Oklahoma’s tobacco settlement money just got a new political filter.
The Tobacco Settlement Endowment Trust’s Board of Investors voted 3-1 on Wednesday to fold an "Oklahoma values" test into its investment policy, steering proxy-voting guidance and money-manager oversight toward protections for oil, gas and agriculture. The change tells the board’s consultant to use an Oklahoma-only values assessment when screening outside asset managers for the roughly $2.2 billion trust that bankrolls public-health grants around the state.
As reported by The Oklahoman, the board added language to its investment policy that formally cites "Oklahoma values" alignment and anti-ESG safeguards. State Treasurer Todd Russ, who chairs the five-member board, said the revisions line up with recent executive orders and are meant to protect what he calls core state industries.
As detailed by Oklahoma Watch, the new assessment was built for the board by Colorado-based consultancy Innovest and leans on corporate "bias" scores maintained by the conservative 1792 Exchange. Independent observers place the trust’s assets in the low billions - roughly $2.2 billion - which helps explain why proxy voting and manager selection have turned into political flashpoints, according to Oklahoma Policy Institute.
How the New Policy Will Be Applied
Under the revised policy, the board’s investment consultant will flag asset managers whose proxy-voting records or stewardship practices clash with the Oklahoma values assessment, then press those firms for changes or explanations. The treasurer’s office has been promoting an "America-first" approach to investing public funds and argues that favoring Oklahoma businesses and industries is part of its fiduciary duty, per the Oklahoma State Treasurer’s office.
Board Split and Dissent
The move was not a rubber stamp. John Waldo, the board member appointed by State Auditor Cindy Byrd, cast the lone "no" vote and urged colleagues to be cautious about how confrontational they get with companies.
"I’m not disagreeing that there’s exposure," Waldo said, warning that the board should try to engage firms before turning critiques into public demands, according to Oklahoma Watch.
Legal and Political Context
The vote lands in the middle of a broader fight over who gets to call the shots on public money. The Oklahoma Supreme Court recently struck down a 2025 law that would have expanded legislative control over the trust, preserving the constitutional protections that created TSET, according to the Oklahoma Supreme Court.
On the national front, a federal judge in Texas last month struck down that state’s anti-ESG "blacklist" law, a ruling that could curb similar divestment or blacklist strategies elsewhere, as reported by the Houston Chronicle.
What to Watch Next
Expect some friction as asset managers, proxy-advisory firms and advocacy groups run into the new rules. House Speaker Kyle Hilbert has already filed two bills this session, HB 4428 and HB 4429, aimed at how state pension systems handle proxy voting, and lawmakers previously passed HB 2034 in 2022 ordering the treasurer to publish a list of banks seen as boycotting Oklahoma’s oil and gas industry, as reported by The Oklahoman.
TSET was set up to lock in tobacco settlement dollars for public-health programs, and this latest shift will test whether rising political priorities and long-term health goals can comfortably share the same balance sheet. The next round of board meetings, manager responses and any legal fights will show whether "Oklahoma values" ends up as a new governance template or a recurring governance headache.
