Oklahoma Treasurer Todd Russ is at the forefront of Oklahoma’s battle against environmental, social and governance investing.

He's in charge of implementing the so-called boycott bill that Republican Gov. Kevin Stitt signed last year, aimed at punishing firms judged to be discriminating against fossil fuels.

Like Texas, West Virginia and other GOP-led states, Oklahoma is coming up with a list of financial companies that could face divestment of state funds over their sustainable investment policies.

Russ – a Republican who was elected treasurer last year after a six-term stint in the state legislature – comes to the job from an interesting vantage point. He formerly headed the Oklahoma state banking association, a group similar to ones that have led resistance to boycott bills in some other red states.

For Russ, the distinction between major financial behemoths and the kind of community banks he represented is key as he weighs the best way to proceed.

"My list may be very different from someone else's list," he said.

This interview has been edited and condensed for clarity.

Are you in favor of this anti-ESG approach? Or are you in favor of what the legislature’s having you do?

You really have to go look and be able to interpret between the lines, what it’s meaning, because most of the sizable oil and gas companies have ESG statements. Everybody has an ESG statement, and that's kind of beginning to get lost in the conversation.

I just came from a board meeting and an investment person made the comment in the formal statement about anti-ESG. And I wanted to say, ‘Hey, wait a minute, it's not anti-ESG. It's anti-discrimination using ESG.’

I definitely am opposed to anyone discriminating against Oklahoma industries and American industries, especially oil and gas, energy, agriculture, those kinds of things.

A lot of financial associations, like bankers associations, have pushed against these anti-ESG laws. It's interesting to me that you're a former banker, but you're having to enforce this.

That's a great point to make. But I will clarify that there is a distinct difference in community banks and large money managers and the small community banks are critical to especially the Midwest and in the United States of America.

There's a clear distinction when it gets into them discriminating against the hand that feeds them versus the smaller ones that reach out and try to help and give them a hand up.

I admire and appreciate and have great friends in the banking industry and come from a long line of that, but I just don't want someone picking on my industries in Oklahoma.

Have you gotten pushback from the state banking association?

Anytime your bread and butter’s getting called on the carpet, you're a little bit nervous and have questions, but I wouldn't call it pushback.

I've had some concern from some of my oil and gas people which really surprised me, and I don't know if they're unclear on what all this is going to turn into, and I'm sure there's different sources of funding that some of them get and some of them don't get. So it's kind of surprising, the players out there on the field.

Are you worried about any potential cost to taxpayers? 

My job’s to be as prudent with the taxpayers’ dollars as I can. One side of the argument is, well, would this cost us lots of money. And the other side of the argument is, aren't you leaving money on the table by not investing in some of these energy companies and some of these high performers, just because they fall into a category that people on the environmental, social, governance extreme side don't appreciate or agree with?

As far as leaving money on the table, oil and gas sectors have been high performers, and if they're not investing in them, they're leaving money on the table for the shareholders. Some of them are going to say, but if you divest, you're going to get all these penalties and fees and charges. And that's not necessarily true, either. When you plop down several billion dollars on the table, lots of people can find ways to make that make money, and just because somebody says they're the lowest doesn't always mean they're always going to be the lowest.

And then what comes next after the questionnaires are submitted?

Well, we'll evaluate the questionnaires and responses and we'll go through and compare them to the statutory criteria, and then we'll start giving them notice that they've been placed on the do-not-do-business-with list and they can appeal that and if they want to launch a good reason or maybe a misunderstanding or a reverse in position, then we'll give them that opportunity. And at the end of 90 days, we’ll know who statutorily we can do business with and who we can’t.

My list may be very different from someone else's list. And there may be a lot of new players that we've never done business with that we find out we can develop a new relationship with. I've had some new players emerge I never knew about that are hundreds of billions of dollars in assets that they manage that would meet the criteria for us to do business with. So they're out there.

Are people coming to you chomping at the bit and saying, ‘Hey, if you stop doing business with so-and-so please do business with us?’

Some of them are, and I've got the others coming and saying, “Hey, don't be too rough on me.”

What's your general take on the fact that this whole boycott bill situation has spread like wildfire across the U.S.?

Anytime you have contention, it's not good, but it's good that we've identified what's going on out there to take a position to value and to support the industries and the values of states like Oklahoma and some of the states throughout the Midwest and the more conservative red states.

We think we're just as right as the other side, and since it's ours and we have that autonomy to make those decision[s], we're just voting with our money. If they feel that way, we'll just take our money and go to another sandbox.

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