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Elon Musk continues push back against ESG

By Ballotpedia staff
In Newsletters, Uncategorized
May 24, 2022 at 2:36 PM

ESG Developments This Week

In Washington, D.C.

Documenting ESG pushback

On May 19, The Wall Street Journal carried an op-ed by Jonathan Berry, a Trump administration Labor Department official, and Boyden Gray, former White House Counsel to President George H. W. Bush. The piece focuses on index funds/ETFs, highlighting efforts made in the states in opposition to ESG, and suggesting that there may, in the near future, be federal efforts following the same tack. The two wrote the following:

“Passive investing through index funds lets ordinary Americans own the market. Those funds and similar vehicles spread risk and keep fees low. The resulting rates of return have triggered seismic shifts from active to passive funds.

The problem is that there’s been an equally seismic power shift to those passive funds’ investment managers. They’re trying to remake corporate America to suit their personal politics.

In truth, it’s the Big Three investment managers who now own the market. BlackRock, Vanguard and State Street control more than $20 trillion in assets. In 90% of public companies, one of the Big Three is the largest shareholder. More money means more votes: At S&P 500 companies, the Big Three cast about 20% to 25% of all shareholder votes. And that vote bloc will only grow as more Americans move their savings into passive funds.

That concentration of voting power in three like-minded investment companies, given the diversity of all other voting interests, means the Big Three can often direct the outcome of board elections and shareholder proposals….

Fortunately, it looks as if more of our elected representatives are waking up. West Virginia’s state treasurer recently fired BlackRock from a state investment board over its China ties and hostility to fossil fuels. Florida’s top officials have moved to claw back proxy voting power from outside fund managers over Chinese entanglements and politicized investment decisions. Texas (with other states to follow) has gone so far as to demand fair treatment in financing for industries that don’t fit the politics of Mr. Fink et al.—think fracking, guns and oil.

Congress is joining the conversation. This week, the Senate took up a major bill, the Investor Democracy is Expected Act. The Index Act requires passive investment managers to cast funds’ most important votes in accord with the wishes of actual investors. This kind of reform dissipates the political power amassed by the Big Three as an incident to the rise of passive investing. It would push America’s public companies to respond to the desires of ultimate investors—i.e., regular people.

Happily, the writing is already on the wall. Facing pushback, Mr. Fink has lately muted the imperious tone from his annual letter to CEOs, and BlackRock has started extending “proxy voting choice” to larger clients, representing 40% of index equity assets under management. So why not finish the job and send the rest of the power back?

American corporations are supposed to work for their shareholders. An ideal, yes, but requiring asset managers to pass voting power back to investors would bring it closer to reality.”

On Wall Street and in the private sector

Documenting the pushback against the pushback to ESG

Throughout May, numerous defenses against efforts in opposition to the ESG investment movement have appeared. Bloomberg ran two columns (one reprinted at The Washington Post) which argued that, in the view of the pieces, pushback efforts in opposition to ESG are somewhat less than they are cracked up to be. The first of these, by Liam Denning, ran May 19:

“Recently, it may feel as if your 401K is just a mathematical distillation of every wrong decision you’ve ever made. Even worse, though, what if your investments are nothing less than the means by which a shallow and divisive agenda is foisted on millions of unsuspecting Americans by an “ideological cartel”?

That choice phrase comes from Vivek Ramaswamy, a former biotech executive, author and now cofounder of a new investment firm seeded by, among others, the billionaire Peter Thiel. Strive Asset Management seeks to take on the Big Three — BlackRock Inc., State Street Corp. and Vanguard Group Inc. — accusing them of coordinating a campaign to push political objectives that are at odds with their clients’ best interests. In essence, BlackRock CEO Larry Fink et al. decide that they want to prioritize tackling climate change or systemic racism or whatnot and then use the trillions of passive dollars they invest to force companies to prioritize that, too. Strive will do the opposite, pushing instead “excellence capitalism” — that is, nudging companies to ditch the political stuff and focus on delivering good products and services….

Ramaswamy’s core argument is a warning about the growing power of passive money managers. This has merit. The Big Three own, on their clients’ behalf, about one-fifth of each S&P 500 member, on average, with potentially negative implications for governance and competition. There is already lively debate and a body of academic literature about this. 

Still, it remains a leap to conclude that there now exists a cartel — a loaded term — that effectively forces certain political stances on US companies and Americans in general. It is far from clear that corporations set the pace on social issues rather than take their cues from below. For example, plenty of people — indeed, a majority in the US — are concerned about climate change, and that didn’t require the imprimatur of any corporate executive….

Google articles about Strive and you will find terms like “ESG,” “SRI” — socially responsible investing — and stakeholder capitalism used interchangeably. Similarly, Ramaswamy’s book uses the catch-all term “woke”:

Basically, being woke means obsessing about race, gender, and sexual orientation. Maybe climate change too. That’s the best definition I can give.

If you say so. Dismissing climate change as just another activist obsession speaks to the logical disconnect of exhorting Exxon to focus on delivering a high-quality product without acknowledging that said product carries an inherent, climate-related flaw that requires a strategic response. One person’s liberal hobby horse is another’s systemic risk….

Strive’s timing is impeccable, effectively taking the opposite side of what has become a crowded trade.

That timing also makes it suspect. Strive launches amid a gathering Republican campaign against companies taking positions that oppose the party line on wedge issues. The day after Strive’s announcement, former Vice President Mike Pence gave a speech in Texas attacking ESG and socially minded investing, making a wild claim that Exxon’s new directors were “now working to undermine the company from the inside.” As much as Strive touts itself as “depoliticizing corporate America,” I’m afraid you don’t get to do that credibly while also boasting about seed money from Thiel.”

The argument that pushback against ESG is politically tinged is an argument reiterated in the second Bloomberg piece—by Jeff Green and Saijel Kishan—published the following day, May 20:

“Heading into the hotly contested midterm elections, the American political right has a new rallying cry: Down with ESG.

Conservatives have identified the popular investing strategy, which accounts for environmental, social and governance risks, as part of a broader narrative about left-wing overreach and “ wokeness” run amok. Utah Treasurer Marlo Oaks calls it “corporate cancel culture.” Behind the rhetoric lie policies designed to sap the momentum of one of Wall Street’s most successful initiatives in recent years, now worth $35 trillion globally. If it works, it will firmly ensconce ESG in the culture wars, galvanize voters and weaken the resolve of big asset managers to act on climate change and other big, societal issues.

West Virginians are already all too familiar with ESG, according to state treasurer Riley Moore. He’s preparing a list of banks that, he says, will lose the state’s business unless they declare they aren’t boycotting the coal industry and other fossil fuels. “Certainly ‘woke capitalism’ is something they are very familiar with,” he said. “We’re facing threats from that in my state, right now.”

The attacks on ESG escalated last week when former Vice President Mike Pence made the strategy a key theme in an energy-policy speech in Houston. A potential candidate for the 2024 Republican presidential nomination, Pence said large investment firms are pushing a “radical ESG agenda” and took aim at BlackRock Inc., whose Chief Executive Officer Larry Fink is a champion of sustainable investing, and others who have pressed for progress on climate change….

With gas prices rising and energy a key factor in Russia’s invasion of Ukraine, it’s becoming easier for Republicans to tie ESG to pocketbook issues of their constituents. Just as Critical Race Theory grew from a catchall for parents unhappy or worried about what their children were learning in public schools to successful efforts to seize control of local school boards, ESG opponents see an opportunity to aim voters’ fears of inflation at the finance industry’s efforts to combat global warming and other social ills. 

It’s also a new front in a longstanding battle against further restrictions on fossil-fuel industries, which give generously to Republican party candidates, and more corporate accountability. At the state level, Republican governors and other officials are finding new ways to block major Wall Street firms from state business, including managing pension funds and bond issues, if they apply ESG principles to other parts of their portfolios.

Nationally, the broadsides against ESG bolster calls to abandon, or at least relax, environmental standards in favor of “energy independence.” It’s also a partisan issue at the US Securities and Exchange Commission, which is trying to require companies to report on their greenhouse gas emissions. In a virtual meeting on the plan in March, the agency’s only Republican commissioner, Hester Peirce, turned off her camera in protest, saying that she was trying to reduce her carbon footprint.

Republicans are increasingly using banks and “woke” companies as cudgels for their base voters, said Reed Galen, a co-founder of the anti-Trump group, The Lincoln Project. “If you’re taking on a company who has environmental and social justice goals, you don’t have to explain ESG to the voters. All you have to do is say ‘woke corporation.’”…

Few expect the Republican attacks on ESG to vaporize the industry. As of now, roughly $3.4 trillion of public retirement money is invested in line with ESG strategies of some sort, according to the sustainable-investing industry group US SIF. Some of the bigger, more liberal states like California and New York are pushing for more restrictive ESG screens for state funds, not less. What’s more, many of the world’s biggest financial institutions have their own goals to cut emissions, which include reducing the amount of business they do with heavy polluters — whether they bill it as ESG or not. Many also have set targets for workforce diversity and elevating women in management, neither of which are politically popular among the right.

Still, the political pressure seems to be taking a toll. BlackRock sent a letter this week to the Texas state comptroller, rebutting the assertion that the firm boycotts the oil and gas industries, and Fink has made it clear he opposes divesting from fossil-fuel companies. The firm also said this year that it won’t back as many shareholder efforts to push companies to reduce their emissions compared with 2021. JPMorgan Chase & Co. is also taking steps to re-establish itself in Texas’s muni-bond market, about eight months after a new law forced that bank out of most deals because of its policies on guns and fossil fuels.”

In the spotlight

Tesla dumped from S&P ESG Index; CEO Elon Musk calls ESG a scam

Over the last several months, this space has documented the paradoxical but serious battle between the ESG gatekeepers and Tesla, the world’s best-known and most valuable maker of automobiles without greenhouse-gas-producing internal combustion engines.  Over the last several weeks, a war of words between ESG advocates and Tesla, a maker of automobiles without greenhouse-gas-producing internal combustion engines, has heated up.

First, Tesla got kicked out of the S&P 500 ESG index:

“This week, S&P Global SPGI +2.51% ’s (SPGI) S&P Dow Jones Indices division said that Tesla (TSLA), which CEO Elon Musk says he founded to put the world on a path to a sustainable-energy future, doesn’t have a comprehensive low-carbon strategy and no longer qualifies for inclusion in the S&P 500 ESG Index (SPXESUP). 

Tesla was “ineligible for index inclusion due to its low S&P DJI ESG Score,” Margaret Dorn, head of ESG Indices, North America, at S&P Dow Jones Indices, wrote in a blog post explaining the decision. “So, while Tesla’s S&P DJI ESG Score has remained fairly stable year-over-year, it was pushed further down the ranks relative to its global industry group peers.””

After that, its CEO Elon Musk called ESG a scam:

“This week, a major move to cut Tesla from a closely followed environmental, social and governance (ESG) index brought anger and relief in nearly equal measure.

Defiance was on display from Standard & Poor’s, which rejected Tesla from its ESG index; annoyance emerged from Tesla TSLA, 1.20% investors, including well-known asset manager and Tesla bull Cathie Wood. There was also a seething snapback from Elon Musk….

“ESG is a scam. It has been weaponized by phony social justice warriors,” tweeted Musk, lamenting that ExxonMobil topped Tesla.

“Ridiculous,” was Wood’s terse response to Tesla’s removal.”



Year in review: A recap of donor disclosure and privacy policy in the first half of 2022

By Ballotpedia staff
In Uncategorized
May 24, 2022 at 12:56 PM

State legislative sessions are winding down. This will be our last edition of The Disclosure Digest for the next few months as we take a short break and gear up for 2023.. We’ll be back later this year to help you get ready for the 2023 sessions. For now, please enjoy this look back at the 2022 session, and as always, thanks for reading!

Disclosure Digest

State legislators have considered at least 143 bills on donor disclosure and privacy policy this year. Some of these bills required the disclosure of donor information, such as names, addresses, and donation amounts, while others prohibited certain types of disclosure and expanded donor privacy. Of the 143 bills we tracked this year, Republicans sponsored 48, Democrats sponsored 62, and bipartisan groups or committees sponsored 33. 

Ballotpedia also covered six court cases in Alaska, Connecticut, New Mexico, Oregon, Rhode Island, and Washington that affected or could affect disclosure and privacy policy.

Let’s take a look back at session activity in 2022 and how it compares to past years.

Enacted legislation

Of the 15 bills on donor disclosure and privacy enacted this year, 11 focused on disclosure and four focused on privacy. Seven bills were passed in Republican trifecta states while three were in Democratic trifectas. 

Disclosure bills:

  • Colorado HB1060 sets limits on contributions to candidates for school board director and require candidates to disclose campaign contribution information to the secretary of state. 
  • Florida H0921 prohibits a foreign national from making or offering to make contributions or expenditures in connection with any election held in the state.
  • Indiana SB0134 requires appropriations of any donation from a nongovernmental organization to a state agency or local unit of government to be listed in a separate line item in the budget of the state or local unit of government. The budget line item must specify each individual state employee or local government employee, whichever is applicable, whose salary is funded in whole or in part from the donated money.
  • Indiana SB0388 requires a postsecondary educational institution to submit a report to the Indiana commissioner for higher education disclosing gifts of at least $50,000 from a foreign source. 
  • Kentucky HB301 prohibits a state government employee from accepting contributions to assist with election administration unless entered into as a lawful contract.
  • Kentucky HB740 requires a candidate exempt from filing a campaign finance report to file a 30 day post-election report of receipts and disbursements. It would also require a candidate who is exempt from filing for the primary who advances to the regular election to refile for the filing exemption. 
  • Maine LD1754 requires contributors giving more than $100,000 to a political action committee or ballot question committee for the purpose of influencing a ballot question to file a disclosure statement with the Commission on Governmental Ethics and Election Practices.
  • Maine LD1782 prohibits a ballot question committee from making contributions to a candidate or political action committee if the contributed funds are derived from a business. 
  • Virginia HB492 requires campaign committee treasurers to keep accounts of campaign contributions and expenditures and authorizes the Department of Elections to conduct reviews of a percentage of campaign committees.
  • Wyoming HB0049 increases the penalty for failing to file disclosure reports.
  • Wyoming HB0080 requires all campaigns and political action committees to file an itemized statement of contributions and expenditures.

Privacy bills:

  • Kansas HB2109 prohibits a state agency from requesting or releasing the personal information of donors to 501(c) organizations.  
  • Utah HB0040 prevents the disclosure of the names and information of donors or prospective donors to a governmental entity.
  • Virginia HB970 prohibits government agencies from requesting or disclosing donor information from any 501(c) organization. The bill exempts the Campaign Finance Disclosure Act of 2006 from the privacy requirements.
  • West Virginia HB4419 removes restrictions on candidate and campaign caucus committees’ donations to their affiliated state party executive committees or a caucus campaign committee.

In comparison, we tracked 40 bills during the first five months of 2021, and eight of these bills had been enacted by this point in the year. Three of the enacted bills were focused on disclosure and five were focused on privacy. In 2020, we tracked 48 bills in the first five months of the year, and four of those bills had been enacted. 

Court activity 

Gaspee Project v. Mederos

On April 25, the U.S. Supreme Court announced it would not take up Gaspee Project v. Mederos, a lawsuit challenging Rhode Island’s campaign finance disclosure regulations. The court’s refusal to hear the appeal means a lower court ruling upholding the state’s law will stand.

Smith v. Helzer

On April 7, five Alaska residents and several independent expenditure groups sued the Alaska Public Offices Commission in U.S. district court challenging donor disclosure requirements enacted through a 2020 ballot measure. 

Ofsink v. Fagan

In a March 22 filing, three Oregon nonprofit groups asked the Oregon Supreme Court to reconsider its decision on a series of campaign finance ballot measures. On March 18, the court rejected the groups’ request to overturn Secretary of State Shemia Fagan’s (D) decision barring the initiatives from appearing on the general election ballot. If the court rejects the groups’ request, the petitioners would have to start the initiative process over.

Cowboys for Trump, Inc. v. Oliver

On Feb. 15, the United States Court of Appeals for the Tenth Circuit affirmed a lower court’s dismissal of a lawsuit challenging New Mexico’s disclosure requirements for political action committees. Cowboys for Trump (also known as C4T), a group founded by Otero County Commissioner Couy Griffin (R), filed the original suit after New Mexico Secretary of State Maggie Toulouse Oliver (D) ordered the group to register as a political action committee or pay a fine.

Washington v. Grocery Manufacturers Association

On March 2, Washington Attorney General Bob Ferguson (D) announced a settlement with a grocery trade group, ending nine years of litigation over the group’s alleged failure to disclose its donors’ identities in a campaign against a 2013 ballot initiative. Under the terms of the settlement, the group will pay a reduced fine in return for accepting responsibility for violating Washington’s disclosure laws and agreeing not to pursue an appeal.

Kissel v. Seagull

On Jan. 19, the United States District Court for the District of Connecticut issued its final ruling in Kissel v. Seagull, striking down a Connecticut statute that required paid solicitors to disclose the names and addresses of donors to the Connecticut Department of Consumer Protection upon request. 

What we’ve been reading

The big picture

Number of relevant bills by state: We’re currently tracking 143 pieces of legislation dealing with donor disclosure and privacy. Of these bills, 116 are primarily focused on disclosure, and 27 are primarily focused on privacy. To reflect this distinction, the charts in this section and the recent legislative actions below are divided between disclosure legislation and privacy legislation. On the maps below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking. 

Donor disclosure legislation

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Donor privacy legislation

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Recent legislative actions

For complete information on all of the bills we are tracking, click here. 

Donor disclosure legislation

  • Louisiana SB473: This bill would require postsecondary education institutions to disclose the source of any foreign gifts. 
    • Republican sponsorship
    • This bill was referred to committee on May 16.

Donor privacy legislation

No legislative actions were taken on privacy bills this week. 

Thank you for reading! Let us know what you think! Reply to this email with any feedback or recommendations. 



ICYMI: Top stories of the week

By Ballotpedia staff
In Newsletters
May 20, 2022 at 5:34 PM
WeeklyBrewHeader.png

We’ve got May 17 primary election results!

Elections took place in at least eight states on Tuesday, including statewide primaries in Idaho, Kentucky, North Carolina, Oregon, and Pennsylvania. Here’s a look at some noteworthy results in battleground races:

  • Ted Budd wins GOP nomination in North Carolina: Budd defeated 13 other candidates to win the Republican nomination for U.S. Senate in North Carolina. Budd, a U.S. representative running with the endorsement of former President Donald Trump (R), had 59% of the vote. Pat McCrory (R), a former governor, had 25%. 
  • Brad Little wins re-nomination as governor of Idaho: Idaho Gov. Brad Little defeated Lt. Gov. Janice McGeachin and six others to win the Republican nomination for a second term. Little had 61% of the vote to McGeachin’s 25%.
  • Madison Cawthorn loses re-nomination: Chuck Edwards (R) defeated seven other candidates, including incumbent Madison Cawthorn (R), to win the Republican nomination in North Carolina’s 11th Congressional District. Cawthorn, who was first elected in 2020, was endorsed by former President Donald Trump (R). Edwards had an endorsement from U.S. Sen. Thom Tillis (R). Cawthorn is the third member of the U.S. House to lose renomination this cycle.

Read more

Looking at the two most recent SCOTUS decisions

SCOTUS issued its two most recent decisions on May 16 in Federal Election Commission v. Ted Cruz for Senate and Patel v. Garland. 

In Federal Election Commission v. Ted Cruz for Senate, the court struck down a campaign finance law that limited the monetary amount of post-election contributions a candidate could use to pay back personal loans made to their campaign in a 6-3 ruling.

In Patel v. Garland, the court held 5-4 that federal courts do not have jurisdiction to review facts found during discretionary-relief proceedings under federal immigration law. Discretionary-relief proceedings are those in which the law grants immigration judges discretion over the type of relief they can award.

Read more

This is how many statewide measures have been certified for the ballot this year

So far, we’ve tracked 93 statewide ballot measures that have been certified for the ballot in 33 states. That’s 10 fewer than the average number certified at this point in other even-numbered years from 2010 to 2020.

Seven new measure were certified last week: 

Signatures have been submitted and are pending verification for 10 initiatives in California, Idaho, Missouri, North Dakota, and South Dakota: 

Enough signatures were verified for two initiatives in Alaska and Ohio to certify them to the legislature: 

Read more

The latest on redistricting in Florida and Kansas

Here’s the latest on court challenges to the Florida and Kansas district maps: 

Flor​ida

On May 12, Leon County Circuit Court Judge Layne Smith ruled that the congressional district boundaries that Gov. Ron DeSantis (R) signed into law on April 22 were unconstitutional. In his opinion, Smith wrote that the enacted plan “would diminish the ability of Black voters to elect their candidate of choice in North Florida,” specifically in the state’s current Fifth Congressional District.

Smith ordered Florida to use a revised congressional map for the 2022 elections that the legislature had previously proposed that restores a version of the Fifth Congressional District.

Kans​as

On May 18, the Kansas Supreme Court overturned a district court’s ruling that found that the state’s enacted congressional district boundaries were unconstitutional. Justice Caleb Stegall wrote for the court, “A majority of the court holds that, on the record before us, plaintiffs have not prevailed on their claims that Substitute for Senate Bill 355 violates the Kansas Constitution.”

Wyandotte County District Court Judge Bill Klapper had struck down Kansas’ enacted congressional map on April 25. 

Read more



Hall Pass: Your Ticket to Understanding School Board Politics

By Ballotpedia staff
In Local, Newsletters, State
May 18, 2022 at 3:00 PM

Welcome to Hall Pass. This newsletter keeps you plugged into the conversations driving school board politics and governance. Each week, we bring you a roundup of the latest on school board elections, along with sharp commentary and research from across the political spectrum on the issues confronting school boards in the country’s 14,000 school districts. We’ll also bring you the latest on school board elections and recall efforts, including candidate filing deadlines and election results.

In today’s edition, you’ll find:

  • The debate over high school grade inflation and its effect on students 
  • School board filing deadlines, election results, and recall certifications
  • A look at Tarrant County school board election results
  • Extracurricular: links from around the web 
  • Candidate Connection survey

Reply to this email to share reactions or story ideas!

On the issues: The debate over high school grade inflation and its effect on students 

In this section, we curate reporting, analysis, and commentary on the issues facing school board members. 

Grade inflation refers to an upward trend in average grades students receive for a particular level of work. For example, if a student submitted an assignment and received a “B” one year, and the next year another student submitted the same level of work and received an “A,” grade inflation would have occurred. 

Below, Zachary Bleemer writes that grade inflation could benefit students and encourage them to graduate. Bleemer also says higher grades could give students the confidence to pursue what he considers more difficult subjects like science and math.

Brandon L. White says grade inflation is particularly harmful to students who are most likely to fail a class or drop out of school entirely. White says the lowered expectations harm all students and do not prepare them for careers or college.

Grade inflation is just plain bad. Right? Maybe not. | Zachary Bleemer, The Washington Post

“A series of recent studies by several independent teams of economists, though, have advanced a surprising hypothesis: that in many circumstances, grade inflation may be providing important benefits to many of today’s students. Everyone agrees that kids should learn more in school. Grade inflation may weaken some students’ incentive to study and could frustrate colleges’ ability to identify well-prepared applicants — but higher grades may also bolster some students’ confidence and encourage them into rigorous disciplines where they might succeed. …STEM courses tend to award lower average grades than other fields, and female students are more likely than male students to switch their fields of study if they earn low grades in introductory courses. As a result, inflating grades in STEM courses might increase the share of female students earning STEM degrees, narrowing the worrisome gender gap in those majors. … All of these studies focus on college grades, but the same arguments hold for high schools. Higher grades could mean less discouragement from challenging subjects and maybe even greater confidence and persistence to graduation.”

Rampant grade inflation is harming vulnerable high schoolers | Brandon L. Wright, Thomas Fordham Institute

“Pressure to boost those [graduation] rates, often due to school accountability policies, plays a role [in grade inflation]—but so do complex motivations like empathy and concern for kids’ future well-being. It’s these latter impulses that lead folks to believe that easing expectations, at least for disadvantaged and struggling students, is a victimless, thoughtful, and maybe even noble act. Though it does young people no real good to be awarded unearned diplomas. The harm done by lowered expectations doesn’t just befall the kids who are barely making it through high school. As illustrated by those profiled in the Globe, a disservice is being done to their high-achieving peers—not young people at risk of not graduating at all, but those who leave high school at the top of their class and under the impression that they’re fully ready for college, including elite schools like Bryn Mawr, B.U., and B.C. They discover—with surprise, pain, angst, embarrassment—that they’re nowhere near ready. The culprit is grade inflation, which occurs when subjective course grades exceed objective measures of performance.”

School board update: filing deadlines, election results, and recall certifications

Ballotpedia has historically covered school board elections in about 500 of the country’s largest districts. We’re gradually expanding the number we cover with our eye on all of the roughly 14,000 districts with elected school boards.

Election results from the past week

The following districts within our scope held elections on May 17:

New York

North Carolina

States with school board filing deadlines in the next 30 days   

Minnesota

  • Five seats on the Minneapolis Public Schools board are up for general election on Nov. 8. A primary is scheduled for Aug. 9. The filing deadline for this election is May 31.

Upcoming school board elections

Districts in Alabama and Georgia are holding primary and general elections on May 24. Districts in California are holding primary elections on June 7.

Alabama

We’re covering the following school board primary elections on May 24. General elections will be held Nov. 8.

Georgia

We’re covering the following school board elections on May 24. General elections will be held Nov. 8. 

California

We’re covering the following school board elections on June 7. 

School board candidates per seat up for election

Since 2018, we’ve tracked the ratio of school board candidates to seats up for election within our coverage scope. We view candidates per seat as a proxy for interest in school board elections, sometimes driven by greater awareness of issues or conflicts around school board governance. Periods with more awareness or conflict tend to correlate with more candidates running for seats on school boards. Click here to see historical data on this subject.  

In 2022, 2.5 candidates are running for each seat in the 508 school board races we are covering in districts where the filing deadline has passed. That represents a 29% increase in candidates per seat compared to 2020. 

A look at Tarrant County school board election results

On May 7, school districts across Texas—including some of the largest in the state—held school board general elections. Districts across the state, especially in Tarrant County, home of Fort Worth, saw conflicts about some of the biggest issues facing school boards today. 

The Texas Tribune’s Jason Beeferman wrote that “All but one of the 11 Tarrant County conservative school board candidates, who were backed this year by several high-profile donors and big-money PACs, defeated their opponents during Saturday’s local elections, according to unofficial results. The one candidate backed by the groups who didn’t win outright advances to a runoff election in June.” The candidates ran for seats in the Keller, Mansfield, Grapevine-Colleyville, and Carroll school districts.

Tarrant is the third-largest county in Texas. In 2020, President Joe Biden (D) received 49.3% of the vote in the county, while Donald Trump (R) received 49.1%. 

School board races in Texas are nonpartisan, though The Dallas Morning News’ Talia Richman writes “they have become extremely politicized in the past year as school boards tackled increasingly divisive — and high-profile — issues, including COVID-19 protocols and how to teach children about history, race, gender and sexuality.”

These nonpartisan races drew attention from the major political parties and satellite groups alike. Last December, The Texas Tribune reported the Texas Republican Party had formed a Local Government Committee, which would work to identify and back candidates in nonpartisan municipal races. The Texas Democratic Party also identifies and backs candidates through its Project LIFT initiative. 

The Dallas Morning News reported that “[a]t least 10 conservative PACs have launched in the past year in cities across the Dallas area with the goal of steering local districts in a more conservative direction.” Funding for PACs came in part from Patriot Mobile, a Grapevine-based cell phone company which the Fort Worth Star-Telegram’s Abby Church reported “poured $500,000 into a PAC to support candidates in the Carroll, Grapevine-Colleyville, Keller and Mansfield school districts, where the races included debates about critical race theory and what books are on library shelves.” 

Not all candidates backed by conservative organizations and PACs won their elections. According to The Texan, candidates in the Coppell Independent School District and Highland Park Independent School District elections were not successful. 

Below are details on a few of the Tarrant County school districts within our coverage scope. 

Keller Independent School District

Three at-large seats on the Keller Independent School District school board were up for election. 

Micah Young defeated incumbent Craig Allen 63.4% to 36.6% in election for Place 1. In the Place 2 general election, Joni Shaw Smith defeated Julie Nors and incumbent Karina Davis with 56.1% of the vote. In the Place 3 general election, Sandi Walker defeated James Duncan 69.2% to 30.8%. 

This year, around 13,000 people voted in the election. In both 2020 and 2018, elections for the two seats on the ballot were canceled due to a lack of opposition.

According to the Fort Worth Star-Telegram, all “the candidates backed by the conservative KISD Family Alliance and True Texas Project won seats.” The Texan reports that Young, Smith, and Walker were also backed by the 1776 Project PAC, which says it is fighting back against the teaching of Critical Race Theory. 

Mansfield Independent School District 

Four seats on the Mansfield Independent School District school board were up for election.

In the Place 3 general election, Craig Tipping and Benita Reed advanced to a June 18 runoff election. Tipping earned 49.2% of the vote to Reed’s 42.9%. Shawn Thompson earned 7.9%. In the Place 4 election, incumbent Keziah Valdes Farrar defeated Amanda Jackson Sneed 56.2% to 43.8%. In the Place 5 election, Bianca Benavides Anderson defeated Jo Anna Cardoza and Le Keishia Dawkins. Anderson won 51.5% of the vote to Cardoza’s 32.6% and Le Keishia Dawkins’s 15.9%. In the Place 7 election, Courtney Lackey Wilson defeated Yolanda McPherson 57.6% to 42.4%.

This year, around 10,300 people voted in the Mansfield Independent School District elections. In 2020, two seats—Place 6 and Place 7—were on the ballot. Because of the coronavirus pandemic, the election date was moved from May to Nov. 3. The Place 6 race was uncontested. In the Place 7 race, 51,775 people voted in the general election, and 9,391 people voted in the Dec. 8 runoff. In 2018, three seats were on the ballot, and 10,454 people voted across all three races.

The Fort Worth Star-Telegram reports Patriot Mobile endorsed the candidates who won their elections. Patriot Mobile also endorsed Tipping, who will compete against Reed in a runoff election on June 18. The 1776 Project PAC also endorsed the highest vote-getters in all four races, including Tipping. 

Tracking school board conflicts

Since 2021, we’ve tracked conflicts in school board elections around the following topics: race in education/critical race theory, responses to the coronavirus pandemic, and sex and gender in schools in school. To date, we’ve identified 695 school districts in 40 states where candidates took a stance on one of these issues. In the May 7 Texas elections alone, we identified 28 districts where one or more candidates took a stance on at least one of these topics. 

You can read more about our research tracking conflicts in school board elections here. 

Not all districts in Texas held an election on May 7. On Nov. 8, 27 districts within our scope will hold general elections.  

Extracurricular: education news from around the web

This section contains links to recent education-related articles from around the internet. If you know of a story we should be reading, reply to this email to share it with us! 

Take our Candidate Connection survey to reach voters in your district

Everyone deserves to know their candidates. However, we know it can be hard for voters to find information about their candidates, especially for local offices such as school boards. That’s why we created Candidate Connection—a survey designed to help candidates tell voters about their campaigns, their issues, and so much more. 

In the 2020 election cycle, 4,745 candidates completed the survey. 

If you’re a school board candidate or incumbent, click here to take the survey.

The survey contains over 30 questions, and you can choose the ones you feel will best represent your views to voters. If you complete the survey, a box with your answers will display on your Ballotpedia profile. Your responses will also populate the information that appears in our mobile app, My Vote Ballotpedia.

And if you’re not running for school board, but there is an election in your community this year, share the link with the candidates and urge them to take the survey!



Former Vice President Pence takes on ESG

By Ballotpedia staff
In Newsletters
May 17, 2022 at 4:10 PM
Economy and Society - Email Header (2021).png

ESG Developments This Week

In Washington, D.C.

Pence takes on ESG

On May 10, ESG investing was the topic of discussion at an event in Houston, where former Vice President Mike Pence (R), critiqued the ESG role in changing the composition of the board of directors at Exxon-Mobil in 2021 and asked state-level officials to enlist in an effort to push back against politicizing business. The Los Angeles Times reports:

“Former Vice President Mike Pence criticized investor-activist campaigns to force companies such as Exxon Mobil Corp. to follow socially conscious investing principles, saying they elevate left-wing goals over the interests of businesses and their employees.

Pence, a potential 2024 Republican presidential candidate, delivered an energy policy speech Tuesday in Houston and called for states such as Texas to “rein in” the push for employee pension funds to use environmental, social and governance principles in investing.

The former vice president cited activist investor Engine No. 1, which was backed by firms including BlackRock Inc. last year as it mounted a successful proxy campaign that led to the replacement of three directors on Exxon’s board. “Those three are now working to undermine the company from the inside,” Pence said.

ESG investing — the use of environmental, social and governance factors in decision making — has become one of the hottest areas in finance in recent years, with the global market adding as much as $40 trillion in assets, according to estimates from Bloomberg Intelligence.

Yet the strategy has drawn the ire of lawmakers in some states….

Finance was always meant to facilitate investment and spur economic growth that benefits the entire U.S., Pence said. But President Biden and government regulators are “weaponizing the financial system to do the exact opposite,” including through “capricious new ESG regulations that allow left-wing radicals to destroy American energy producers from within.”

Similar accusations have been circulating in Texas for some time, but Pence’s comments are among the most aggressive yet. The growth of ESG investing has pushed some of Wall Street’s biggest investors to become much more active in proxy campaigns….

GOP lawmakers and powerful industry groups, including the U.S. Chamber of Commerce, have opposed increased activity by financial watchdogs on ESG issues during the Biden administration, even as the White House has called for increased oil and gas production to help reduce fuel prices.

Biden has also made fighting climate change a centerpiece of his presidency, and last year ordered regulators to develop stronger plans for measuring and mitigating the risks climate change poses to the financial system.”

In the States

Judge strikes down California diversity law

On May 16, a California state judge handed down a rebuke of ESG/DEI efforts on the part of state lawmakers, the second such rebuke in several months:

“A state judge struck down a California law requiring companies in the state put female directors on their boards, the second legal setback in as many months for efforts to mandate board diversity.

Judge Maureen Duffy-Lewis of the Superior Court of California in Los Angeles ruled that the 2018 law was unconstitutional because it violated the equal protection clause of the state’s constitution, according to a copy of the verdict.

The California law mandated that public companies with headquarters in the state have at least two or three women on their boards by 2021, depending on the size of the board. Those that didn’t faced financial penalties.”

Last month, the same court invalidated the California law requiring publicly traded companies to have a minimum number of underrepresented racial or sexual minorities on their boards of directors.

On Wall Street and in the private sector

Financial Times: “BlackRock says it will not support most of this year’s shareholder resolutions on climate change”

Over the past several weeks, BlackRock, the world’s largest asset management firm and one of the driving forces behind the ESG movement, conceded that its sustainability strategy might be more complicated than it had let on. Although the firm reiterated its long-term sustainability goals and insisted that its strategy has not officially changed, its actions tell a different story, according to a piece in the Financial Times:

“Power without responsibility? The passive fund industry wields substantial clout on the corporate landscape: $16tn of it, according to Morningstar. Now BlackRock, the biggest of them all, has given itself a pass on the knotty issue of climate change.

Pinpointing factors including the timeframe for transitioning from fossil fuels and war-inflated energy costs, the US-based fund manager says it will not support most of this year’s shareholder resolutions on the subject. Such proposals, the $10tn money manager reckons, are too extreme, too prescriptive or entail too much micromanaging.

This is quite the turnround for a firm that has been criticised — by the opposite camp — for its meddling stakeholder capitalism. Boss Larry Fink, a besuited eco-warrior, has long beat the drum for sustainability. This, he explained in his annual letter to chief executives, is “not because we are environmentalists, but because we are capitalists and fiduciaries to our clients”….

Whether or not BlackRock’s rationale is disingenuous is beside the point. For many investors, the one-time climate champion’s abdication represents a big step back. It in effect grants permission to other investors to relax their grip. More worrying still, it puts corporate boards on notice that they can breathe a little easier when irksome proposals appear on the slate.”

On Twitter, Vivek Ramaswamy, the biotech entrepreneur and author of Woke, Inc., argued that BlackRock’s actions and change in tone were, in his view, akin to the asset-management giant trying “to put the toothpaste back in the tube.” 

Biotech entrepreneur puts his assets where his mouth is

On May 10, The Wall Street Journal broke an exclusive story detailing a plan by Vivek Ramaswamy, in conjunction with a handful of prominent investors, to push back against BlackRock, its CEO Larry Fink, and the ESG and sustainability investment trend:

“An upstart financial firm backed by Peter Thiel and Bill Ackman has a message for American corporations: Focus on making money, not taking stands.

Vivek Ramaswamy, who made his fortune in pharmaceutical startups before writing a book last year called “Woke, Inc.,” says he has raised $20 million to start a fund manager that would urge companies not to wade into hot-button social or environmental issues. Mr. Thiel invested both personally and through his Founders Fund, joined by Palantir Technologies Inc. PLTR -21.31% co[1]founder Joe Lonsdale and other venture investors.

Mr. Ramaswamy’s ambitions speak to the culture wars nipping at U.S. corporate executives. Under growing pressure from employees, investors and customers, many have taken public positions on political issues only to face criticism from the other side….

The firm, called Strive, will be based far from Wall Street in Mr. Ramaswamy’s home state of Ohio. In an interview Monday, the 36-year-old dubbed his approach “excellence capitalism,” focused on letting companies do what they do best—and nothing else—and inveighed against what he sees as a creeping liberal bias inside BlackRock Inc. BLK -3.67% and its peers, Vanguard Group and State Street Corp., which he called an “ideological cartel.”

Those three firms in recent years have become almost unimaginably large, managing $20 trillion of assets. They have pushed companies to improve diversity, cut their climate emissions, and embrace other changes—largely under the banner of “stakeholder capitalism,” which considers other outcomes, not just profits, when assessing corporate behavior….

Mr. Ramaswamy’s project began under cover months ago, code-named “Whitestone” to capture its aim of being the anti-Blackrock, people familiar with the matter said. It isn’t known what products it will offer, and it has a long way to go to rival the combined market power of the financial giants it seeks to challenge.

“A majority of Americans want companies to stay out of politics,” he said. “They want to have a separate space for where they shop, where they work, and where they invest from the places where they cast their ballots or engage in their political debates.””

Among Ramaswamy’s first hires at his new firm, was Justin Danhof, the director of the Free Enterprise Project at the National Center for Public Policy Research. Danhof, a notable ESG opponent, has been profiled in at least two books about the emergence of ideology-based investing.

In the spotlight

Should companies focus on water, not oil?

In a long ESG analysis, Reuters cites a recent study that suggests that executives and asset managers who are concerned about the ways in which the environment can affect corporate success and profits should worry more about water than about oil:

“For something that is so crucial to all aspects of life, including the most fundamental business operations, water risk is a blind spot for many investors and businesses.

There is little understanding of how overuse, pollution and increasingly frequent extreme weather events, such as the years-long drought in California, the recent heatwave in India and Pakistan, and last year’s floods in Europe, are affecting water availability, says Cate Lamb, global director of water security at disclosure not-for-profit CDP.

A third of listed financial institutions do not assess exposure to water risk in their financial activities, although 69% of listed equities told CDP in 2021 that they are exposed to water-related risks.

“A large proportion of businesses still have the mindset that water will always be available to them whenever and wherever they need it, and that they don’t need to manage it like other issues,” Lamb says.

Yet with the United Nations predicting a 40% global shortfall in water supply by 2030 if current consumption and production patterns do not change, it is a mindset that will increasingly open companies up to operational risk, according to a new report from CDP and UK-based non-profit financial think-tank Planet Tracker….

Businesses in key industries are already losing billions of dollars as a result of the global water crisis, CDP and Planet Tracker say in the report, which highlights how changes in regulation, high levels of pollution and community opposition have “stranded” assets, including the Keystone oil pipeline in Canada, a gold mine that straddles the border of Chile and Argentina, an Australian coal mine and a nuclear facility in the United States.

But a host of other sectors also face significant risks around water availability and quality, from fashion to agriculture to chip-making and data centres.

In Chennai, in India’s Tamil Nadu state, one of the world’s fastest growing cities, a devastating drought in 2019 caused it to run out of groundwater. This led to a number of the local tech companies having their licence to operate constrained, or rescinded altogether, Lamb says. In the recent heatwave, India’s largest tributary completely dried up for the first time ever, threatening agricultural production that feeds the vast majority of the country, and huge amounts of energy production, too.

“When events like this happen, we see governments having to make really difficult decisions to ensure water supplies for citizens and food production, at the expense of energy and other businesses,” she adds.”



Colorado General Assembly passes bill amending nonprofit disclosure requirements

By Ballotpedia staff
In Uncategorized
May 17, 2022 at 1:05 PM

On May 5, the Colorado Senate passed a bill establishing criteria that would require certain groups supporting or opposing ballot initiatives to register as issue committees. SB237 would limit the amount of money nonprofits can spend on ballot measures before they are considered issue committees and become subject to donor disclosure requirements. The Colorado House of Representatives passed the bill on May 10.

Colorado has a Democratic trifecta, which means the Democratic Party controls the office of governor and both chambers of the state legislature. Democrats have a 20-15 majority in the Senate and a 41-24 majority in the House. 

What the bill would do

Colorado law requires nonprofits to disclose their donors if their major purpose is supporting or opposing ballot measures. Section 1-45-103 defines major purpose as support of or opposition to a ballot measure through annual expenditures and its “production or funding…of written or broadcast communications, or both, in support of or opposition to a ballot issue or ballot question.” Section 1-45-108 requires issue committees to disclose the name and address of each person who has contributed more than $20.  

SB237 would define an organization’s major purpose based on the percentage of its expenditures spent on ballot measure. An organization would be considered an issue committee if more than 30% of its expenditures in the past three years were to support or oppose two or more ballot measures. Organizations spending more than 20% of their expenditures on a single ballot measure would also be considered issue committees. These issue committees would be subject to pre-existing donor disclosure requirements.

The bill would also enact new disclosure requirements for issue committees and candidates. Committees or candidates making ballot measure expenditures of more than $5,000 in a calendar year would be required to submit campaign finance reports to the secretary of state for additional expenditures of more than $1,000.

Legislative actions

Sens. Stephen Fenberg (D) and Chris Holbert (R) introduced SB237 on April 28, 2022. The Senate State, Veterans, & Military Affairs Committee voted to refer the bill to the Senate Appropriations Committee on May 3. The Senate passed the bill in a unanimous vote on May 5.

In the House, the bill was initially referred to the House State, Civic, Military, & Veterans Affairs Committee, which voted to refer it to the Committee on Appropriations on May 5. The House passed the bill 53-12 on May 10, with Republicans casting all 12 votes against it. The bill now goes to Colorado Gov. Jared Polis (D).

Reactions

Michael Fields, a senior adviser to Advance Colorado Action said the current regulations on ballot measure spending are unclear  “There’s a lack of clarity right now on what (nonprofits) can do on ballot issues,” Fields said. 

Sen. Holbert said the bill would assist the secretary of state’s office in investigating campaign finance complaints. “[The bill] provides some clarity as to what the state should or shouldn’t do. I don’t think it allows the groups to do anything new or different,” Holbert said. 

Annie Orloff, a spokeswoman for Secretary of State Jena Griswold (D), said, “The Secretary of State’s Office does not support this legislation as drafted at this time,” but did not say why.  

What we’ve been reading

The big picture

Number of relevant bills by state: We’re currently tracking 143 pieces of legislation dealing with donor disclosure and privacy. Of these bills, 116 are primarily focused on disclosure, and 27 are primarily focused on privacy. To reflect this distinction, the charts in this section and the recent legislative actions below are divided between disclosure legislation and privacy legislation. On the maps below, a darker shade of green indicates a greater number of relevant bills. Click here for a complete list of all the bills we’re tracking. 

Donor disclosure legislation

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Donor privacy legislation

Number of relevant bills by current legislative status: 

Number of relevant bills by partisan status of sponsor(s): 

Recent legislative actions

For complete information on all of the bills we are tracking, click here. 

Donor disclosure legislation

  • California SB746: This bill would require a business intentionally using its products or services to make political communications to submit campaign finance reports in certain circumstances. 
    • Democratic sponsorship
    • This bill was referred to committee on May 10.
  • Colorado SB237: This bill would amend the definition of an issue committee and require a person or committee making direct ballot issue or ballot question expenditures of more than $5,000 to file a report with the secretary of state.
    • Bipartisan sponsorship
    • This bill passed both chambers on May 10. 
  • Louisiana SB473: This bill would require postsecondary education institutions to disclose the source of any foreign gifts. 
    • Republican sponsorship
    • This bill passed the upper chamber on May 11. 
  • Missouri HB1505: This bill requires entities making expenditures of $500 or more in support of, or in opposition to, a candidate, an issue considered by the general assembly, or a ballot measures, other than a contribution made directly to a candidate or committee, to disclose their donors in some circumstances.
    • Democratic sponsorship
    • This bill was referred to committee on May 13.
  • Missouri HB1511: This bill requires committees involved in inaugural activities on behalf of a statewide officeholder to file disclosure reports with the ethics commission. It would also bar committees from accepting contributions from anonymous entities.
    • Democratic sponsorship
    • This bill was referred to committee on May 13.
  • Missouri HB2312: This bill would prohibit candidate committees from accepting cash donations in excess of $100, contributions made on behalf of another person, anonymous contributions of more than $25, and contributions from out-of-state committees. Anonymous contributions could not exceed $500 or one percent of the aggregate amount of all contributions received by that committee in the same calendar year, whichever is greater. The bill would also require recipients to disclose the name and address of the actual source of each contribution and to disclose sponsors in print and digital advertisements. 
    • Democratic sponsorship
    • This bill was referred to committee on May 13.
  • Missouri HB2891: This bill would require corporations and foreign non-profit organizations making expenditures over $500 in support or opposition to a candidate or ballot measure to file a report disclosing the name and address of the person making the expenditure.  
    • Democratic sponsorship
    • This bill was referred to committee on May 13.
  • New Hampshire SB348: This bill would prohibit contributions made on behalf of another individual, from a labor union or affiliate of a labor union, or from an anonymous source. It would also establish maximum limits on contributions made by any single individual or entity. 
    • Republican sponsorship
    • This bill passed both chamber on May 13. 

Donor privacy legislation

No legislative actions were taken on privacy bills this week. 

Thank you for reading! Let us know what you think! Reply to this email with any feedback or recommendations.



Checks and Balances: Tennessee lawmakers end judicial deference

By Ballotpedia staff
In Uncategorized
May 16, 2022 at 9:25 PM
Checks and Balances

The Checks and Balances Letter delivers news and information from Ballotpedia’s Administrative State Project, including pivotal actions at the federal and state levels related to the separation of powers, due process, and the rule of law.

This edition: 

In this month’s edition of Checks and Balances, we review the United States Supreme Court’s (SCOTUS) reinstatement of a Trump-era water rule; the latest on challenges to the Biden administration’s coronavirus (COVID-19) vaccine requirement for federal employees; a challenge to free-speech limitations in agency settlement agreements; and the Department of Justice’s (DOJ) appeal of a nationwide injunction blocking the Biden administration’s public transport mask requirement. 

At the state level, we take a look at a new Tennessee law prohibiting judicial deference practices in the state as well as a case pending before the Ohio Supreme Court that could determine the future of judicial deference in Ohio.

We also highlight the Biden administration’s recent departure from the Trump administration’s position on agency sue and settle practices. As always, we wrap up with our Regulatory Tally, which features information about the 176 proposed rules and 241 final rules added to the Federal Register in April and OIRA’s regulatory review activity.

In Washington

SCOTUS reinstates Trump-era Clean Water Act regulation

What’s the story?

The U.S. Supreme Court on April 6, 2022, voted 5-4 to halt a lower court injunction that had blocked a Trump-era rule regarding certification procedures for certain projects under the Clean Water Act (CWA). The dissenting justices argued that the court’s decision—part of its shadow docket—failed to explain the need to reinstate the rule and grant emergency relief in the case. 

The 2020 rule aimed to update the Environmental Protection Agency’s (EPA) 1971 regulations governing state and tribal water quality certifications to align with the 1972 CWA amendments. The rule limited the scope of project certification under Section 401 of the Clean Water Act (CWA) to consideration of the proposed project’s effect on water quality requirements, among other provisions. Prior to the rule, some state and tribal entities had considered other environmental factors as part of their certification decisions.

 A coalition of states, tribes, and advocacy groups challenged the rule in three district courts, arguing in part that the rule unlawfully violated established case law regarding the interpretation of the CWA. After the Biden administration took office in 2021, the EPA requested that the district courts remand the cases without vacating the rule while the agency determined whether to repeal or revise the regulation. The United States District Court for the Northern District of California nonetheless remanded and vacated the rule in part “because the agency has demonstrated that it will not or could not adopt the same rule upon remand.” 

A separate coalition of states and industry groups appealed the decision to the United States Court of Appeals for the Ninth Circuit and asked the United States Supreme Court to issue a stay blocking the vacatur pending the Ninth Circuit’s decision. “Can a single district court vacate a rule that an agency adopted through notice-and-comment rulemaking without first finding that the rule is unlawful? The answer is plainly ‘no,’” they argued.

The majority Supreme Court justices did not provide an explanation for their decision to issue a stay. A dissent by Justice Elena Kagan, joined by the minority justices, argued, “The applicants here have not met our standard because they have failed to substantiate their assertions of irreparable harm. The Court therefore has no warrant to grant emergency relief.”

Want to go deeper?

Courts direct challenges to federal employee vaccine mandate through civil service procedures

What’s the story? 

A three-judge panel of the United States Court of Appeals for the Fourth Circuit on April 19, 2022, unanimously held in Rydie v. Biden that federal government employees cannot challenge President Joe Biden’s (D) coronavirus (COVID-19) vaccine requirement for federal workers in an Article III court without first bringing their challenge before the Merit Systems Protection Board (MSPB).

Biden issued the vaccine mandate via Executive Order 14043 on September 9, 2021. The plaintiffs in the case argued that Biden lacked the authority to issue the requirement. The Fourth Circuit judges held that the plaintiffs must first direct their challenge through the grievance process outlined in the Civil Service Reform Act, which culminates in a decision by the MSPB. Final decisions by the MSPB can then be challenged in an Article III court. 

A three-judge panel of the United States Supreme Court for the Fifth Circuit on April 7 arrived at a similar decision, voting 2-1 to overturn a nationwide injunction issued by U.S. District Judge Jeffrey Brown that had blocked enforcement of the mandate.

Want to go deeper?

SCOTUS could hear challenge to free-speech limitations in SEC settlements

What’s the story?

The U.S. Supreme Court will soon decide whether to take up a case questioning the constitutionality of the Securities and Exchange Commission’s (SEC) settlement agreements that require defendants to sign away their First Amendment rights.

Since 1972, the SEC has entered into settlement agreements allowing defendants to publicly disavow the agency’s complaint against them while, at the same time, preventing them from making “any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis,” according to the petition before the court in Romeril v. Securities and Exchange Commission.

The case concerns Barry D. Romeril, a former Xerox executive who entered into a settlement with the agency in 2003 and sued in 2019 to reinstate his right to speak about the case. A three-judge panel of the United States Court of Appeals for the Second Circuit unanimously ruled in favor of the SEC, holding that Romeril had given up his First Amendment right to free speech when he agreed to settle with the agency rather than litigate the case in an Article III court. Romeril appealed to the Supreme Court, arguing in part, “No act of Congress authorizes such a sweeping restriction on freedom of speech.” 

A decision by the Supreme Court in the case would provide clarity to lower courts, which have reached different conclusions on the issue. In 2019, a divided three-judge panel of the United States Court of Appeals for the Fourth Circuit rejected a similar settlement between a private citizen and the City of Baltimore, holding “that enforcement of the non-disparagement clause at issue here was contrary to the citizenry’s First Amendment interest in limiting the government’s ability to target and remove speech critical of the government from the public discourse.”

Want to go deeper?

Appeal of mask mandate ruling could clarify scope of CDC authority

What’s the story?

The U.S. Department of Justice (DOJ) on April 20, 2022, appealed a decision by Judge Kathryn Kimball Mizelle of the United States District Court for the Middle District of Florida that blocked enforcement of the Biden administration’s public transport mask mandate. A decision by the United States Court of Appeals for the Eleventh Circuit could clarify the scope of the CDC’s authority to issue the mask mandate and take similar action in the future.

Judge Mizelle on April 18 issued a nationwide injunction that blocked enforcement of the mask mandate, arguing that the requirement for individuals to wear masks in public transportation hubs and conveyances (such as airports and airplanes) exceeded the Centers for Disease Control and Prevention’s (CDC) statutory authority and violated the rulemaking requirements of the Administrative Procedure Act (APA).

Mizelle wrote in the opinion, “The Mandate’s explanation—a single conclusory sentence—does not carry its burden to ‘show strong enough reason to invoke the good cause exception’” to notice-and-comment rulemaking. Mizelle added that the relevant section of the Public Health Services Act “has no ‘unmistakably clear language’ indicating that Congress intended for the CDC to invade the traditionally State-operated arena of population-wide, preventative public-health regulations.”

White House Press Secretary Jen Psaki disagreed with Mizelle’s position, telling reporters that public health “decisions shouldn’t be made by the courts—they should be made by public health experts.”

Want to go deeper?

In the states

Tennessee lawmakers end judicial deference practices

What’s the story? 

Tennessee Governor Bill Lee (R) on April 14, 2022, signed a bill aimed at ending judicial deference practices in the state. Tennessee joins at least eleven other states that have either limited or prohibited judicial deference to state agency interpretations of laws and regulations since 2008.

Senate Bill 2285 requires courts to interpret state statutes or rules de novo, as opposed to deferring to state agency interpretations of laws or regulations. The law also states, “After applying all customary tools of interpretation, the court shall resolve any remaining ambiguity against increased agency authority.” This resembles the rule of lenity in criminal law, which resolves ambiguities in favor of the defendant.  

Ballotpedia has identified eleven other states since 2008 in which voters, courts, or lawmakers have taken action to limit or prohibit judicial deference practices: Arkansas, Arizona, Colorado, Florida, Georgia, Kansas, Michigan, Mississippi, Utah, Wisconsin, and Wyoming.

Want to go deeper?

Ohio Supreme Court considers future of judicial deference

What’s the story? 

A case before the Ohio Supreme Court could determine the future of judicial deference in the state.

In TWISM Enterprises LLC v. State Board of Registration for Professional Engineers and Surveyors, the Hamilton County Court of Appeals deferred to the Ohio Board of Registration for Professional Engineers and Surveyors’ interpretation of its engineering certification rules, which denied TWISM Enterprises’ application to provide professional engineering services because the company’s designated licensed engineer was an independent contractor rather than an employee. TWISM Enterprises appealed the decision to the Ohio Supreme Court, arguing that the agency’s interpretation of the governing statute was flawed because the law does not specify that the licensed engineer must be an employee of the business.

The Ohio Supreme Court had yet to set a date for argument in the case as of May 13, 2022.

Want to go deeper?

____________________________________________________________________________

The return of sue and settle practices at the EPA

The Environmental Protection Agency Administrator Michael Regan issued a memorandum in March revoking former EPA Administrator Scott Pruitt’s 2017 directive that ended sue and settle practices at the agency. Pruitt had argued that sue and settle (when a federal agency is sued by an interested party, declines to defend itself in court, and negotiates a settlement with the plaintiff in a non-adversarial process) amounted to regulation by litigation behind closed doors. 

Regan departed from Pruitt’s position in the memorandum, arguing in part that sue and settle practices serve to preserve agency resources by avoiding expensive litigation:

“In enacting environmental laws, Congress included tools to ensure that the EPA carries out its vital mission to protect human health and the environment for all. In environmental statutes, and in tandem with the Administrative Procedure Act, Congress commonly has adopted provisions authorizing judicial action against the EPA, such as citizen suits to enforce deadlines and judicial review processes related to final agency action. At the same time, parties, including federal agencies. frequently enter into settlements to avoid expensive and resource-intensive litigation, where appropriate. Settlements can preserve resources of the parties and the courts; in many instances they can be the most practical, economical and efficient path forward while also serving the public interest. Appropriate settlement of environmental claims against the EPA preserves agency resources to focus on the vital work the agency carries out under the environmental statutes. …

[Pruitt’s] directive gave little weight to the well-understood value of settlements in appropriate cases.”

Want to go deeper? 

____________________________________________________________________________

Regulatory tally

Federal Register

Office of Information and Regulatory Affairs (OIRA)

OIRA’s April regulatory review activity included the following actions:

  • Review of 38 significant regulatory actions. 
  • No rules approved without changes; recommended changes to 36 proposed rules; two rules withdrawn from the review process.
  • As of May 2, 2022, OIRA’s website listed 110 regulatory actions under review.
  • Want to go deeper? 


ICYMI: Top stories of the week

By Ballotpedia staff
In Newsletters
May 13, 2022 at 4:52 PM
WeeklyBrewHeader.png

Texas’ May 7 constitutional amendment election turnout

On May 7, Texas voters decided on two statewide ballot measures and local school board elections. Voters approved both constitutional amendments. Turnout was 7.5% of registered voters, the lowest in a constitutional amendment election since November 2017. 

Read more

Reviewing the results of Tuesday’s elections

Elections for offices within Ballotpedia’s coverage scope took place in four states on Tuesday, including statewide primaries in Nebraska and West Virginia. Here are some highlights:

  • Primaries were held for 24 of the 49 seats in Nebraska’s unicameral legislature. As of Thursday, five of the 24 primaries remained too close to call. Of the 19 callable races, 10 had an incumbent on the ballot, all of which saw the incumbent advance to the general election.
  • Primaries were held for 17 of the 34 seats in the West Virginia State Senate Tuesday. There were two contested Democratic primaries, including the District 1 primary, in which Randy Swartzmiller (D) defeated incumbent Owens Brown (D) 53% to 47%. Brown is the ninth incumbent state legislator to lose re-nomination in a primary this year. There were also 11 contested Republican primaries, four of which had an incumbent on the ballot. The incumbent won all four of those primaries.
  • Primaries were held for all 100 seats in the West Virginia House of Delegates. There were 43 contested Republican primaries, 25 of which had an incumbent on the ballot. Of the 17 callable primaries with an incumbent on the ballot, five resulted in the incumbent’s defeat. There were also 16 contested Democratic primaries, three of which had an incumbent on the ballot. The incumbent won two of those primaries, while the third was contested between two incumbents.

Read more

State legislative incumbents defeated in primaries remains similar to previous cycles

With four statewide primaries behind us, the number of incumbents defeated in contested primaries remains similar to previous election cycles. So far in 2022, 14 incumbents—11 Republicans and 3 Democrats—have lost in primary elections. That’s 12% of all incumbents in contested primaries compared to 15% in 2020 and 14% in 2018 at this point in the cycle.

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Pennsylvania sees the fewest candidates running for the U.S. House since 2016

The filing deadline for candidates running for the U.S. House in Pennsylvania this year was March 15. Forty-eight candidates are running for Pennsylvania’s seventeen U.S. House districts, including 23 Democrats and 25 Republicans. That’s 2.82 candidates per district, slightly less than the 2.83 candidates per district in 2020, and less than the 4.66 in 2018. 

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Hall Pass: Your Ticket to Understanding School Board Politics

By Ballotpedia staff
In Local, Newsletters, State
May 11, 2022 at 3:00 PM

Welcome to Hall Pass. This newsletter keeps you plugged into the conversations driving school board politics and governance. Each week, we bring you a roundup of the latest on school board elections, along with sharp commentary and research from across the political spectrum on the issues confronting school boards in the country’s 14,000 school districts. We’ll also bring you the latest on school board elections and recall efforts, including candidate filing deadlines and election results.

In today’s edition, you’ll find:

  • On the issues:  The debate over American principles and laws governing instruction on race in school
  • School board filing deadlines, election results, and recall certifications
  • A brief primer on charter schools in America
  • Candidate Connection survey

Reply to this email to share reactions or story ideas!

On the issues

In this section, we curate reporting, analysis, and commentary on the issues school board members deliberate when they set out to offer the best education possible in their district.

The debate over American principles and laws governing instruction on race in schools 

Ballotpedia is tracking race-related laws in school curricula and classrooms. Governors in states like Florida, Georgia, Tennessee, and Virginia have signed legislation or issued executive orders limiting how such topics can be taught in public schools. 

Below, Kmele Foster, David French, Jason Stanley, and Thomas Chatterton Williams write that such laws make it difficult for teachers to accurately educate students on American history, the end result of which is to create an ignorant populace. The authors also say such laws undermine due process and the free expression of ideas.

Joy Pullmann writes that teachings related to systemic racism, equity (which she contrasts with equality), and white privilege stem from critical race theory. Pullmann says such teachings are anti-American and that critical race theory is incompatible with free speech, freedom of association, and equal justice. Pullman says taxpayers should not have to support anti-American teachings in classrooms.

We Disagree on a Lot of Things. Except the Danger of Anti-Critical-Race-Theory Laws. | Kmele Foster, David French, Jason Stanley, and Thomas Chatterton Williams, The New York Times

“Indeed, the very act of learning history in a free and multiethnic society is inescapably fraught. Any accurate teaching of any country’s history could make some of its citizens feel uncomfortable (or even guilty) about the past. To deny this necessary consequence of education is, to quote W.E.B. Du Bois, to transform ‘history into propaganda.’ What’s more, these laws even make it difficult to teach U.S. history in a way that would reveal well-documented ways in which past policy decisions, like redlining, have contributed to present-day racial wealth gaps. An education of this sort would be negligent, creating ignorant citizens who are unable to understand, for instance, the case for reparations — or the case against them. Because these laws often aim to protect the feelings of hypothetical children, they are dangerously imprecise. State governments exercise a high degree of lawful control over K-12 curriculum. But broad, vague laws violate due process and fundamental fairness because they don’t give the teachers fair warning of what’s prohibited. … Let’s not mince words about these laws. They are speech codes. They seek to change public education by banning the expression of ideas. Even if this censorship is legal in the narrow context of public primary and secondary education, it is antithetical to educating students in the culture of American free expression.”

It’s Critical Race Theory That Is Un-American, Not Laws Banning It | Joy Pullmann, The Federalist

“Without breaking a sweat, the New York Times has gone from insisting critical race theory doesn’t exist to arguing state legislatures must let public schools inflict it on kids. Kmele Foster, David French, Jason Stanley, and Thomas Chatterton Williams claim in the Times that ‘Anti-Critical Race Theory Laws Are Un-American.’ This is exactly backwards. It’s teaching critical race theory that is un-American. … Critical theorists oppose free speech, the consent of the governed, freedom of association, and equal justice under the law. This is not about banning them from speaking, but in using representative government to deny them the privilege of taxpayer sinecures to help them foment America’s subversion and collapse. CRT teaches not only that people are defined by their skin color but also that paler skin is inherently evil. So this theory is used to justify the insistence that the United States is inherently evil, which is also patently anti-American. The concepts of ‘systemic racism,’ ‘white privilege,’ ‘anti-racism,’ and ‘equity [as opposed to equality]’ all stem from critical theory. Since this ideology is obviously false and toxic, state legislatures have moved to protect children from being taught it as gospel in the public education systems they directly oversee.”

School board update: filing deadlines, election results, and recall certifications

Ballotpedia has historically covered school board elections in about 500 of the country’s largest districts. We’re gradually expanding the number we cover with our eye on all of the roughly 14,000 districts with elected school boards.

Election results from the past week

Districts in Texas held general elections for school boards on May 7. Click here to see election results for all 47 districts within our coverage scope. Next issue, we’ll bring you a roundup of commentary and analysis about what the results mean for Texas public schools. 

Districts in Nebraska held primary elections on May 10. Select a district below to read about those election results:

A primary for four seats on the Nebraska State Board of Education was also held May 10. Elizabeth Tegtmeier and incumbent Robin Stevens advanced to the general election. Based on unofficial returns, Tegtmeier received 62.4% of the vote, Stevens received 20.4%, and Pat Moore received 17.2%. Click here to see results. 

Upcoming school board elections

Districts in North Carolina are holding primary and general elections on May 17. Districts in Georgia are holding primary and general elections on May 24.

North Carolina

We’re covering the following school board elections on May 17.

Georgia

We’re covering the following school board elections in Georgia on May 24. 

School board candidates per seat up for election

Since 2018, we’ve tracked the ratio of school board candidates to seats up for election within our coverage scope. We view candidates per seat as a proxy for the level of conflict and dissension around school board governance. Periods with more conflict tend to correlate with more candidates running for seats on school boards. Click here to see historical data on this subject.  

In 2022, 2.51 candidates are running for each seat in the 353 school board races we are covering in districts where the filing deadline has passed.

Charter schools in America: some basics

Minnesota was the first state to pass a law authorizing charter schools in 1991. Charter schools are a category of tuition-free, publicly-funded, independently run schools. According to the National Center for Education Statistics (NCES), a charter school is “a publicly funded school that is typically governed by a group or organization under a legislative contract—a charter—with the state, district, or other entity. The charter exempts the school from certain state or local rules and regulations. In return for flexibility and autonomy, the charter school must meet the accountability standards outlined in its charter.”

Charter schools generally receive a percentage of the per-pupil funds from the state and local school districts for operational costs based on enrollment. In most states, charter schools do not receive funds for facilities or start-up costs, and usually rely to some extent on private donations. The federal government also provides special grants for charter schools.

Since the 1990s, charter schools have expanded to 45 states and the District of Columbia, according to the Education Commission of the States, a nonprofit organization that describes itself as “a partner to state policymakers by providing personalized support and helping education leaders come together to learn from one another.” 

Only Montana, Nebraska, North Dakota, South Dakota, and Vermont do not have laws authorizing charter schools. West Virginia became the 45th state to authorize charter schools in 2019, when Gov. Jim Justice (R) signed House Bill 206. The state’s first charter schools were approved in November 2021. 

Kentucky authorizes charter schools but does not currently have any in operation. Former Kentucky Gov. Matt Bevin (R) signed House Bill 520 in 2017, authorizing charter schools. However, a permanent funding mechanism was never established. In late March 2022, the Kentucky General Assembly passed House Bill 9, which would have authorized federal, state, and local funding for charter schools. However, Gov. Andy Beshear (D) vetoed the bill on April 7, saying he believed the funding mechanism was unconstitutional and that he did not support charter schools.

The number of charter schools per state varies widely, according to data from the National Alliance for Public Charter Schools, which describes itself as the “the leading national nonprofit organization committed to advancing the public charter school movement.” In 2019, California had the most charter schools in the country, with 1,336, followed by Texas and Florida. Twenty-four states had fewer than 100 charter schools. 

Charter school enrollment has grown steadily over time. In 2000, the NCES estimated that 448,343 students were enrolled in charter schools. By the 2019-2020 school year, the most recent year for which data are available, that number had climbed to nearly three and a half million students. The percentage of public school students enrolled in charter schools is around 7%. 

Take our Candidate Connection survey to reach voters in your district

Everyone deserves to know their candidates. However, we know it can be hard for voters to find information about their candidates, especially for local offices such as school boards. That’s why we created Candidate Connection—a survey designed to help candidates tell voters about their campaigns, their issues, and so much more. 

So far in 2022, 1,606 candidates have completed our Candidate Connection survey. In the 2020 election cycle, 4,745 candidates completed the survey. 

If you’re a school board candidate or incumbent, click here to take the survey.

The survey contains over 30 questions, and you can choose the ones you feel will best represent your views to voters. If you complete the survey, a box with your answers will display on your Ballotpedia profile. Your responses will also populate the information that appears in our mobile app, My Vote Ballotpedia.

And if you’re not running for school board, but there is an election in your community this year, share the link with the candidates and urge them to take the survey!



Economy and Society: ESG Task Force issues first enforcement action

By Ballotpedia staff
In Federal, Newsletters
May 10, 2022 at 2:30 PM

Economy and Society is Ballotpedia’s weekly review of the developments in corporate activism; corporate political engagement; and the Environmental, Social, and Corporate Governance (ESG) trends and events that characterize the growing intersection between business and politics.

ESG Developments This Week

In Washington, D.C.

Wall Street Journal notes opposition to SEC’s rapid rule-making, including among Democrats        

Two weeks ago, The Wall Street Journal’s editorial board published a piece that highlighted objections to what it described as rapid rule-making at the SEC under Chairman Gary Gensler. It noted that even some Democrats have been frustrated by the tactics Gensler has employed:

“Progressives lobbied President Biden to appoint Gary Gensler as Securities and Exchange Commission Chairman because of his record as a hell-for-leather financial regulator during the Obama days. But now even some House Democrats are asking the Chairman to tap the brakes.

“We write to express concern over some of the Securities and Exchange Commission’s comment periods for complex rulemakings that may hamper the ability for the public to provide effective and meaningful input,” 47 House Members, including 28 Democrats, wrote Mr. Gensler recently. They cite two new proposed rules that would expand SEC control over private markets.

One rule would impose stringent disclosure requirements for fees, expenses and annual independent audits on private fund advisers that are similar to those for public advisers. A second would require private funds to report more information to the SEC about investment losses, among other things, supposedly so the agency can monitor systemic financial risks….

The rule-makings aren’t exactly beach reading and will require teams of lawyers and analysts to sort through their implications. Yet Mr. Gensler provided a mere 30 days for public comment. “This abbreviated period will likely hinder engagement from Congress, investors, and other market participants,” the House Members write.

House Members want Mr. Gensler to extend the public comment period to at least 90 days, which was the norm for highly complicated rules during previous administrations. The Office of the Federal Register suggests that agencies may provide up to 180 or more days for “complex” rule-makings. Mr. Gensler’s drive-by regulation seems to be a pattern.

Energy companies this week also asked Mr. Gensler to extend the 60-day public comment for a proposed 506-page climate disclosure rule, which would require businesses to report their greenhouse gas emissions including those of their suppliers and customers. “SEC should give the public ample time to consider the full impacts of this wide-ranging rule designed to deny financing to the energy sources that meet 80% of global demand now and well into the future,” they write.

Under the Administrative Procedure Act, agencies must take into account public comments. If they disagree with the comments, they have to explain why. A short public comment period will mean fewer detailed comments, which will let the agency finalize the proposals faster with few changes.

The SEC has undertaken more than 50 rule-makings that would affect nearly every investor and public company in America, and many private ones too. Mr. Gensler is rushing to complete as many of them as he can before next January, when Republicans appear likely to take control of the House and could use their appropriations power to rein him in.”

On May 9, the SEC acceded to demands from interested parties and agreed to extend the comment period for the three rules noted above by 30 days each:

“The Securities and Exchange Commission today announced that it has extended the public comment period on the proposed rulemaking to enhance and standardize climate-related disclosures for investors until June 17, 2022. The SEC also announced that it will reopen the comment periods on the proposed rulemaking to enhance private fund investor protection and on the proposed rulemaking to include significant Treasury markets platforms within Regulation ATS for 30 days.

“Today, the Commission acted to provide the public with additional time to comment on three proposed rulemakings that have drawn significant interest from a wide breadth of investors, issuers, market participants, and other stakeholders,” said SEC Chair Gary Gensler. “The SEC benefits greatly from hearing from the public on proposed regulatory changes. Commenters with diverse views have noted that they would benefit from additional time to review these three proposals, and I’m pleased that the public will have additional time to provide thoughtful feedback.””

Some observers are expecting Gensler’s climate disclosures to fail

On May 2, Shivaram Rajgopal and Bruce Usher, two professors at Columbia Business School, penned a piece for Bloomberg Law in which they looked at SEC’s climate disclosure proposal, as well as the possibility that it may be disrupted, and then examined possible alternative means for achieving the same goals. They wrote:

“[E]ven though the ink has barely dried on these newly released SEC climate rules, it’s important to recognize that the 510 pages of regulations may never be enacted. There is no consensus in Congress to act on the climate problem, Republican lawmakers have already urged the SEC to withdraw their proposal, and a more conservative U.S. Supreme Court could view the new rules as an overreach. And, state attorneys are also vowing to challenge the SEC’s proposal.

So if these rules are dead on arrival, where are the areas of promise? There are a few….

Here’s what could happen next.

First, this momentum toward climate disclosure might encourage businesses to change strategy, taking steps to move capital out of fossil fuels and toward renewable technologies and other solutions to climate change….

Second, it’s likely that the need for climate leadership will lead to businesses adding expertise. While companies like Apple, Facebook, Google, and Microsoft already report extensive emissions data, many companies lack the same level of expertise.

The Big Four accounting firms along with other professional-service firms have already started to invest in climate expertise. Ernst & Young announced that it will spend $10 billion over the next three years on audit quality, sustainability, and technology, and KPMG is planning to spend more than $1.5 billion over the next three years on climate-change-related initiatives and training on ESG issues….

Third, increased climate literacy will allow for more scrutiny of green claims, meaning capital will be more likely to flow to truly sustainable projects. As tougher climate policies are proposed and implemented, the days of corporate greenwashing—and investors being misled—could finally come to an end.

That could lead to more money flowing to projects like Apple’s Green bonds which raise capital for projects with environmental benefits, and recently funded over a gigawatt of clean power globally, equivalent to removing 200,000 cars from the road. More companies are likely to follow Apple in investing in truly sustainable projects with more regulation around climate reporting.”

Though not noted in professors Rajgopal and Usherarticle, some analysts in the capital markets and related investment community are expecting publicly traded corporations to comply with disclosure standards whether the SEC passes them or not:

“The International Sustainability Standards Board (ISSB) is rallying regulators from the U.S., Europe, Japan and other jurisdictions around common rules for disclosures about climate risk and other environmental, social and governance (ESG) issues.

The working group of regulators will meet this month and in July to craft a “global baseline” of ESG disclosure standards, according to the ISSB, which in March released for public comment proposed rules on how a company should disclose the ways it gauges and manages ESG risks. A company would also need to publicly describe how sustainability risks, such as drought or flood, affect its total value.

“There is strong public interest in seeking to align where possible the international and jurisdictional requirements for sustainability disclosures,” ISSB Chair Emmanuel Faber said in a statement. 

The ISSB, aiming to bring consistency across borders, intends to urge regulators worldwide to consider adopting its proposals as a foundation for their own domestic sustainability disclosure rules, including those focused on carbon emissions….

The ISSB, backed by the architects for global accounting rules, has asked for public feedback on its proposal by July 29. It plans to complete standard-setting by the end of 2022.

The ISSB was created by the IFRS Foundation, a London-based group that oversees the International Accounting Standards Board (IASB), and launched in November during the COP26 climate conference in Glasgow.

As with IASB rules, companies could voluntarily adopt the ISSB standards or a regulator could endorse the guidelines and require compliance by companies under its jurisdiction.

SEC’s Climate an ESG Task Force issues first enforcement action 

Among other ESG tasks, the Securities and Exchange Commission has promised to keep ESG practitioners honest. To ensure compliance with promises made, the SEC created an ESG enforcement task force in early 2021. That task force has now issued its first enforcement action:

“The SEC’s Climate and ESG Task Force has now issued its first enforcement action.  The SEC has brought a 76-page complaint in federal district court against Vale, S.A., a Brazilian mining company, alleging that Vale “ma[de] false and misleading claims about the safety of its dams.”  Significantly, Vale “regularly misled local governments, communities, and investors about the safety of the Brumadinho dam through its environmental, social, and governance (ESG) disclosures.”…

In essence, the SEC has brought a classic enforcement action against a company for allegedly misleading disclosures–and these disclosures are not just present in typical SEC forms (e.g, 20-F and 6-K), or in investor presentations, but in the separate ESG reports issued by Vale.  As stated in the SEC’s complaint, the “false statements to investors [were] in SEC filings, the 2016 and 2017 Sustainability Reports, and the 2018 ESG Webinar.”  This enforcement action by the SEC demonstrates that statements made in ESG reports should now be considered as ripe for litigation–whether public enforcement actions or private securities litigation–as classic sources of disclosures.    

Notably, the complaint also features allegations concerning corporate governance failures and problems with the auditing process related to the ESG reports and other disclosures.  The presence of these allegations may act to reinforce the SEC’s focus on corporate governance and attestation in its proposed mandatory climate disclosures.”

In the spotlight: Tesla joins Musk in pushing back against ESG 

While Tesla is, by definition, a company that exists specifically to reduce carbon emissions from internal combustion engine vehicles, Elon Musk and others at the company have been reluctant to share ESG-related information with ratings agencies and have, therefore, been given relatively poor ESG scores. Now, Musk and his company are pushing back:

“Tesla Inc., whose Chief Executive Officer Elon Musk has criticized ESG for making little sense, said current ways of measuring environmental, social and governance issues are “fundamentally flawed.”

In a 144-page annual report, the electric vehicle-maker said ESG ratings are based on how corporate profits are affected by ESG-related factors, rather than gauging a company’s real-world impact on society and the environment. The ratings are used by money managers to help decide where to invest. 

In effect, individual investors who park their money in ESG funds managed by large asset managers are unaware that their capital is being used to buy shares of companies that are exacerbating the effects of climate change, rather than mitigating it, Tesla said. 

“We need to create a system that measures and scrutinizes actual positive impact on our planet, so unsuspecting individual investors can choose to support companies that can make and prioritize positive change,” the Austin, Texas-based company said. It added that large investors, ratings agencies, companies and the public need to push for change.” 

Musk has been a recent critic of ESG, and has said its investment principles should be “deleted if not fixed.”