What’s Up with Businesses Opposing Anti-ESG Investment Proposals?

The backlash from powerful business groups and fears that state pension systems could see huge losses are pushing conservative Republicans to water down their anti-ESG investment proposals. ESG stands for environmental, social and governance, and its increased use in investing in recent years has been accompanied by intense pushback. Now, those efforts are riling groups long allied with conservatives in supporting less government regulation. Anti-ESG efforts draw support from companies and industries that feel under attack, such as oil and natural gas producers, while ESG supporters say it isn’t about boycotting certain sectors or companies but doing a better job assessing future risks. NASRA, the association representing U.S. state pension fund administrators, opposes any move on either side of the ESG debate away from making the security of pension fund assets “the paramount goal.” 

Public pension funds as well as big institutional investors are caught in the debate. About one-eighth, or $8.4 trillion, of U.S. assets, are being managed using ESG principles. Bankers associations and state chambers of commerce in Kansas and Indiana have criticized the strongest versions of anti-ESG legislation currently under consideration in their states as being “anti free market.” The head of state pension systems in Kansas and legal researchers in Indiana have warned about billions in losses over the next 10 years, prompting legislators to rewrite the bills.