Creighton professor joins 130 academics in defending consideration of climate change in investing

LINCOLN — A Creighton University professor says that Pope Francis and his two predecessors at the Vatican have all called for increased consideration of the ecological costs of business decisions to protect the planet.

That, according to Dan DiLeo, a moral theologian, includes considering climate risks — so-called “environment, social and governance” (ESG) issues — when making financial investments.

“ESG has been part of Catholic social teaching for years,” DiLeo said. “It’s kind of ironic that it’s become this live wire issue.”

DiLeo was among 130 professors and academic researchers who recently signed onto a letter urging state and federal policymakers to protect the freedom to invest responsibly.

The letter pushes back on a conservative-fueled effort to ban states from considering ESG in investing state funds.

Two bills to do that were introduced in the Nebraska Legislature this year after State Treasurer John Murante and then-Attorney General Doug Peterson warned that ESG was “woke capitalism” and that investment decisions should be made only to maximize expected return.

Efforts to restrict “sustainable” investing were initiated in at least 37 states this year, and some conservative states, including Iowa and Wyoming, have restricted consideration of ESG in investing state funds. (The Nebraska proposals failed to advance.)

The Nebraska Investment Council, which manages $40 billion in state pension and trust funds, discussed in February whether to consider shifting some business away from its main investment adviser, BlackRock, because of its stance on ESG.

” … The ESG movement has the potential to do substantial harm to both the financial system and society as a whole,” stated a December report, written by Peterson and a small group of lawyers in the AG’s office.

The academics’ letter, which follows a similar statement in March by 270 business leaders and investors, says it is irresponsible to disregard the impacts of global warming, extreme weather and rising sea levels when making investment decisions.

“ESG for investors is a way to understand how companies are managing the risk or opportunities presented by pollution, water scarcity, and worker welfare, and improve their assessment of a company’s financial performance — exactly what is expected of them as fiduciaries,” said Tensie Whelan, director of New York University Stern Center for Sustainable Business.

The academics point out that extreme weather in 2022 caused more than $165 billion in damages, and those damages are projected to rise in the future. Two major insurance companies, Allstate and State Farm, recently decided to halt sales of property and casualty insurance to new customers in California because of a string of natural disasters there.

‘Political theater’

Ignoring ESG can hurt taxpayers, the letter says, pointing to Texas, where taxpayers could face up to $532 million in higher interest costs.

“There is a lot of political theater in the anti-ESG campaign being driven by a number of Republican politicians. It is effective for fund-raising, to the economic detriment of their own citizens,” said Bob Eccles, a professor at the University of Oxford, who formerly taught at  the Harvard Business School.

DiLeo has been active in climate issues as part of his role at Creighton. He is an associate professor and director of the Justice and Peace Studies Program at the Omaha university and has been a consultant with Catholic Climate Covenant since 2009.

He said that in that role, he wrote an op-ed recently in the Omaha World-Herald pushing back on Murante’s role in a national group condemning ESG. That’s also why he signed the recent letter, distributed by the group, freedomtoinvest.org.

“ESG says investors should consider moral principles and refuse to purchase companies that obviously harm people and planet,” he wrote in the op-ed. “ESG investors are increasingly divesting from fossil fuel corporations in response to the moral dimensions of climate change.”

DiLeo is also helping moderate an online climate change conference this summer entitled Laudato Si’ and the U.S. Catholic Church. The opening session Wednesday featured the official who helped broker the Paris climate agreement.

DiLeo told the Examiner there is “a kind of dissonance” between the partisan position being taken by some politicians and Catholic teaching on social and climate change issues.