John Podesta, currently president of the Center for American Progress, recently spoke to the National Association of State Treasurers:
Continued leadership from state treasurers on global warming will be essential to ensure that we address the scale and urgency of climate risk—and capture the vast economic possibilities that lie ahead as the world transitions to a clean energy future.
I wonder if he was able to say that with a straight face — “continued leadership from state treasurers on global warming will be essential” — because I’m sure I would have had a hard time suppressing a hearty laugh. Not that state treasurers aren’t important, they just aren’t really in the business of climate change policy.
Podesta’s theory here is the same that provided the foundation for the New York Attorney General’s recent letters to five energy companies. Podesta explained: “Climate change is a threat to the long-term value of the economy and failure to calculate its impacts or manage or reduce its harm mean that our assets are being over valued, and the risks we face are being under reported.”
Ahem. If state treasurers (or attorneys general) believe that the state is investing in over-valued assets, the appropriate course of action would be to direct the state pension funds or other state entities maintaining investments to sell the over valued assets. Instead, the advice here seems to be to hold onto the (allegedly) over-valued assets, but require or encourage the companies to write financial disclosures intended to drive down the market price of these assets.
This is no way to run a pension fund, but then it isn’t really about the money. Instead, it is about trying to find additional leverage to achieve environmental policy goals. I’m not opposed to pursuing environmental policy goals, but I just think that state treasurers and security disclosure laws are not the best way to make this kind of policy.
The National Association of State Treasurers website states:
State treasurers serve as the chief financial officers of the states. They are guardians of the taxpayers’ money that is used to operate state governments and provide services. State treasurers are the trustees of the public purse. In this capacity, they hold the state to high ethical and professional standards.
I assume that, as trustees of the public purse, they are not buying over-valued assets and then trying to drive the value of those assets down.