Environmental, Social, and Governance (ESG) principles are key for a just financial and sustainable future. They are a tenet of the free market, ensuring individuals have all the necessary information before making decisions about where to invest their money. Across the country, however, state legislators and executives are risking a safe future for people and planet by pushing anti-ESG bills across the country.
“Research shows that returns on socially responsible investing are on par or better than investing not based on ESG principles, especially over the long term,” says Cathy Cowan Becker, Responsible Finance Campaign Director at Green America.
With clear and proven benefits of ESG principles, Green Americans understand how important this fight is. And across the country, anti-ESG bills and resolutions are failing from the pressure of this understanding.
There have been a lot of victories in stopping anti-ESG actions, but Republicans continue to paint investing freedom as a threat to profits—specifically the profits of the fossil fuel industry. And they’re not wrong. Using your voice, and your dollar, is a great way to fight for a greener future.
Crushing Anti-ESG Bills and Resolutions
In 2023, political critics of ESG investing introduced 198 bills and resolutions in 38 states attacking investors’ freedom and prohibiting considerations of things like fossil fuels, firearms, agriculture, timber, and animal products, according to researching and advising firm Pleiades Strategy. State officials issued a further 44 executive actions targeting ESG investing. Overall, 31 laws and resolutions passed.
In 2024, politicians have introduced 108 anti-ESG bills across the country. There have also been 27 executive actions, comprising orders, letters, issuing rulings, and lawsuits.
What’s to account for the 10% drop in anti-ESG success rate? People are fighting back.
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.
North in Oklahoma, a district court judge Sheila Stinson issued an injunction on an anti-ESG law prohibiting “pension funds and localities from doing business with financial firms accused of boycotting fossil fuels.”
The people testifying against anti-responsible investing legislation and resolutions are “everyday investors, local bankers, local insurance, state retirement plan officers, city administrators, etc.,” says Becker. “They say these bills would cost them a lot of money, and indeed they have.”
Inside the Crusade for Anti-ESG Bills
Pleiades Strategy’s reports for 2024 shows the continuation of targeted attacks on ESG investing. Most anti-ESG bills fall into specific categories, such as:
- Limits on Public Pensions: 13 bills in 2024 seek to ban consideration of “non-pecuniary” factors, or “fiduciary commitment,” particularly the consideration of long-term investment risks posted by hazardous industries.
- Bans of ESG Scores: 4 bills seek to prohibit the private sector from using ESG scores in risk assessment for loans and insurances.
- Contracting Bans: These bills, 23 from this year, would block state and local governments from contracting with financial institutions that consider ESG factors, mostly through blacklists.
State executives like attorney generals and state treasurers do their part to stop ESG investing in its tracks. Their strategies include federal opposition to pro-ESG laws and nominees, threatening the private sector’s freedom to “guide their own business strategies” through withdrawn funds and canceled contracts, and bullying and regulating the private sector with legal interventions.
Many bills are evolving from previous iterations.
The 2023 “Fair Access to Financial Services” bill failed in every state in which it was introduced, so this year Republicans replaced it with the “Equality in Financial Services Act.”
This bill promises the “threat of widespread civil litigation, significant fines and damages, and harassment from state attorneys general to coerce companies into ignoring risk when offering financial services.” The justification is the “discrimination” against select industries, despite their proven harm.
What You Can Do, Right Now
Only six states have active anti-ESG legislation at play, but the bills could do a lot of harm.
| State | Bill | Summary |
|---|---|---|
| Michigan | HB 5310 | Bans state agencies from signing a contract with financial institutions that are currently not doing business with firearms dealers, advocacy groups, and manufacturers; fossil fuel companies; and agriculture producers or timber companies. |
| Michigan | HB4344 | State agencies cannot contract with companies on the construction of state property if the company does and will not boycott a business enterprise. |
| Michigan | HB 4381 | Investment fiduciaries can only consider pecuniary (money) factors when evaluating investments. |
| New York | AB 4090/SB 6472 | Trustee(s) of retirement and social security funds cannot use ESG criteria as a screening method. |
| Ohio | SB 6 | Trustees and board members of public employees retirement funds, police and fire pension funds, and state teachers retirement funds can only make investment decisions based on maximizing the return and not influencing ESG factors. |
| Ohio | HB 4 | To declare the General Assembly's intention to enact legislation regarding financial institutions and other businesses that conduct economic boycotts or discriminate against certain companies or customers based on certain factors. |
| Pennsylvania | HB 334 | Requires fair access to financial services; imposing powers and duties on the Department of Banking and Securities; and imposing penalties. |
| Arizona | SB 1167 | Bars financial institutions from discriminating in providing financial services and must provide explanation for a denial based on business with particular industries. |
| Arizona | SB 1337 | Bars financial institutions from discriminating in providing financial services for failing to accept targets of greenhouse gas emissions (GHGs), perform racial and gender audits, and facilitate and assist employees with obtaining abortion or gender affirming care. |
| Arizona | HB 2443 | The state cannot require financial institutions to consider social credit score when considering lending money to a customer. |
| Arizona | SB 1014 | Financial institutions, insurers, and credit reporting agencies cannot discriminate based on political affiliation, ESG scores |
| Arizona | HB 2213 | Government entities, including universities and community college districts, must base investment decisions solely on pecuniary factors. |
| Arizona | HB 2457/SB 1013 | Financial fiduciaries and proxy voters may not consider non-pecuniary factors, including ESG goals, when evaluating investments. |
| Arizona | SB 1195/House Resolution 2040 | Bans public entities from spending money on an organization that advocates for the reduction of meat and dairy consumption; replacing motor vehicle travel with walking, bicycling, and public transportation; limiting airplane travel; reducing GHGs and global temperature; replacing private ownership with a circular economy; or furthering Marxist ideologies. |
| Arizona | Sen. Resolution 1007/House Resolution 2011 | Bans public entities from doing any business that discriminates against the firearm industry. |
| Illinois | Sen. Resolution 1003 | Reaffirms a commitment to oversight and accountability of state investments to prioritize the well-being and prosperity of all residents above political, partisan, or ESG considerations in all investment decisions. Demands transparency of rationale behind every investment decision. |
If you live in one of the states currently considering bills and resolutions that would limit responsible investing, the most effective thing you can do is contact your state legislator to voice your disapproval.
- Find your state legislators by inputting your address at openstates.org
- You may also be able to find your state representatives on your state legislature’s website, which you can find at congress.gov/state-legislature-websites
You can also support responsible investing by:
- Checking out our guide on adding socially and environmentally responsible investment options to your employer’s retirement plan.
- Checking out our 10 steps to breaking up with your megabank and switching to a community development bank or credit union.
- Checking out how you can use your own investments to create a greener world by engaging in shareholder activism such as voting your proxy ballots.
- Supporting bills protecting ESG investing, like Oregon’s COAL Act, making the Beaver State the third in the US (after Maine and California) and fourth in the world (after Ireland) to pass fossil fuel divestment legislation.
- Reach out to GBN members who assist with socially responsible investment strategies, including but not limited to:
Conservative anti-ESG strategies, Becker says, encompass the “third stage of climate denial.” Through varying levels of legislation and Congressional resolutions, ESG investing faces an onslaught of pushback.
By actively preventing people from investing based on their morals, politicians are effectively picking winners and losers, supporting planet-harming industries like gas, oil, and fossil fuels. The priority is and will remain lining the pockets of corporate executives, with no consideration for a safe and healthy future.
Since money talks, investing is one of the most powerful tools in the fight against the climate crisis and deserves protection.
