Riverton officials object to policies politicizing financial institutionsMar 31, 2023 09:47AM ● By Travis Barton
Mayor Trent Staggs and the Riverton City Council passed a resolution objecting to the financial sector using environmental, social and governance policies in credit ratings. (Photo courtesy Riverton City)
The Riverton City Council unanimously approved a resolution opposing the influence of environmental, social and governance (ESG) policies on credit rating agencies, investment firms and other financial institutions.
“ESG policies are a deliberate politicization of financial institutions,” Riverton Mayor Trent Staggs said in a city press release. “An individual or organization’s political views should not be a consideration when determining credit scores or whether to lend money.”
City officials were worried the agencies that score the city’s credit or its debt could be shaped by perceptions unrelated to its finances.
“We’ve been very aggressive in controlling our debt here in Riverton City, in paying off debt and making that a focus,” Councilmember Troy McDougal said during the March 7 council meeting. “The way they’re pushing the agenda is by controlling your ability to access cash and the more we become debt free and cash flow positive, the more we are in control of our destiny.”
One credit agency, according to city officials, gave the city top scores in social and governance policies, but rated Riverton as “moderately negative” in the environmental category.
Their report, Public Services Director Kevin Hicks told the council, said Riverton received a low score due to “elevated exposure to water stress” and “persistent drought conditions” that require “consistent investment historically.”
Staggs told the council he wanted them to know these ESG profiles were being done and that they could impact the city’s overall rating, stressing the importance to oppose such a possibility.
“It can result in market participants using economic force to drive a political agenda, and it prioritizes social or political outcomes over financial ones,” he said during the meeting.
The resolution directs the city’s financial advisers to work with investment firms that are committed to focusing solely on financial interests. Next steps for the city include a thorough review of its purchasing and procurement policies and how companies who subscribe to ESG policies should be ranked as the city determines what companies to do business with.
Staggs said he wanted to “ensure we’re working with organizations that really have the best cost and structure in mind.”
Councilmember Andy Pierucci felt strongly on this position, saying he was concerned about the “arbitrary and capricious nature of these scores.”
He was quick to note that while they reject the notion of an arbitrary score to these standards, it doesn’t mean they don’t care about environmental, social and good governance issues.
“You can tell when a business is profitable,” Pierucci said. “Facts don’t lie. Data doesn’t lie. When you start bringing in these political perspectives, it becomes very subjective.”
Staggs agreed, pushing back on the environmental score by highlighting the $12 million they’re spending on secondary water meters.
The city’s resolution comes after push back against the policies in the recent legislative session and a year after Utah officials, including Utah Treasurer Marlo Oaks and Utah Attorney General Sean Reyes, Utah’s entire Congressional delegation, Gov. Spencer Cox, Lt. Gov. Deidre Henderson, Auditor John Dougall, and Utah’s legislative leaders sent a letter to S&P Global Ratings President and CEO Douglas Peterson and President Martina Cheung demanding S&P withdraw its released ESG credit indicators for states and state subdivisions.
In a statement at the time, Oaks criticized ESG saying it is “about controlling and forcing behaviors.”
“It attempts to do through capital markets what activists and their government allies have been unable to do through democratic processes. It is a political score that, intentionally or not, can result in market participants using economic force to drive a political agenda,” he said.
He noted the focus on ESG ratings when evaluating governments threatens to obscure real investment risks, undermine faith in the impartiality of credit ratings and penalize states whose politics do not align with the political interests behind the ratings system.
S&P assigned Utah a “moderately negative” environmental score and “neutral” social and governance scores. But Oaks highlighted Utah being recognized for the 15th year in a row as the state with the best economic outlook along with being cited as one of the top states for business, GDP growth and quality of life.
“Our large and small cities are some of the nation's top-performing cities,” Oaks said in the statement. “And last year, we were even cited as having the nation’s smallest wealth gap. How does a state that is consistently recognized as a leader in the nation for its broad fiscal and economic success receive an overall moderately negative ESG score?”
Staggs called on other municipalities to act as well in the press release.
“I call upon local governments to join us in pushing back against ESG policies that are transforming our nation’s financial system from one based on sound, unbiased monetary factors to one that rewards or punishes based on political views,” Staggs said.