Joan Michelson, a Forbes Contributor, cited a recent Plural report on legislation impacting ESG investing in her recent article: “Wave of ‘Anti-ESG’ Investing Legislation, New Study Found.”
ESG-Related Legislation is Part of the Political “Culture War” — In Over Two-Thirds of the States
The devasting physical and financial impact of climate-related events is literally why the SEC is developing its climate risk disclosure rules, due to be announced shortly. “The climate emergency is urgent and climate risk is financial risk. And the SEC is all about the protection of investors and the financial markets,” Kristina Wyatt, who oversaw the SEC task force developing these rules told me in an exclusive interview on Electric Ladies Podcast. “Investors were saying, ‘look, the information that we’re getting just doesn’t cut it. It’s not sufficiently clear, consistent, comparable, reliable. We need more and we need the SEC to step in and provide clearer guidance, clearer rules to help ensure that investors are getting the information that they need.’ ” So the SEC is doing so.
In the meantime, Republican-led state legislatures around the country are aggressively fighting it by introducing over 156 “anti-ESG” bills in 37 states — in just the first six months of 2023 — and similar bills have also been introduced by the Republicans in Congress. These bills seem to deny investors the right to make investment decisions, because they prohibit investment managers from considering climate- and ESG-related investment risk.
“Over two-thirds of U.S. state legislatures have considered anti-ESG legislation in 2023, and 14 states have enacted legislation restricting the use of ESG factors in public investments and procurements. On the other side of the debate, just one pro-ESG bill has become law and only 11 states have even considered such legislation,” as part of their “culture wars,” according to a new comprehensive nationwide analysis by Plural, a policy tracking firm.
Their analysis also found that, “Legislators in Oklahoma and Texas were most active in writing anti-ESG bills, with 17 and 15 bills introduced, respectively. Legislators in Arkansas and Utah passed the most anti-ESG laws, with four bills passed each.”
Pro-ESG legislation has been far less pervasive, according to Plural. In 2023 so far, “42 pro-ESG bills have been introduced in 11 states. Just one, Colorado SB 23-16, has become law. New Jersey and Massachusetts have been most active in introducing pro-ESG legislation. Both states have introduced seven pro-ESG bills.”
Plural defines “pro-ESG proposals” as those that, “aim to decrease investments in ‘harmful’ industries. These include the fossil fuel, tobacco and weapons industries. They also focus on increasing transparency around investments in those industries,” and in climate-related risks.
This legislation is yet another reminder of the power of the vote — in state elections, as well as national ones.
