is also# skeptical of so-called greenwashing## firms who use ESG mainly as a marketing device.

REBECCA HENDERSON: There are# companies that have just said,## yes, we need ESG.

Go measure it,# An d they aren't really being used# to govern the firm and they aren't## really useful to investors.

So that is true.## It is also true that some of the things that# people are trying to measure ar But, to me, that sounds like reason to improve# the measures, not to get rid of them altogether.

PAUL SOLMAN: In the end, the debate may come# down to time frame, shareholder value in the## more knowable short run, in contrast to the# less knowable, but ever more threatening future.

For the "PBS NewsHour," Paul Solman.