States Embrace Conservatives With Anti-ESG Legislation

Several states have taken the baton from conservatives who have raised awareness of the risks of investment strategies involving environmental, social, and governance (ESG) factors by passing laws against it.

BlackRock, Wells Fargo, Vanguard, and JPMorgan Chase are among many of the world's largest investment firms that utilize ESG in their investment decisions. ESG grades companies on their ethics, board diversity, and political, environmental, and sustainability efforts. Such factors have led many conservatives to label ESG as part of the woke ideological movement, and states have taken notice.

"We've come in the last year and a half from nothing to having a quarter of the states passing stuff and having half of the states engaging," Derek Kreifels, CEO of the State Financial Officers Foundation, a free-market nonprofit that promotes fiscally responsible public policy, told National Review. "To go from nothing to this in the last 18 months or so has been phenomenal."

Some in the media see the anti-ESG movement failing. In February, The Washington Post said the "conservative battle against 'woke' banks is backfiring," and Bloomberg Law reported in April that the anti-ESG movement has gotten a lot of hype but has "few big wins" in statehouses.

However, Catherine Gunsalus, director of state advocacy for Heritage Action, told National Review that such a narrative "couldn't be further from the truth."

"I think the math shows that," Gunsalus said. "I think they're nervous on the other side of this that this movement to push back on ESG is actually being successful."

Texas began the pushback in 2021, National Review reported, passing a law that bars the state from doing business with financial companies that favor renewable-energy firms over fossil fuels for environmental rather than financial reasons. Last year, West Virginia, Kentucky, Oklahoma, Tennessee, and Idaho followed suit.

This year, Arkansas, Florida, Utah, and Montana have enacted such legislation.

Florida's law, signed May 2 by Gov. Ron DeSantis, a challenger for the 2024 Republican presidential nomination, prohibits the use of ESG in all investment decisions at the state and local level, ensuring that fund managers only consider financial factors that maximize the highest rate of return. It also prohibits the use of ESG factors by state and local governments when issuing bonds, including a contract prohibition on rating agencies whose ESG ratings negatively impact the issuer's bond ratings.

Also in March, Congress passed bipartisan legislation to end a Labor Department rule that allows retirement fund managers to use ESG factors in their investment plans. However, President Joe Biden vetoed the measure, his first veto as president.

DeSantis is leading an 18-state alliance "to push back against President Biden's environmental, social, corporate governance agenda that is destabilizing the American economy and the global financial system."

https://www.newsmax.com/newsfront/esg-investing-conservatives/2023/05/30/id/1121725/