The American Legislative Exchange Council (ALEC) is an industry-sponsored organization that fetes conservative state lawmakers and arms them with corporate-friendly and conservative “model bills” to introduce in their state legislatures. According to USA Today, many of ALEC’s model bills “amount to wish lists for special interests” and have become pervasive among state legislatures across the country. Working with oil industry-funded interest groups, ALEC has passed two anti-responsible investment model bills.
Misleading Campaigns. In the past few years, the American Legislative Exchange Council has passed two anti-responsible investment “model bills.” In December 2021, ALEC’s Energy, Environment, and Agriculture (EEA) Task Force passed a model bill inspired by the Texas anti-ESG law that would prohibit states from doing business with financial firms that had divested from fossil fuel companies. This model bill was authored by Andy Puzder of the oil industry-funded Heritage Foundation with assistance from the State Financial Officers Foundation and the oil industry-funded Texas Public Policy Foundation.
Coordinated Action. An attendance list obtained by the Center for Media and Democracy from the ALEC meeting in which this model bill passed showed that it was attended by numerous lobbyists in the fossil fuel industry including ones from Koch Companies, Alliance Resource Partners, American Fuel and Petrochemical Manufacturers, and Pinnacle West. A year later in 2022, ALEC passed another anti-responsible investing bill that would prohibit state, local, or university public pension funds from considering ESG factors in their investments. An email obtained by the Center for Media and Democracy found this bill was also drafted by Andy Puzder of Heritage Foundation along with the State Financial Officers Foundation.
Backdoor Deals. Recently, ALEC has begun taking significant contributions from anti-responsible investment organizations as well. In 2022, Consumers Research contributed $18,500 to ALEC and in 2023 they were Chairman’s Level sponsors of ALEC’s 50th Annual Meeting at a cost of between $50,000-$60,000 according to a sponsorship packet obtained by the Center for Media and Democracy. Other sponsors of ALEC’s 50th Annual Meeting included anti-responsible lending groups State Financial Officers Foundation, Heritage Foundation, and 1792 Exchange.
Polluter Funding. ALEC has taken at least $6.5 million in contributions from oil interests. The group has received over $4.5 million from the foundations of Charles Koch, the owner of the dirty energy conglomerate Koch Industries, including $3.3 million from 1986-2017 and $1.24 million from 2018-2021 according to Charles Koch Foundation and Charles Koch Institute tax forms. Koch Companies Public Sector also has a representative on ALEC’s Private Enterprise Advisory Council. ALEC has also taken nearly $2 million from ExxonMobil since 1998.
Fact: The model bills passed by ALEC would cost taxpayers millions and harm their retirement savings. One of ALEC’s model bills was based off of the Texas anti-responsible investing law that banned banks who engage in responsible investing from state contracts. That law costs Texas taxpayers $416 million annually, according to a study by Wharton Business School. Another ALEC model bill that prohibits state pension funds from using responsible investing criteria has been estimated to harm the returns of retirees to the tune of billions of dollars. According to a Director of the conservative CATO Institute, “Artificially limiting the pool of investments through boycott and divestment—or by categorically preventing plan fiduciaries from considering ESG factors—can negatively impact a plan’s investment returns. Pension funds in some states have objected to such anti‐ESG measures as inconsistent with their fiduciary responsibilities. And pension funds in other states have estimated losses under anti‐ESG provisions, including $3.6 billion in Kansas, $6.7 billion in Indiana, and $6 billion in Texas over a 10‐year period.”