While socially responsible investing has its roots in moral, spiritual, and religious concerns, it has now evolved into the mainstream of investing.  

As of 2022, responsible investing accounts for more than $8.4 trillion, or 1 in 8 dollars under management, according to the US Sustainable Investment Forum.  

Source: US Sustainable Investment Forum 

Responsible investing is closely related to ESG investing, or investing that takes environment, social, and corporate governance (ESG) factors into account.  

• Environmental factors look at how well a company manages its environmental impact and addresses environmental problems in areas such as air, water, climate, pollution, agriculture, water, and animal welfare. 

• Social factors look at how well a company treats all its stakeholders, including its diversity and equity practices, workplace conditions, community relations, and human rights.   

• Governance factors look at how corporate power is checked and shared through such venues as political contributions, executive compensation, board diversity, board independence, transparency and disclosure.   

Returns from ESG investing are as good or better than conventional investing -- because ESG investing takes additional information into account that can increase profit and lessen risk.  

Why is ESG investing under attack? 

Responsible investing is under attack for one simple reason: It has become so popular that it threatens certain profitable industries that are harming people and planet.  

Sens. Sheldon Whitehouse, Brian Schatz and Martin Heinrich explain why this is happening now:  

“The underlying problem is that the fossil fuel industry is running up against a 'risk wall,' where long-established economic risks associated with climate change are now sufficiently clear and present to trigger ordinary risk-reporting requirements in financial markets. Rather than reduce their emissions, or face up to the risks that they cause, the fossil fuel industry is trying to break and remake traditional risk reporting to selectively remove reporting of climate-related risks.”   

“The underlying problem is that the fossil fuel industry is running up against a 'risk wall,' where long-established economic risks associated with climate change are now sufficiently clear and present to trigger ordinary risk-reporting requirements in financial markets. Rather than reduce their emissions, or face up to the risks that they cause, the fossil fuel industry is trying to break and remake traditional risk reporting to selectively remove reporting of climate-related risks.” 

-- Sens. Sheldon Whitehouse, Brian Schatz and Martin Heinrich 

Unfortunately, the attacks on ESG and responsible investing emanate from a well-funded and coordinated campaign. 

The funding starts with the largest known political contribution in US history -- $1.6 billion from Chicago electronics magnate Barre Seid to Leonard Leo -- the same Leonard Leo who funneled millions of dollars through various front groups to remake the Supreme Court in his far-right image.  

Leo's front groups still exist, though they have changed names -- Judicial Crisis Network is now Concord Fund and Judicial Education Project is now 85 Fund. Leo also started new groups such as Marble Freedom Trust, CRC Advisors, and Consumers Research -- all with undisclosed funding to wage culture wars across the country.  

Leo's groups are joined by numerous right-wing think tanks long at the center of climate denial -- such as the Heritage Foundation, American Legislative Exchange Council, Heartland Institute, and Texas Public Policy Foundation.  

Also in the mix are state-based groups such as the State Financial Officers Foundation and the Republican Attorneys General Association.  

For a fuller accounting of the anti-ESG network, see "Attacks on sustainable investing are third stage of climate denial -- here's how to fight back" 

What do the attacks on ESG consist of? 

The coordinated campaign against ESG and responsible investing has taken place at both the federal and state levels.  

Federal level 

In March 2023, both houses of Congress narrowly passed a resolution to repeal the Department of Labor's Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule. The rule allowed -– but did not compel -– retirement plan fiduciaries to take environmental, social, and corporate governance considerations into account in their investment decisions. 

President Biden had vowed to veto the resolution, and did veto it shortly after it passed. Since then, although some members of Congress have threatened to pass resolutions to repeal other administrative rules that allow responsible investing, that has not happened again.  

Instead, Republican-led House committees have held multiple anti-ESG hearings, with witnesses that include prominent climate deniers, and they have subpoenaed numerous businesses and nonprofits that specialize in sustainable investing. 

In response, Green America and five allied organizations issued a petition to Protect Climate Action and Shareholder Rights that received over 21,000 signatures. Andrew Behar, CEO of As You Sow, one of the subpoenaed organizations, presented the petition in meetings with members of Congress. 

In September 2024, the Republican-led House passed a pair of bills targeting ESG investing. These two bills rolled together eight previous bills that among other things would: 

• Require disclosure only on “material” factors and allow companies to decide what is material. 

• Create an “advisory committee” for the SEC made up of corporate executives but not shareholders. 

• Allow corporations sole discretion on whether to include a shareholder resolution on their proxy ballots. 

• Require banking regulators to submit extensive reports to Congress, including any interaction with an NGO on climate-related risk. 

• Require retirement plans to differentiate between “pecuniary” and “non-pecuniary” factors, which legal experts say is impossible. 

While these bills are unlikely to pass the Senate and then would face another likely Biden veto, they demonstrate the anti-ESG agenda to attack all aspects of responsible investing, including disclosure requirements, shareholder advocacy, banking regulations, and retirement plans.  

--> Want to push back? Tell your House representative to join the Sustainable Investment Caucus. 

State level 

Most anti-ESG attacks have been happening on the state level. In 2023, Republican legislators in 38 states introduced 165 bills and resolutions to ban state pension and contract managers from making responsible investment decisions that take ESG factors into account, according to Pleiades Strategy, which tracks state anti-ESG legislation. 

State officials issued a further 44 executive actions targeting ESG investing. Overall, 31 laws and resolutions passed in 2023.  

Those anti-ESG laws and bills came with a hefty price tag.  

• In Texas, a 2024 report from The Perryman Group showed anti-ESG legislation could cost the state $821.1 million and nearly 8,800 job-years by the end of the year. Since these laws’ introduction in 2021, Texas has lost $700 million in local economic activity. 

• In Oklahoma, District Court Judge Sheila Stinson issued a permanent injunction for an anti-ESG law that cost the state $180 million. 

• The Kansas State Division of the Budget projected reduced returns of $3.6 billion over 10 years for the Kansas Public Retirement System if anti-ESG investment restrictions were adopted. 

• The Arkansas Public Employees Retirement System estimated they could lose $30-40 million each year due to an anti-ESG bill requiring public divestiture from institutions using ESG-related metrics. 

• An economic analysis found that anti-ESG bills in six states — Kentucky, Florida, Louisiana, Oklahoma, West Virginia and Missouri — could cost taxpayers up to $700 million in excess interest payments. 

In part for that reason, many fewer state ESG bills passed in 2024. Of the 161 bills and resolutions introduced in 2024, only six passed, according to Pleiades Strategy. 

Has the anti-ESG train slowed down?  For now, perhaps -- but that is because everyday investors, local bankers, local insurance, state retirement plan officers, city administrators and more stepped up to testify in their states against these attacks.  

Unfortunately, anti-ESG groups still have a lot of money -- and they will keep up the attacks. Recently their targets have shifted from the E part of ESG investing -- addressing the environment -- so the S part -- the social aspect. Attacks on corporate diversity, equity, and inclusion are rampant. 

How to counter attacks on responsible investing 

Fortunately, each of us has many options for fighting back against attacks on responsible investing.  

By aligning our money with our values, we have the power to divest our own finances from the institutions that harm people and planet, and reinvest in mission-driven institutions that build a more sustainable and equitable world.  

Here's what you can do 

• If you have an account at a bank that finances fossil fuel projects or invests in fossil fuel companies, check out Green America's Get a Better Bank Map to find a community development bank or credit union in your areas. Then check our 10 Steps to Break Up with your Megabank for how to make the switch. 

• If your credit card is with one of the large banks that funds fossil fuels, check out our Credit Card Guide for how to find a responsible card.  

• If your home, renters or auto insurance is through one of the big companies that insures and invests in fossil fuels, check out our Climate Smart Insurance Directory. 

• If you aren't sure where your retirement or college funds are invested, find out! Then check how your funds rate on ESG metrics. If your workplace retirement plan does not have responsible investing options, check our guide to getting your employer to add socially and environmentally responsible options. 

• If you own stock, vote your values! Here is our latest list of Key Shareholder Resolutions to Vote leading up to company annual general meetings. 

• If you could use some sound financial advice (and who can't?), check out the financial planners and consultants in our Green Business Network who specialize in socially responsible investing. 

• Finally, to hold yourself accountable, you can take our pledge to move your money or form a cohort to go through our Align Your Money with Your Values curriculum together. 

Green America is not an investment adviser, nor do we provide financial planning, legal, or tax advice. Nothing in our communications or materials shall constitute or be construed as an offering of financial instruments or as investment advice or investment recommendations. 

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