Economy and Society: The Federal Reserve and ESG

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.

Federal Reserve eyeing ESG-friendly stress-tests for banks

For most of the last year, the ESG-regulation debate has focused on two primary subjects: the Securities and Exchange Commission (SEC) and its desire to compel publicly traded companies to disclose environmental, social, and governance data along with traditional pecuniary disclosures; and the Department of Labor’s new proposed rule to overturn the Trump administration’s rule on investments by ERISA-governed retirement plans in ESG vehicles. Before this year is over, according to analysts, the Federal Reserve might potentially impose regulations on financial companies regarding ESG-related matters as well. Specifically, the Federal Reserve wants to make ESG dataand climate change exposure, in particularpart of the stress tests in which banks are required to participate. In October, for example, a senior contributor at Forbes noted the following:

“Fed Governor Lael Brainard, a pioneer in this area, offered some basic guidance on how the central bank is considering taking on efforts, strongly opposed by the financial industry, to take climate risks into account when assessing possible sources of volatility.

Brainard said the total cost of U.S. weather and climate disasters over the last five years is $630 billion, a record for such a period. This includes billions in damages to farms, homes and businesses, she said, with 2020 marking a sixth straight year seeing ten or more billion-dollar weather and climate events.

“We can already see the growing costs associated with the increasing frequency and severity of climate-related events,” she told a Boston Fed conference.

“Several foreign regulators have already undertaken climate scenario analysis, affording us the opportunity to learn from their experiences. It will be helpful to move ahead with the first generation of climate scenario analysis to identify risks and potential issues and to inform subsequent refinements to our models and data.”…

Brainard proposes using the existing bank stress test framework as a template for thinking about how to get started. Greater transparency on the part of banks as to their risks of not only direct risk to climate shocks but also potential pitfalls from the costs of energy transition will be key.”

In November, Reuters reported that Wall Street doesn’t expect these tests to be implemented immediately.

“A U.S. Treasury Department-led report warned last month that rising temperatures were an “emerging threat” to financial stability and said regulators should use scenario analyses to build robust predictive risk-management tools.

Despite being the most influential central bank in the world, the Fed has long lagged its peers in getting a grip on those risks.

Over the past year, however, the Fed has ramped up pressure on big banks to scan their portfolios for climate change risks and could be in a position to run a formal scenario analysis and release broad findings to the public in 2023, according to seven industry executives with direct knowledge of the discussions who declined to be named.

The previously unreported growing industry consensus shows how regulators are trying to move quickly to execute President Joe Biden’s agenda to incorporate climate risk into the financial regulatory system, with major ramifications for Wall Street banks like JPMorgan Chase & Co (JPM.N) Citigroup (C.N), Wells Fargo & Co (WFC.N), Bank of America Corp (BAC.N), Goldman Sachs Group (GS.N) and Morgan Stanley (MS.N)….

Reuters reported in May that Fed supervisors had begun privately pressing lenders for data and details on their efforts to assess the exposure of their loan books to climate change.

Those discussions are being driven by Kevin Stiroh, who began leading the Fed’s climate change supervisory work in February. They have intensified in recent months and started to focus on how a balance sheet scenario analysis might work, according to the executives.

“Broadly speaking, regulators are moving forward with all due speed on this,” said Sean Campbell, head of policy research at the Financial Services Forum, which represents big banks, adding a 2023 timeline “is about right.”

Fed officials have not previously indicated when they would expect to perform an analysis. In an interview with Reuters, Randal Quarles, the Fed’s outgoing vice chair for supervision, said that there was no official timeline, but he likewise told Reuters two years “sounds about right.””

One wildcard in the pending implementation of Federal Reserve’s new ESG-friendly stress-tests is hinted at in this last paragraph from Reuters, which quotes “Randal Quarles, the Fed’s outgoing vice chair for supervision.” According to a December 28 article in The Wall Street Journal, President Biden appears set to appoint Sarah Bloom Raskin to replace Quarles, a conservative, as the Fed’s top regulator. Raskin is an advocate of an ESG-related regulatory mission for the federal government (including, presumably, the Federal Reserve). The Journal noted:

“Ms. Raskin’s nomination could mollify progressive Democrats, some of whom opposed Mr. Biden’s decision in November to offer a second term to Fed Chairman Jerome Powell, a Republican first chosen for the top job by former President Donald Trump.

They have called for the Fed to take a tougher stance in regulating big banks and a bolder approach in addressing financial risks posed by climate change.

While serving as a Fed governor from 2010 to 2014, Ms. Raskin was deeply involved in behind-the-scenes work to write rules implementing the 2010 Dodd-Frank financial-regulatory overhaul.

Since leaving the government, Ms. Raskin has spoken out on the need for the Fed and other federal financial regulators to more proactively address growing threats from climate-related events such as natural disasters and wildfires.

“There is opportunity in pre-emptive, early and bold actions by federal economic policy makers looking to avoid catastrophe,” Ms. Raskin wrote in the foreword of a report last year from the Ceres Accelerator for Sustainable Markets, a climate advocacy group.

Sen. Elizabeth Warren (D., Mass.) has signaled to the White House she would support either Ms. Raskin or Richard Cordray, the Consumer Financial Protection Bureau’s first confirmed director, who also has been under consideration for the Fed’s banking-regulator post….

More recently, in a New York Times opinion article in May 2020, Ms. Raskin was critical of broad-based emergency-lending backstops enacted by the Treasury and Fed to assist businesses during the pandemic because she believed they should have taken steps to prevent lending to oil-and-gas concerns. “The decisions the Fed makes on our behalf should build toward a stronger economy with more jobs in innovative industries—not prop up and enrich dying ones,” she wrote.”

On Wall Street and in the private sector

Reuters: “How 2021 became the year of ESG investing” 

As one year draws to a close and another year begins, analysts have provided numerous looks at the Wall Street year that was and predictions about what the year ahead will hold. Many of those retrospectives and forecasts focused on ESG, which remained one of the fastest-growing investment strategies in the world in 2021.

On the upside for ESG, on December 23, Reuters reported the following:

“Investors concerned about climate change and social justice had a bumper year in 2021, successfully pushing companies and regulators to make changes amid record inflows to funds focused on environmental, social and corporate governance (ESG) issues.

Extreme weather becoming more frequent and events highlighting social justice issues, such as the death of George Floyd in Minneapolis police custody, contributed to ESG rising to the top of the agenda of investors, companies and policy makers.

A record $649 billion poured into ESG-focused funds worldwide through Nov. 30, up from the $542 billion and $285 billion that flowed into these funds in 2020 and 2019, respectively, the latest Refinitiv Lipper data shows. ESG funds now account for 10% of worldwide fund assets.

Stocks of companies rated highly for their sustainability efforts also notched gains. The MSCI World ESG Leaders’ index has risen 22% so far this year, compared with the MSCI World Index’s gain of 15%.

Investors flexed their muscle to challenge companies’ ESG credentials, culminating in a landmark board challenge against oil major Exxon Mobil Corp (XOM.N). Support for social and environmental proposals at the shareholder meetings of U.S. companies rose to 32% in 2021 from 27% in 2020 and from 21% in 2017, according to the Sustainable Investments Institute.

“It was a watershed year,” said Tim Smith, a director at investment management firm Boston Trust Walden….

[Additionally] In the United States, companies can sometimes avoid putting shareholder resolutions to a vote by asking the SEC for permission. Thomas Skulski, managing director at proxy solicitor Morrow Sodali, said the SEC strengthened the hand of ESG investors in November by narrowing the circumstances under which companies can skip votes. 

As a result, companies next year could face more challenges on operational issues, such as how they use consumer packaging or plastics, Skulski said.”

Financial Times: “ESG shares underperform oil and gas in 2021”

Meanwhile, however, ESG also suffered setback, perhaps the most important of which was noted just last week by The Financial Times:

“Oil and gas shares — knocked early in the pandemic and increasingly shunned by eco-conscious investors — have this year eclipsed the stock markets’ in-vogue environmental, social and governance-focused companies.

As of December 29, US giants Exxon and Chevron had added 48 per cent and 40 per cent respectively in 2021. The duo have helped power global energy equity funds past many of the hundreds of US and European sustainable funds as defined by Morningstar, a data provider.

The iShares MSCI global energy producers exchange-traded fund is up 37 per cent to December 29, outperforming the largest US ESG fund — the $31.8bn Parnassus Core Equity fund – which is up 28 per cent. The largest iShares ESG fund run by giant fund manager BlackRock has also trailed, up 30 per cent.

It marks a sharp change from 2020, with the more tepid performance leading to early signs that investor enthusiasm for ESG funds has cooled, as investor inflows into the fund class have slowed from their breakneck pace at the beginning of the year.

The Invesco Solar ETF and the iShares Global Clean Energy ETF are down more than a quarter this year. In contrast, these funds’ share prices tripled and doubled, respectively in 2020, when Exxon plummeted 41 per cent and Chevron fell 30 per cent.

Danish power group Orsted “was the darling” for ESG funds in 2020, Gauthier said. But Orsted and wind turbine maker Vestas have warned of challenging conditions in renewable energy after projects in Europe suffered low wind speeds and higher costs hit manufacturers.

Orsted and Vestas have dropped by around a third in 2021. Iberdrola, the Spanish utility that has also prioritised renewable electricity, is down around a tenth this year.

Meanwhile, despite volatility in the oil price following the emergence of the Omicron coronavirus variant last month, Brent crude and the US benchmark WTI are both up by more than a half in 2021.

Global oil demand is on track to surpass 2019 levels by March 2022 and is projected to continue its rise in 2023, according to JPMorgan. “We are seeing the first energy crisis of the decarbonisation era,” said Joyce Chang, chair of global research at JPMorgan.”

86% of incumbents were successful in their Nov. bid for re-election

In the 2021 general election, an average of 85.54% of incumbents nationwide won their re-election bids. The number drops to 82.35% when including incumbents that withdrew or were disqualified.

In 2020, 93% of incumbents won their elections. In 2019, that number was 90%, and it was 92% in 2018. 

Minnesota incumbents were the least successful in 2021 with a win rate of 55%, followed by Kansas (59%) and Colorado (67%).

Additional reading: 

Illinois enacts law prohibiting anonymous contributions in judicial elections

Welcome to the monthly edition of The Disclosure Digest! Our December issue will arrive in your inbox after Christmas.

Illinois enacts law prohibiting anonymous contributions in judicial elections

On Nov. 15, 2021, Illinois Gov. J.B. Pritzker signed SB0536, a law prohibiting candidates seeking nomination to state courts from accepting donations from organizations that do not disclose their donors’ identities. The bill also bars judicial campaign committees from receiving funds from out-of-state sources, forbids people from making or accepting contributions made on behalf of someone else, and raises the threshold for itemized contributions from $500 to $1,000. The statutes pertaining to nonprofit contributions were part of the larger elections-related content of the bill.

The bill passed both chambers of the Democrat-controlled Illinois General Assembly along partisan lines. All  72 Democrats in the House voted in favor of the bill, and 42 Republicans voted against it. In the Senate, 41 Democrats voted for the bill, and 17 Republicans voted against it. 


Democratic sponsors of the bill said it would increase funding transparency in the state’s judicial elections and prevent donors from influencing court decisions. State Rep. Katie Stuart (D) said, “The danger of dark money I don’t think can be [over]stated,” and “the thought that there’s dark money influencing someone, again, who’s a sitting judge for 10 years” was concerning. “Trying to avoid dark money in elections, I think is something that we can all get behind. So the change would stop out-of-state and untraceable money from finding its way into our judicial races to maintain the integrity of those judicial elections,” Stuart said.

Some Republican lawmakers said the bill was a Democratic effort to protect the party’s state supreme court majority. State Rep. Ryan Spain (R) said, “I can’t help but notice that the impetus for great changes in how we conduct elections for the judiciary in the state of Illinois – both the remapping of the Supreme Court (and) the change in campaign finance activities – comes after, for the first time in the history of our state, a Democratic Supreme Court justice lost his retention in the 2020 election,” a reference to former Justice Thomas Kilbride’s loss in his second retention election. “This is another effort for the majority [party] to change the rules of the game because they don’t like the outcome,” Spain said.  

Republicans also said the bill could violate freedom of speech, citing the 2010 Citizens United U.S. Supreme Court decision that held limits on corporate independent expenditures in elections violated the First Amendment. Stuart pointed to decisions in cases like Caperton v. A. T. Massey Coal Co. in 2002, in which the court ruled judicial campaign contributions could violate due process. 

In context

Illinois, along with 28 other states, already prohibited judicial campaigns from soliciting contributions directly. Twenty-four states have introduced legislation to expand donor disclosure requirements. SB0536 is unique in that it completely prohibits undisclosed donations rather than requiring their disclosure. 

A California elections agency also recently addressed contributions made on behalf of someone else, which SB0356 prohibits. On Oct. 21, the California Fair Political Practices Commission (FPPC) voted unanimously to adopt new disclosure requirements for charitable contributions made on behalf of politicians in a practice known as behested payments. Under the new rules, elected officials must report the name of the person directing a behested payment through a donor-advised fund. While this rule requires the disclosure of the source of these payments, SB0356 forbids them entirely. 

SB0536 is the eighth donor disclosure and privacy bill passed this year. The others were enacted in California, Idaho, Iowa, South Dakota, and Tennessee.

The big picture

Number of relevant bills by state: We’re currently tracking 45 pieces of legislation dealing with donor disclosure and privacy. On the map 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. 

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

  • Michigan HB5490: This bill would modify the Michigan Campaign Finance Act to exclude a contributor’s occupation, employer, and principal place of business from the information required in campaign finance statements.
    • Primary emphasis: Privacy
    • Republican sponsorship
    • This bill was referred to committee on Oct. 28, 2021
  • Illinois SB0536: This bill would prohibit candidates seeking nomination to state courts from accepting donations from any organization that does not disclose its donors’ identities. It bars judicial campaign committees from receiving funds from out-of-state sources, forbids people from making or accepting contributions made on behalf of someone else, and raises the threshold for itemized contributions from $500 to $1,000. 
    • Primary emphasis: Disclosure
    • Democratic sponsorship
    • Gov. J. B. Pritzker signed the bill into law on Nov. 15, 2021.
  • Florida H0617: This bill would create an exemption from public records requirements for personal identifying information of a donor or prospective donor to the direct-support organization of the Statewide Council on Human Trafficking who desires to remain anonymous and provide an exemption from notice requirements for specified meetings. It provides for future legislative review and repeal of the exemption under the Open Government Sunset Review Act. It is a companion bill to Florida S0294
    • Primary emphasis: Disclosure
    • Republic sponsorship
    • Toby Overdorf (R) introduced the bill on Nov. 16, 2021.  
  • Pennsylvania HB2087: This bill would prohibit public agencies from disclosing the personal information of a charitable organization’s members, volunteers, and donors. Additionally, public agencies would not be able to require individuals or organizations to provide personal information.
    • Primary emphasis: Privacy
    • Republican sponsorship
    • This bill was referred to committee on Nov. 16, 2021

Tennessee enacts law authorizing partisan elections for school boards

Welcome to The Ballot Bulletin, where we track developments in election policy at the federal, state, and local level. In this month’s issue:

  1. Tennessee enacts law authorizing partisan elections for school boards
  2. Redistricting round-up: Illinois adopts new congressional map; Connecticut adopts new legislative map
  3. Legislation update

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Tennessee enacts law authorizing partisan elections for school boards

On Nov. 12, Gov. Bill Lee (R) signed HB9072 into law, authorizing partisan elections for local school boards in Tennessee. 

  • What HB9072 does: HB9072, which took effect immediately, amended Tennessee Code Section 49-2-201, which governs the method of conducting school-board elections in the state. Under HB9072, “[e]lections for school board members may be conducted on a partisan or nonpartisan basis.” For partisan elections, “political parties may nominate candidates for membership on the board by any method authorized under the rules of the party or by primary election.” Previously, school-board elections were nonpartisan: a candidate was not permitted to “campaign as the nominee or representative of any political party.” 
  • Legislative history: Thirteen Republicans introduced HB9072 in the state House on Oct. 26. The original version of the bill would have required partisan school-board elections. The state Senate approved an amended version, which authorized but did not require partisan elections, on Oct. 29 by a vote of 20-10. Twenty Republicans voted in favor, with four Republicans and six Democrats voting in opposition. The House approved the amended version 52-39 on Oct. 29, with 52 Republicans voting in favor, 16 Republicans voting against, and 23 Democrats voting against.  
  • Reactions
    • Rep. Scott Cepicky (R), who co-sponsored HB9072, said, “The groundswell came from our parents and we’re seeing this across our state in the disconnect between those who are sitting on our school boards and the people who elect them. Our job is to provide as much transparency in the voter box as we can so that people have an idea of the level of expected performance from the people that they send to represent them.”
    • Rep. Robin Smith (R), who co-sponsored the bill, said, “Politics don’t belong in school. And yet, they are. [The bill]  just provides information for voters and parents [about] the ideological leanings of those that serve on the school board.”
    • Rep. Larry Miller (D), who voted against HB9072, said, “Do you not think that we are partisan enough? Now what we want to do is make education partisan? Think about that. How ridiculous does that even sound?” 
    • Rep. Patsy Hazlewood (R), who voted against the bill, said, “We all want or have the desire for good school board members because school board members are going to mean good schools. We have seen across our state and across our country how difficult some school board meetings are. It’s going to be harder and harder to get good candidates to run.”
  • National context: Most school-board elections are nonpartisan. Two states – Louisiana and Pennsylvania – require that all school boards hold partisan elections. A handful of other states – such as Georgia, North Carolina, and, now, Tennessee – authorize but do not require partisan school-board elections. 

Redistricting round-up: Illinois adopts new congressional map; Connecticut adopts new legislative map

In today’s round-up, we take a look at the following recent developments: 

  • Illinois adopts new congressional district boundaries
  • Connecticut completes legislative redistricting

Illinois adopts new congressional district boundaries 

On Nov. 24, Gov. J.B. Pritzer (D) signed into law new congressional district boundaries. Illinois was apportioned 17 districts in the U.S. House of Representatives after the 2020 census, one less than it was apportioned after the 2010 census.

According to The Chicago Tribune’s Rick Pearson, the maps place the following pairs of incumbents within the same districts:

After the Illinois General Assembly approved the new district boundaries on Oct. 29, Kinzinger announced he would not seek re-election in 2022. Also, Newman said she would seek re-election not against Garcia, but U.S. Rep. Sean Casten (D), whose new district encompasses several areas Newman represented before redistricting. Bost announced he would run for re-election in the 12th District on Oct. 29. Miller has not yet declared her plans.

For more information about redistricting in Illinois, click here.

Status of congressional redistricting: As of Dec. 1, 18 states have adopted new congressional district maps, and 26 states have yet to do so (six states have only one congressional district each, making redistricting unnecessary). Congressional redistricting has been completed for 159 of the 435 U.S. House districts (36.6%).

Connecticut completes legislative redistricting

On Nov. 23, the Connecticut Reapportionment Commission voted 8-0 in favor of new maps for the state’s 36 Senate districts. The commission enacted new House maps on Nov. 18. These maps will take effect for Connecticut’s 2022 state legislative elections.

The commission, made up of four Democratic lawmakers, four Republican lawmakers, and a ninth member selected by the other commissioners, took over the redistricting process after the state’s Reapportionment Committee did not meet its Sept. 15 deadline. Census data was not delivered to the state until Sept. 16. Unlike maps that would have been adopted by the committee, the commission’s maps did not need to win two-thirds approval from both chambers of the Connecticut General Assembly.

According to the CT Mirror’s Mark Pazniokas, “Passage of the Senate map came without debate in an 11-minute meeting conducted via Zoom, a reflection that the maps in Connecticut are resolved by negotiation.” Senate Minority Leader Kevin Kelly (R) said, “It’s truly a bipartisan effort,” and Senate President Pro Tempore Martin Looney (D) said, “We have a much better approach than most the country does on this.”

For more information about redistricting in Connecticut, click here

Status of state legislative redistricting: As of Dec. 1, 22 states have adopted legislative district maps and 28 states have yet to do so. Nationwide, legislative redistricting has been completed for 771 of 1,972 state Senate districts (39.1%) and 2,032 of 5,411 state House districts (37.6%).

Legislation update: Redistricting, electoral systems, and primary systems bills 

Redistricting legislation: So far this year, we’ve tracked at least 245 redistricting-related bills up for consideration in state legislatures. 

Redistricting legislation in the United States, 2021 

Current as of Dec. 1, 2021

Electoral systems legislation: So far this year, we’ve tracked at least 150 bills dealing with electoral systems that are up for consideration in state legislatures. 

Electoral systems legislation in the United States, 2021 

Current as of Dec. 1, 2021

Primary systems legislation: So far this year, we’ve tracked at least 20 bills dealing with primary systems that are up for consideration in state legislatures. 

Primary systems legislation in the United States, 2021 

Current as of Dec. 1, 2021

Major party campaign committees raise $63 million in October

Six party committees have raised a combined $662 million over the first ten months of the 2022 election cycle. In October, the committees raised $63 million, according to recent filings with the Federal Election Commission.

The Republican National Committee (RNC) raised and spent more than the Democratic National Committee (DNC) in October. The RNC raised $13.8 million and spent $16.5 million, while the DNC raised $11.5 million and spent $13.0 million. So far in the 2022 election cycle, the RNC has raised 2.7% more than the DNC ($136.7 million to $133.0 million).

At this time in the 2020 election cycle, the RNC led the DNC in fundraising by a larger 89.0% margin ($194.0 million to $74.5 million).

The National Republican Senatorial Committee (NRSC) raised $9.0 million and spent $7.1 million in October, while the Democratic Senatorial Campaign Committee (DSCC) raised $7.0 million and spent $4.5 million. The NRSC has raised 13.8% more than the DSCC so far in the 2022 election cycle ($85.2 million to $74.2 million). October was the seventh consecutive month where the NRCC outraised the DSCC.

The House committees raised more than their Senate counterparts last month, with the Democratic Congressional Campaign Committee (DCCC) raising $11.7 million and spending $6.8 million and the National Republican Congressional Committee (NRCC) raising $9.8 million and spending $7.1 million. So far in the 2022 election cycle, the DCCC has raised 2.8% more than the NRCC ($118.2 million to $114.8 million). This was the fourth consecutive month where the DCCC outraised the NRCC.

At this point in the 2020 election cycle, the NRSC also led the DSCC in fundraising by 8.8%($54.4 million to $49.8 million). The DCCC also led the NRCC in total fundraising by 38.4% ($101.3 million to $70.4 million).

So far in the 2022 election cycle, the RNC, NRSC, and NRCC have raised 3.4% more than the  DNC, DSCC, and DCCC ($336.7 million to $325.4 million). The Republican committees’ fundraising advantage is up from 3.0% last month.

Additional reading:

Recall elections scheduled against two Nebraska school board members

Recall elections against two of the six members of the Leyton Public Schools Board of Education in Nebraska are being held on Jan. 11, 2022. Board members Suzy Ernest and Roland Rushman will be on the ballot.

The recall petitions listed the district’s increased legal fees since January 2021 as reasons for the recall against both Ernest and Rushman. The petition against Ernest said she took action without the full board’s approval on two items: placing the superintendent on paid administrative leave and signing an acceptance for asbestos removal. The petition against Rushman said he failed to follow the Board Code of Ethics and slandered district administrators.

In response to the recall effort against her, Ernest said her action to place the superintendent on paid administrative leave was authorized in the superintendent’s contract. Both Ernest and Rushman said the decision to place the superintendent on paid administrative leave occurred after the board received serious complaints. They said those complaints were the reason behind the district’s increased legal fees. Ernest also said that she signed the acceptance for asbestos removal under the direction of the then-interim superintendent.

To get the recalls on the ballot, 138 signatures had to be collected for each member. On Oct. 12, the county clerk verified exactly 138 signatures for the recall against Ernest and 148 signatures for the recall against Rushman.

Ballotpedia has tracked 84 school board recall efforts against 215 board members so far in 2021—the highest number of school board recall efforts we have tracked in one year. The next-highest year was in 2010 with 38 recall efforts against 91 school board members.

In the first half of 2021, Ballotpedia tracked 164 recall efforts against 262 officials. This was the most recall efforts for this point in the year since the first half of 2016, when we tracked 189 recall efforts against 265 officials. In comparison, we tracked between 72 and 155 efforts by the midpoints of 2017, 2018, 2019, and 2020.

Additional reading:

Ballotpedia’s Top 15 races to watch in 2021

Image of several stickers with the words "I voted"

While there are no federal elections taking place this year other than special elections, statewide elections for political office are taking place in three states and local elections are occurring across the country.

Ballotpedia’s top 15 races to watch this year include:

Attorney General of Virginia: Incumbent Mark Herring (D) and challenger Jason Miyares (R) are running in one of the two races that will determine Virginia’s triplex status.

Governor of New Jersey: Incumbent Phil Murphy (D), Jack Ciattarelli (R), and three other candidates are running for governor. The race will determine the status of New Jersey’s Democratic trifecta and triplex.

Governor of Virginia: Terry McAuliffe (D), Glenn Youngkin (R), and two others are running for governor of Virginia. This race will impact Virginia’s trifecta and triplex status.

Lieutenant Governor of Virginia: Hala Ayala (D) and Winsome Sears (R) are running for lieutenant governor. Virginia is one of 17 states where the governor and lieutenant governor are nominated and elected separately.

Virginia House of Delegates: All 100 House seats are up for election, with Democrats defending a 55-45 majority. If Republicans net six or more seats, they will break Virginia’s Democratic trifecta, while if Democrats lose fewer than five net seats or gain seats, they will maintain their majority.

Pennsylvania Supreme Court: Kevin Brobson (R) and Maria McLaughlin (D) are running for a 10-year term on the Pennsylvania Supreme Court. The court currently has a 5-2 Democratic majority.

Mayor of Atlanta: Incumbent Keisha Lance Bottoms did not file for re-election this year, becoming Atlanta’s first mayor since World War II to do so. Sixteen candidates are running in the nonpartisan election to succeed her. If necessary, a runoff will take place Nov. 30.

Mayor of Boston: Annissa Essaibi George and Michelle Wu are running for mayor of Boston. Incumbent Kim Janey, who succeeded to the office to fill a vacancy earlier in the year, was defeated in the primary.

Mayor of Buffalo: India Walton (D) and five write-ins, including incumbent Byron Brown (D), are running for mayor. Walton defeated Brown in the Democratic primary.

Mayor of Minneapolis: Incumbent Jacob Frey (D), AJ Awed (D), Katherine Knuth (D), Shelia Nezhad (D), and thirteen others are running in a ranked-choice election for mayor of Minneapolis.

Mayor of Seattle: Bruce Harrell and Lorena González are running for mayor of Seattle. Incumbent Jenny Durkan did not file for re-election.

Minneapolis City Council: All 13 seats on the Minneapolis City Council are up for election. Fifty-eight candidates, including 11 of the incumbents, filed for the seats. Democrats currently hold 12 seats on the council and the Green Party holds one.

Seattle City Attorney: Ann Davison and Nicole Thomas-Kennedy are running for Seattle’s top prosecutorial post after defeating incumbent Pete Holmes in the primary.

Seattle City Council: The two at-large seats on Seattle’s nine-member city council are up for election. Local commentary has focused on the position 9 seat, which is open as incumbent Lorena González is running for mayor.

JeffCo Colorado Schools: Three of the five seats on the JeffCo school board are up for election. This was among 71 school boards in 18 states where we had identified conflict over responses to the coronavirus as an element in the 2021 elections, as of Oct. 26.

These elections were selected by members of Ballotpedia’s editorial department based on past election results, unique election-specific circumstances, and race ratings published by elections forecasters. The final selections were made with the goal of including a mix of state and local races in mind.

Additional reading:

Battleground districts in Virginia’s House of Delegates elections

Elections for the Virginia House of Delegates are taking place on Nov. 2, 2021. Ballotpedia has identified 22 of the 100 races as battlegrounds. Sixteen battlegrounds are elections for seats currently held by Democrats while the other six are for Republican-held seats. Based on analysis of these districts’ electoral histories, these races have the potential to be more competitive than other races and could possibly lead to shifts in a chamber’s partisan balance.

To determine state legislative battleground races in 2021, Ballotpedia looked for races that fit one or more of the four factors listed below:

  1. In the last state legislative election, the winner received less than 55% of the vote.
  2. The presidential candidate who won the district in 2020 is of a different party than the most recent state legislative election winner in the district, and the most recent state legislative election winner won by a margin of 10 percentage points or less.
  3. The presidential candidate who won the district in 2020 is of a different party than the most recent state legislative election winner in the district, and the incumbent is not on the ballot this year.
  4. The presidential candidate who won the district in 2020 is of a different party than the most recent state legislative election winner in the district, and that presidential candidate won the district by a margin of 20 percentage points or more.

In 2019, Democrats won control of the chamber with a 55-45 majority. Twenty-nine races (29% of the chamber) were decided by margins of 10% or smaller, and six of the 100 seats up (6% of the chamber) changed partisan control, passing from Republican to Democratic control. Republicans need to gain six seats to win control of the chamber in 2021. Democrats need to hold at least 51 seats to maintain their majority.

The outcome of these elections, in addition to the state’s 2021 gubernatorial election, will determine Virginia’s trifecta status. Virginia became a Democratic trifecta in 2019 for the first time since 1994. If Republicans win control of the House or the governorship, they will break Democrats’ trifecta control of the state.

Additional reading:

Economy and Society: SEC proposes rule increasing proxy disclosures

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.

The SEC pushes on proxy disclosures 

On Wednesday, September 29, the Securities and Exchange Commission proposed a rule that would require large asset managers to provide greater disclosure and transparency on how they vote the proxies associated with the funds they manage. The Wall Street Journal had the details:

“The Securities and Exchange Commission proposed a rule that would require money managers to disclose more information on how they use their voting power.

When investors buy a mutual fund and exchange-traded fund from an asset manager, the money manager votes on shareholder proposals on behalf of the investors. Shareholder votes extend to issues from executive compensation to a company’s efforts to address climate change.

The SEC proposal on Wednesday targets funds that manage trillions of dollars for investors. It follows a years-long concern among some SEC officials that current disclosures make it difficult for individual investors to see how asset managers cast shareholder votes on their behalf….

The popularity of index funds fueled the rise of a small group of money managers in the last decade. This has given firms such as BlackRock Inc., BLK 0.24% Vanguard Group and State Street Global Advisors enormous sway over corporate affairs that appear on proxies, including pay for top executives, board appointments and acquisitions. A 2019 study found that the three firms collectively cast an average of about 25% of the votes at S&P 500 companies.”

Eight days later, BlackRock, the largest asset management firm in the world, with nearly $10 trillion in assets under management, made its own news regarding proxy votes, appearing to accept the SEC’s characterization of the need for transparency:

“Investment giant BlackRock Inc. BLK 0.24% is giving institutional investors such as pensions and endowments the option to cast shareholder votes tied to their investments.

When investors buy a fund from an asset manager, the money manager typically votes on shareholder proposals on behalf of the investors.

Starting in 2022, BlackRock says its large investors can vote themselves on everything from who sits on boards to executive pay to what companies should disclose on greenhouse gas emissions. The change allows those BlackRock clients to lay claim to voting power on some $2 trillion in investments tied to index-tracking assets BlackRock manages in institutional accounts. This is about 40% of roughly $4.8 trillion of indexed equities managed by BlackRock.

“We believe clients should, where possible, have more choices as to how they participate in voting their index holdings,” BlackRock said in a client note on Thursday announcing the changes….

BlackRock said that it is “committed to exploring all options to expand proxy voting choice to even more investors.” That includes individual investors in exchange-traded funds and index mutual funds.”

Rubio continues ESG pushback

A week after introducing legislation pushing back against ESG, Senator Marco Rubio (R-Fla.) sent a letter to the Securities and Exchange Commission (SEC) asking it to clarify several ESG matters. Specifically, Senator Rubio wanted the SEC to explain how ESG rules will affect American business in its dealings with China. He wrote:

“[P]revious positions taken by the Commission indicate that the consistent application of its policies to the PRC is not guaranteed,” Rubio wrote. “In recent years, the Commission has created arbitrary exceptions to its general rules for activities in the PRC.

For example, a standard purporting to provide information about issuers’ relevant ‘social’ businesses practices that required the disclosure of ‘diversity, equity, and inclusion’ practices with respect to their workforces in the United States, but not the complicity of those same issuers in supporting the Chinese Communist Party (CCP)’s many human rights abuses within the PRC or globally would be, at the very least, highly inconsistent and arbitrary….

[Consider] [w]hether China-based issuers or issuers with significant business in the PRC should require the representation or information about the representation of underrepresented ethnic or religious groups historically oppressed by the CCP, including Uyghurs, ethnic Kazakhs, Kyrgyz, and members of other Muslim groups, Tibetans, Christians, and practitioners of Falun Gong, among others.

If the level of ‘investor demand’ for an ESG disclosure for business activity in the U.S. is diminished for substantially similar, or even more substantial activities in the PRC, it may indicate that the disclosure is not primarily about providing beneficial and consistent information to investors about that activity, but instead is an arbitrary attempt to influence issuers on certain domestic political affairs….”

According to a press release, Senator Rubio also “argued that the SEC should consider how to consistently apply its standards to supply chain resiliency and investor protection” to China, especially in light of what it described as “the hoarding of medical supplies by [China] during the COVID-19 pandemic….”

On Wall Street and in the private sector

ESG opponent highlights ESG ratings confusion on Fox News

Independent Wall Street analyst, anti-ESG activist, and author Stephen Soukup appeared on both Fox News’sTucker Carlson Tonight,” and Fox Nation’sTucker Carlson Today” to discuss his book The Dictatorship of Woke Capital. Among other things, Soukup discussed ESG and what he considers one of its greatest perils, the confusion over ESG ratings, an assessment shared among some of ESG’s most outspoken proponents. He argued that the ratings are inconsistent, are often contradictory, and can be manipulated for purposes other than promoting shareholder-focused goals. In the end, he argued, “ESG can mean anything you want it to mean,” or, conversely, can be selectively applied for personal, political, or cultural reasons.

Soukup raised the issue of Elon Musk and Tesla, which, he said, would appear to most outsiders to be an ESG no-brainer investment, a company that is on the cutting edge of trying to eradicate the need for the internal combustion engine. He argued, however, that Tesla’s ESG’s ratings are inconsistent and are often negative, not because of its business practices but because of its reporting practices, which many ratings services consider insufficient. 

Meanwhile, over at Morningstar, Michael Jantzi, the founder of Sustainalytics, a division of Morningstar and one of the best known and most prominent ESG ratings services, insists that there is no reason for anyone to be worried that the perceived diversity in ESG ratings signals a chaotic and exploitable business environment. Indeed, he insists that this diversity is proof that the opposite is true, that the ESG movement is, in his view, maturing and robust:

“This [criticisms] is an indication of a maturing and increasingly robust industry. There’s a lot of nuance, particularly on the institutional side of the business, looking at the challenges of integration across asset classes.

Constructive criticism in anything makes you better….

[T]he diversity of ratings is a sign of a healthy market. It reflects that there are a variety of approaches–some, like Sustainalytics’ ESG Risk Ratings, measure risk, other focus on impact, while others look only at reputation or market sentiment, for example. Different starting points lead to different outcomes, so the market has choice. That’s a good thing from my perspective. I often wonder if the critics of ESG ratings are also the ones complaining loudly about the fact that credit ratings and sell side ratings are too aligned?

As for emojis–they instantly convey a direction or how someone is feeling about something, so in a sense there is some similarity to ESG ratings. But the criticism reflects a fundamental misunderstanding of what an ESG Risk Rating is. It’s not meant to be a single indicator or a single tool to make a decision. It’s meant to be used alongside other tools and inputs to inform the user about whether or not this is a company you might want to consider investing in or engaging with. It’s a starting point to what lies beneath.”

In the spotlight

“We don’t have patience much longer for these disclosures to be forthcoming. We are increasingly seeing the impacts of climate change not only across our portfolios but also across the global economy….[T]his was the year that we really started to take more concerted action based on what companies were providing us…. Where we felt that companies were falling short for a variety of ESG issues, we were more inclined to support those [shareholder] proposals this year.”

A look back at government responses to the coronavirus pandemic, October 5-9, 2020

Although the first case of COVID-19 in the U.S. was confirmed on Jan. 21, 2020, it wasn’t until March when the novel coronavirus upended life for most Americans. Throughout the year, states issued stay-at-home orders, closed schools, restricted travel, issued mask mandates, and changed election dates.

Here are the policy changes that happened October 5-9, 2020. To read more of our past coverage of the coronavirus pandemic, click here

Monday, October 5, 2020

Stay-at-home orders and reopening plans:

  • Massachusetts cities and towns designated as lower risk on the state’s community spread map advanced to Step 2 of Phase 3 of the reopening plan. In that stage, indoor entertainment businesses like roller rinks and trampoline parks could reopen, and indoor and outdoor performance venues could operate at up to 50% capacity. Additionally, gyms, libraries, and museums were permitted to operate at 50% capacity.
  • The Michigan Department of Health and Human Services (MDHHS) issued an emergency public health order replacing many coronavirus restrictions the Michigan Supreme Court struck down on Oct. 2, including limits on gatherings and a mask requirement. The court ruled that Gov. Gretchen Whitmer’s (D) emergency orders were based on an unconstitutional law called the Emergency Powers of the Governor Act of 1945.
  • West Virginia Gov. Jim Justice (R) issued an executive order allowing live outdoor music performances to resume so long as crowds were restricted to 25% capacity or 250 individuals, whichever is less. He permitted indoor live music performances which were streamed across the internet without crowds to resume.   

Election changes:

  • The United States Supreme Court reinstated South Carolina’s witness signature requirement for absentee/mail-in ballots.
  • Ohio Secretary of State Frank LaRose (R) announced that counties would be allowed to offer multiple drop-off options for returning absentee/mail-in ballots. LaRose said that these options would be restricted to one site per county.
  • Polk County District Court Judge Robert Hanson issued an order allowing Iowa counties to send voters absentee/mail-in ballot applications with pre-filled personal information.
  • U.S. District Court for the District of Arizona Judge Steven Logan ordered that Arizona’s voter registration deadline be extended to 5 p.m. on Oct. 23.

School closures and reopenings:

  • Pre-K, kindergarten, and first grade students in Florida’s Miami-Dade Public School district returned to classrooms. Students in higher grades were returned to classrooms later in the week. The Miami-Dade Public School district is the largest district in Florida and the fourth largest in the country.

State court changes:

  • Delaware courts advanced into a modified Phase 3 of reopening, allowing jury trials to resume. Phase 3 also allowed courts to operate at 75% capacity and increased the number of people allowed in a courtroom to 50.

Tuesday, October 6, 2020

Stay-at-home orders and reopening plans:

  • Washington Gov. Jay Inslee (D) eased coronavirus restrictions on restaurants, businesses, and youth sports. The new rules allowed theaters in counties in Phase 2 of reopening to operate at 25% capacity and theaters in Phase 3 of reopening to operate at 50% capacity. Additionally, restaurants in Phase 2 counties were allowed to sit up to six people together at a table, while restaurants in Phase 3 were allowed up to eight.
  • Wisconsin Department of Health Services Secretary Andrea Palm issued an order limiting indoor gatherings to 25% capacity. Colleges, schools, churches, polling locations, rallies, and outdoor venues were exempt from the order. 

Election changes:

  • The Iowa Supreme Court stayed a state court’s order that had allowed county election officials to send pre-filled absentee/mail-in ballot request forms to voters.
  • Florida Secretary of State Laurel Lee (R) announced that the state’s voter registration deadline would be extended to 7 p.m. on Oct. 6, 2020.

Thursday, October 8, 2020 

Stay-at-home orders and reopening plans:

  • Connecticut moved into the third phase of reopening, which allowed businesses like restaurants and barbershops to operate at 75% capacity. Outdoor event venues (like amphitheaters and racetracks) and indoor performing arts venues were allowed to operate at 50% capacity. 

Election changes:

  • U.S. District Court for the Northern District of Ohio Judge Dan Aaron Polster ordered Ohio Secretary of State Frank LaRose to allow counties to install absentee/mail-in ballot drop boxes at locations other than election board offices.
  • A three-judge panel of the U.S. Court of Appeals for the Seventh Circuit voted 2-1 to stay a lower court order extending registration and absentee/mail-in ballot return deadlines in Wisconsin.

Eviction and foreclosure policies:

  • Washington Gov. Jay Inslee (D) extended the statewide moratorium on evictions through Dec. 31. 

Friday, October 9, 2020

Stay-at-home orders and reopening plans:

  • Pennsylvania Gov. Tom Wolf (D) modified restrictions to allow gatherings of up to 7,500 people in large outdoor venues or 3,750 in indoor venues.
  • New York Gov. Andrew Cuomo (D) announced new restrictions on areas of New York City where coronavirus cases were rising. In areas designated as red zones, state-defined non-essential businesses were required to close, religious gatherings were limited to 10 people, and restaurants could only offer takeout service.
  • Michigan Gov. Gretchen Whitmer issued an executive order allowing movie theaters and other indoor entertainment venues to reopen. Capacity at those venues was capped at 20 people per 1,000 square feet. 

Election changes:

  • U.S. District Court for the Western District of Texas Judge Robert Pitman blocked Gov. Greg Abbott’s (R) directive restricting the number of absentee/mail-in ballot return locations to one per county.
  • A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit stayed a district court’s order directing Ohio Secretary of State Frank LaRose to allow counties to install absentee/mail-in ballot drop boxes at locations other than election board offices. As a result, LaRose’s initial order limiting drop boxes to one site per county was reinstated.
  • U.S. District Court for the Western District of Missouri Judge Brian C. Wimes issued an order requiring Missouri election authorities to accept mail-in ballots returned in person. However, on Oct. 10, 2020, Wimes stayed his order pending appeal, leaving the requirement that mail-in ballots be returned by mail in place.

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