Key Takeaways
- • The TSET Board of Investors, chaired by Oklahoma Treasurer Todd Russ, hired Colorado-based Innovest as investment consultant this year, replacing longtime manager NEPC after a request for proposals.
- • Innovest's preliminary Oklahoma Values Alignment Assessment, presented at an Aug. 20 board meeting, rates eight of the trust's 20 investment managers as high-risk, including Invesco, PIMCO and UBS.
- • The assessment relies on corporate ratings from the conservative nonprofit 1792 Exchange, which is led by former Kentucky Attorney General Daniel Cameron, and which has a Corporate Bias Ratings database with more than two dozen Oklahoma-based companies.
- • Innovest upgraded Bank of Oklahoma, the trust's custodian bank, from medium to lower risk, citing the bank's ESG integration and DEI commitments.
- • The review is scheduled for completion when the board next meets in November, and the board has previously faced legal challenges to a values-based policy.
Summary
The board that oversees the $2 billion Tobacco Settlement Endowment Trust (TSET) in Oklahoma is evaluating whether the trust's investment managers align with what it calls Oklahoma values. According to reporting by The Oklahoman and Oklahoma Watch, the board hired Colorado-based Innovest this year after dropping longtime investment manager NEPC following a request for proposals. Treasurer Todd Russ, who chairs the five-person Board of Investors, directed Innovest to review each of the trust's 20 investment managers in what is termed the Oklahoma Values Alignment Assessment.
Innovest presented preliminary findings at an Aug. 20 board meeting and said it will complete the review at the board's November meeting. The preliminary report rates eight managers as high-risk, including large firms Invesco, PIMCO and UBS. Innovest said it relied on corporate ratings from the 1792 Exchange, a nonprofit formed in 2021 that describes itself as countering "woke capitalism" and is led by Daniel Cameron, a former Kentucky Republican attorney general now running for U.S. Senate. The 1792 Exchange's Corporate Bias Ratings database includes more than two dozen Oklahoma-based companies, and it rates energy companies ONEOK and Williams Cos. as high-risk, with Continental Resources, Devon Energy and Expand Energy rated medium-risk.
Bank of Oklahoma, the trust's custodian bank, was rated medium-risk by the 1792 Exchange, but Innovest downgraded it to lower risk, citing the bank's CEO signing a diversity and inclusion pledge and the company's ESG integration. A BOK subsidiary, Cavanal Hill, manages a fixed-income bond fund for TSET. Company officials did not respond to requests for comment.
Russ has defended the review, arguing that fiduciaries must assess whether investment philosophies, such as zero-carbon pledges, could harm the energy-heavy state's investments. Innovest principal and president Wendy Dominguez told the board that performance and index tracking remain the top metrics, but that fees paid to managers should also be considered. Board appointee Aaron Ackerman said the assessment "demonstrates potential misalignment" while acknowledging he was not concerned with the precision of the high-risk designations. The initiative has drawn criticism as an example of culture-war issues entering investment decisions. TSET's trust fund earnings were $140.59 million in fiscal 2025, up from $86.84 million in fiscal 2024.
Innovest presented preliminary findings at an Aug. 20 board meeting and said it will complete the review at the board's November meeting. The preliminary report rates eight managers as high-risk, including large firms Invesco, PIMCO and UBS. Innovest said it relied on corporate ratings from the 1792 Exchange, a nonprofit formed in 2021 that describes itself as countering "woke capitalism" and is led by Daniel Cameron, a former Kentucky Republican attorney general now running for U.S. Senate. The 1792 Exchange's Corporate Bias Ratings database includes more than two dozen Oklahoma-based companies, and it rates energy companies ONEOK and Williams Cos. as high-risk, with Continental Resources, Devon Energy and Expand Energy rated medium-risk.
Bank of Oklahoma, the trust's custodian bank, was rated medium-risk by the 1792 Exchange, but Innovest downgraded it to lower risk, citing the bank's CEO signing a diversity and inclusion pledge and the company's ESG integration. A BOK subsidiary, Cavanal Hill, manages a fixed-income bond fund for TSET. Company officials did not respond to requests for comment.
Russ has defended the review, arguing that fiduciaries must assess whether investment philosophies, such as zero-carbon pledges, could harm the energy-heavy state's investments. Innovest principal and president Wendy Dominguez told the board that performance and index tracking remain the top metrics, but that fees paid to managers should also be considered. Board appointee Aaron Ackerman said the assessment "demonstrates potential misalignment" while acknowledging he was not concerned with the precision of the high-risk designations. The initiative has drawn criticism as an example of culture-war issues entering investment decisions. TSET's trust fund earnings were $140.59 million in fiscal 2025, up from $86.84 million in fiscal 2024.
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