Business fights back as Republican state lawmakers push anti-ESG agenda
Business
Business fights back as Republican state lawmakers push anti-ESG agenda
(Reuters) - U.S. political battles over corporate sustainability are turning hotter this spring as aggressive Republican statehouse efforts face increasing pushback from businesses and pension funds looking to account for climate change and protect returns.
Dozens of Republican-sponsored bills aim to free fossil fuel companies from climate-driven constraints adopted by some Wall Street firms. Others touch on hot-button environmental, social and governance (ESG) topics like abortion rights and firearms.
Those stances have been adopted by some conservative legislators who say the laws are needed to counter ESG-minded shareholder activists, citing cases like the 2021 investor revolt at Exxon Mobil Corp over climate concerns.
But as the number of the so-called "ESG backlash" bills multiply, the proposed laws have in turn provoked their own reaction from business leaders, legislators and public officials who worry they would hurt returns by cutting off public pension funds from outside investment managers or interfere with executives' obligations to shareholders.
A Reuters review of testimony, previously unreported public documents and interviews with elected leaders, lobbyists and attorneys detail mounting challenges to many pending anti-ESG bills.
The tussles have financial implications for some of the largest investment firms that manage billions of dollars for state pension plans. Wall Street money managers stand to lose big business or walk away if and when restrictions are placed on public investments, even as they balance pressure from officials in Democratic states.
Lauren Doroghazi, senior vice president at government relations consultant MultiState Associates, said the debates show lawmakers coming to terms with the anti-ESG bills' practical impact.
"There has certainly been a lot of pushback and education about how this might operationally affect some particular industries," she said.
She estimates fewer than a fifth of the anti-ESG ideas and policies originally sought would be passed into law, a share that could still prove significant.
