Why Sean Reyes wants federal regulators to investigate this company’s ‘environmental activism’

Attorney General Sean Reyes, along with a dozen other Republican AGs, says federal regulators should evaluate Vanguard from buying public utility stocks.

(Chris Samuels | The Salt Lake Tribune) Utah Attorney General Sean Reyes speaks in his office about a lawsuit filed by Utah and other states against Google, Wednesday, July 7, 2021. On Nov. 30, 2022, Reyes and a dozen other state attorneys general filed a motion asking to the Federal Energy Regulatory Commission to hold a hearing about whether an investment firm should be allowed to buy public utility stocks because of the firm's ESG investing.

Utah Attorney General Sean Reyes, along with a dozen other Republican attorneys general, is asking top federal energy regulators to review Vanguard Groups’ authorization to buy public utility stocks because of the company’s “environment activism.”

Reyes is asking the Federal Energy Regulatory Commission (FERC) to hold a hearing on whether Vanguard Group should be allowed to purchase large shares of publicly traded utilities due to its support of environmental, social and governance — or ESG — investing.

The ability of major financial institutions to purchase large amounts of public utility stock is reviewed by FERC every three years. Reyes and the other state officials argue Vanguard promised in 2019 it would not “exercise any control over the day-to-day management” of utility companies or make any moves that would impact electricity prices.

“Vanguard’s own public commitments and other statements have at the very least created the appearance that Vanguard has breached its promises to the commission by engaging in environmental activism,” they wrote.

The filing from Reyes and other attorneys general argues Vanguard pushed Berkshire Hathaway, which owns PacifiCorp, to publish climate disclosures for the Utah utility. If Vanguard were to pressure PacifiCorp and utilities in other states to shutter power plants that use coal or natural gas, it could adversely impact consumers.

“Vanguard is speaking out of both sides of its mouth — telling FERC it is just a passive investor in utilities but at the same time committing to use its trillions to pressure companies away from fossil fuels. FERC should ensure that Vanguard’s activism will not lead to electricity price hikes and grid instability,” Reyes said in a news release.

Reyes and other state officials argue Vanguard is engaging in “environmental activism” by joining groups that aim to reduce global greenhouse gas emissions through their investments.

“The groups Vanguard joined (despite Vanguard’s specific commitments to the Commission) aim to shift global electricity production from natural gas and coal from approximately 67% of global electricity to 0%. This will undoubtedly affect the cost and reliability of energy supplies,” they argued.

Berkshire Hathaway’s website says approximately 20% of PacifiCorp’s energy production comes from coal and natural gas. In Utah, the company’s Hunter and Huntington facilities utilize coal, and the Currant Creek plant employs natural gas.

Reyes’ pushback is the latest pushback from Utah state officials against ESG investing. In September, Utah State Treasurer Marlo Oaks pulled approximately $100 million in state money managed by the investment firm BlackRock over its ESG strategy.

Reyes’ letter was signed by attorneys general from Indiana, Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, Ohio, South Carolina, South Dakota and Texas.