Arguments about environmental, social, and corporate governance (ESG)

* Key terms related to ESG
* Enacted ESG legislation
* Areas of inquiry and disagreement
* Opposition to ESG
* Federal ESG rules and regulations
* Public pension information by state
* Ballotpedia's ESG legislation tracker
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What is ESG?

ESG investing is an asset management approach that considers the environment, social issues, and corporate governance practices. It's a type of stakeholder investing, which argues shareholder returns should not be the only goal. Stakeholder investing contrasts with traditional approaches that exclusively consider financial factors like balance sheets, income statements, and valuations to maximize risk-adjusted returns (also known as shareholder investing).

Environmental, social, and corporate governance

* * *

• What is ESG?
• Enacted ESG legislation
• Arguments for and against ESG
• Opposition to ESG
• Federal ESG rules
• ESG legislation tracker
• Economy and Society: Ballotpedia's weekly ESG newsletter

## Contents

* 1 How should I use this page?
* 2 What are the main arguments for and against ESG?
* 2.1 Arguments about ESG's impact on businesses and investments
* 2.2 Arguments about ESG's impact on political and economic structures
* 2.3 Arguments about ESG's impact on society and the environment
* 3 Thesis: ESG undermines business and investment goals
* 3.1 Argument: ESG hurts investment outcomes
* 3.1.1 Claim: ESG stocks cannot and do not match or outperform the market
* 3.1.2 Claim: ESG investing strategies reduce diversification and are thus riskier
* 3.1.3 Claim: ESG is less efficient than alternative investment strategies
* 3.1.4 Claim: ESG considerations distract from the interests of beneficiaries
* 3.1.5 Claim: ESG investing creates conflicts of interest
* 3.2 Argument: ESG harms core business functions
* 3.2.1 Claim: ESG distracts from sound business decision-making
* 3.2.2 Claim: ESG creates unnecessary tension between management and employees
* 3.2.3 Claim: ESG strategies fail to recognize the only responsibility of corporations is to generate profits
* 4 Thesis: ESG threatens political and economic structures
* 4.1 Argument: ESG detracts from the democratic process and consolidates power
* 4.1.1 Claim: ESG hurts free speech
* 4.1.2 Claim: ESG turns companies into political instruments
* 4.1.3 Claim: ESG consolidates power in large investment funds
* 4.1.4 Claim: ESG is corporatist
* 4.1.5 Claim: ESG establishes an unelected tax on businesses and consumers
* 4.1.6 Claim: ESG pursues governmental goals without the checks and balances of normal politics
* 4.2 Argument: ESG harms local and national economies
* 4.2.1 Claim: ESG weakens state economies reliant on coal, oil, and gas
* 4.2.2 Claim: ESG drives up consumer prices
* 4.2.3 Claim: ESG hurts farmers
* 4.2.4 Claim: ESG weakens America's national security and increases dependence on foreign countries for energy
* 4.2.5 Claim: ESG regulations make businesses less competitive globally
* 4.2.6 Claim: ESG is anti-competitive and monopolistic
* 5 Thesis: ESG is ineffective for advancing environmental and social goals
* 5.1 Argument: ESG does not deliver on environmental promises
* 5.1.1 Claim: ESG investing does not prevent climate change but rather seeks to mitigate portfolio damage
* 5.1.2 Claim: ESG talk allows businesses to deflect responsibility for climate change, avoiding real solutions
* 5.2 Argument: ESG causes social harm
* 5.2.1 Claim: ESG funds are favor Chinese companies with slave labor ties
* 5.2.2 Claim: ESG approaches boycotting Israel harm Israeli children
* 5.3 Argument: ESG misleads stakeholders
* 5.3.1 Claim: ESG commitments mislead regulators and customers by overstating corporate responsibility
* 5.3.2 Claim: ESG scores favor high-performing companies and fail to account for real environmental or social progress
* 5.3.3 Claim: ESG is a superficial marketing tactic rather than a substantive strategy for change
* 6 Thesis: ESG enhances business and investment goals
* 6.1 Argument: ESG enhances investment outcomes
* 6.1.1 Claim: ESG strategies can outperform the market in the long term
* 6.1.2 Claim: ESG doesn't harm investment returns
* 6.1.3 Claim: Investment strategies must consider environmental risks and opportunities
* 6.2 Argument: ESG improves core business functions
* 6.2.1 Claim: ESG reduces risks that can hurt businesses
* 6.2.2 Claim: ESG ensures compliance with emerging government regulations
* 6.2.3 Claim: ESG boosts employee engagement, satisfaction, and productivity, which enhances overall business performance
* 6.2.4 Claim: ESG practices can cut costs and improve supply chain prospects, contributing to profitability
* 6.2.5 Claim: ESG can foster stronger customer loyalty
* 6.2.6 Claim: ESG commitments promote innovation
* 7 Thesis: ESG promotes healthier political and economic structures
* 7.1 Argument: Stakeholder capitalism brings more voices into decision-making
* 7.1.1 Claim: ESG frameworks encourage inclusive governance and platform diverse perspectives
* 8 Thesis: ESG helps promote social and environmental responsibility
* 8.1 Argument: ESG is good for the environment
* 8.1.1 Claim: ESG helps cut carbon emissions, directly contributing to climate goals
* 8.1.2 Claim: ESG commitments promote innovation that leads to more sustainable business models
* 8.1.3 Claim: Business-to-business ESG pressure encourages widespread environmental responsibility
* 8.2 Argument: ESG commitments are good for society
* 8.2.1 Claim: ESG compels companies to solve problems facing society
* 8.2.2 Claim: Stakeholder capitalism benefits society by balancing shareholder interests with the public good
* 8.2.3 Claim: ESG compliance helps businesses recognize that societal health is directly connected to business success
* 9 The debate over Oklahoma's anti-ESG law
* 9.1 Claims
* 9.1.1 Anti-ESG laws protect jobs, tax revenue, and economic health
* 9.1.2 Anti-ESG laws are necessary to ensure fiduciary responsibility and prevent nonfinancial or political decisions
* 9.1.3 Anti-ESG laws prevent discrimination against industries disfavored by ESG activists
* 9.1.4 Anti-ESG laws help keep fossil fuel production in America instead of shifting it overseas
* 9.2 Counterclaims
* 9.2.1 Anti-ESG laws raise borrowing costs for local governments
* 9.2.2 Anti-ESG laws play politics with pension funds, conflicting with fiduciary duties
* 9.2.3 The cost to implement anti-ESG laws conflicts with fiduciary duties
* 9.2.4 Anti-ESG laws infringe on the First Amendment
* 9.2.5 Anti-ESG definitions of energy boycotts are too vague
* 9.3 Responses to counterclaims
* 9.3.1 Anti-ESG laws don't raise borrowing costs
* 9.3.2 Anti-ESG laws prevent politics in investments and don't harm fiduciary duties
* 9.3.3 The costs of switching asset managers don't violate fiduciary duties
* 9.3.4 Anti-ESG laws don't infringe on freedom of speech
* 10 The debate over the Texas Permanent School Fund's divestment from BlackRock
* 10.1 Claims
* 10.1.1 BlackRock’s ESG policies effectively boycott fossil fuel companies
* 10.1.2 Boycotts make asset management companies ineligible for state contracts under TX SB 13
* 10.1.3 BlackRock’s decarbonization initiatives and proxy voting patterns actively harm the Texas oil and gas industry and school funding
* 10.1.4 Using BlackRock’s services undermines fiduciary responsibility
* 10.1.5 The Texas PSF divestment was necessary to oppose ESG ideology
* 10.2 Counterclaims
* 10.2.1 BlackRock does not boycott fossil fuels
* 10.2.2 BlackRock complied with Texas law
* 10.2.3 BlackRock delivered financial benefits to the TPSF
* 10.2.4 Texas law included a fiduciary exception that applied to BlackRock's contract
* 10.2.5 The decision to terminate BlackRock's contract violated TPSF’s fiduciary duty
* 10.2.6 The decision to terminate was politically driven and lacked transparency
* 10.3 Responses to counterclaims
* 10.3.1 BlackRock’s energy investments are insufficient to disprove a boycott
* 10.3.2 BlackRock’s ESG policies and proxy voting practices actively harm fossil fuels
* 10.3.3 BlackRock’s fiduciary exemption claim does not justify continued investment
* 10.3.4 BlackRock’s financial performance does not outweigh the harm it causes to Texas interests
* 10.3.5 The TPSF’s decision aligns with fiduciary responsibility
* 11 The debate over California's climate disclosure requirements
* 11.1 Claims
* 11.1.1 Requiring companies to disclose greenhouse gas (GHG) emissions (including Scope 3) and climate risks ensures greater transparency for investors, consumers, and stakeholders
* 11.1.2 Climate disclosures empower stakeholders to make informed decisions and hold companies accountable for their environmental impact
* 11.1.3 Disclosure requirements help identify vulnerabilities and enable better risk management
* 11.1.4 Climate-related risk reports help ensure businesses are prepared for climate-related disruptions
* 11.1.5 The policies set a positive precedent for national and global climate governance, encouraging other jurisdictions to follow suit
* 11.1.6 The regulations align with increased investor demand for standardized and comprehensive climate-related data
* 11.2 Counterclaims
* 11.2.1 The disclosure requirements compel companies to speak on topics they may not wish to address, violating free speech rights
* 11.2.2 Forcing companies to disclose value-chain emissions (Scope 3) imposes an excessive burden and is overly prescriptive
* 11.2.3 California's laws would regulate companies operating beyond its borders, burdening interstate commerce under the Supremacy Clause
* 11.2.4 Climate disclosures are inaccurate and ineffective
* 11.2.5 The disclosure requirements hurt farmers
* 11.3 Responses to counterclaims
* 11.3.1 The disclosure laws caused no harm under the First Amendment
* 11.3.2 Many companies already track emissions and risks voluntarily, so the laws are not overly burdensome
* 11.3.3 The disclosure laws do not burden interstate commerce in violation of the Supremacy Clause
* 11.3.4 The disclosure laws are effective in filling an information gap for investors and consumers about climate risks
* 12 The debate over NYC's fossil fuel divestment
* 12.1 Claims
* 12.1.1 Divesting from fossil fuels mitigates material financial risks
* 12.1.2 Investing in fossil fuels would threaten the pension board's fiduciary duty
* 12.1.3 Divesting from fossil fuels is good for the environment
* 12.1.4 Investing in clean energy expedites the implementation of climate solutions
* 12.2 Counterclaims
* 12.2.1 Divestment prioritizes ideological goals over fiduciary duty
* 12.2.2 Underfunding of the pension plan would be detrimental to New York's taxpayers
* 12.2.3 The plans divested without first doing a proper financial analysis
* 12.2.4 Over the last decade, fossil fuel stocks overall did not perform worse than the market as a whole
* 12.3 Responses to counterclaims
* 12.3.1 Pension fund beneficiaries have not and will not suffer injury due to divestment
* 12.3.2 Addressing climate change is not a political choice but an economic imperative
* 12.3.3 Fossil fuel investments pose long-term financial risks due to the risks of climate change
* 12.3.4 The divestment decision was well-researched and a financially sound decision
* 13 See also
* 14 Footnotes

See also: Reform proposals related to environmental, social, and corporate governance (ESG)

This page presents the main arguments related to environmental, social, and corporate governance (ESG). Click on a question below to see specific arguments and claims from policy white papers, academic journals, op-eds, and other sources.

* What are the arguments opposing ESG?

Read more

* What are the arguments supporting ESG?

Read more

* What are recent ESG conflicts?

Read more

### How should I use this page?[edit]

This page tracks broad arguments for and against ESG. It also covers practical arguments about recent ESG policy conflicts. You can read this article from top to bottom, but our staff recommends reviewing the main arguments on both sides and using the in-page links to navigate to the arguments of greatest interest.

To learn about the arguments for and against ESG:

* Start in the section below titled "What are the main arguments for and against ESG."
* Find the main topic you're most interested in. The main topics cover ESG's impact on business and investments, political and economic structures, and society and the environment.
* Review the main arguments for and against ESG side-by-side.
* Click an argument or claim on either side of the debate to learn more and see sourced examples of each view from academics, policymakers, journalists and others.
* Return to "What are the main arguments for and against ESG" to continue your research.

To learn about practical arguments about ESG policy conflicts:

* Click here to view the debates covered on this page.
* Select a policy conflict from the options.
* Review the background and the claims (supporting a policy), counterclaims (opposing the policy), and responses to counterclaims.
* Click any claims, counterclaims, and responses to counterclaims that interest you for more information and examples of the arguments from judges, policy makers, and others.

### What are the main arguments for and against ESG?[edit]

The debate over ESG can be broken up into the following three areas of disagreement:

1. Arguments about ESG's impact on businesses and investments
2. Arguments about ESG's impact on political and economic structures
3. Arguments about ESG's impact on society and the environment

#### Arguments about ESG's impact on businesses and investments[edit]

This section lists arguments about whether ESG is good or bad for businesses and investments.

Thesis: ESG undermines business and investment goals

* Argument: ESG hurts investment outcomes
* Claim: ESG stocks cannot and do not match or outperform the market
* Claim: ESG investing strategies reduce diversification and are thus riskier
* Claim: ESG is less efficient than alternative investment strategies
* Claim: ESG considerations distract from the interests of beneficiaries
* Claim: ESG investing creates conflicts of interest
* Argument: ESG harms core business functions
* Claim: ESG distracts from sound business decision-making
* Claim: ESG creates unnecessary tension between management and employees
* Claim: ESG strategies fail to recognize the only responsibility of corporations is to generate profits

Thesis: ESG enhances business and investment goals

* Argument: ESG enhances investment outcomes
* Claim: ESG stocks can outperform the market in the long term
* Claim: ESG doesn't harm investment returns
* Claim: Investment strategies must consider environmental risks
* Argument: ESG improves core business functions
* Claim: ESG boosts employee engagement, satisfaction, and productivity, which enhances overall business performance
* Claim: ESG reduces risks that can hurt businesses
* Claim: ESG ensures compliance with emerging government regulations
* Claim: ESG practices can cut costs and improve supply chain prospects, contributing to profitability
* Claim: ESG can foster stronger customer loyalty
* Claim: ESG commitments promote innovation

#### Arguments about ESG's impact on political and economic structures[edit]

This section lists arguments about whether ESG is good or bad for political and economic structures.

Thesis: ESG threatens political and economic structures

* Argument: ESG detracts from the democratic process and consolidates power
* Claim: ESG is corporatist
* Claim: ESG turns companies into political instruments
* Claim: ESG consolidates power in large investment funds
* Claim: ESG establishes an unelected tax on businesses and consumers
* Claim: ESG pursues governmental goals without the checks and balances of normal politics
* Argument: ESG harms local and national economies
* Claim: ESG weakens state economies reliant on coal, oil, and gas
* Claim: ESG weakens America's national security and increases dependence on foreign countries for energy
* Claim: ESG regulations make businesses less competitive globally
* Claim: ESG hurts farmers
* Claim: ESG drives up consumer prices
* Claim: ESG is anti-competitive and monopolistic

Thesis: ESG promotes healthier political and economic structures

* Argument: Stakeholder capitalism brings more voices into decision-making
* Claim: ESG frameworks encourage inclusive governance and platform diverse perspectives

#### Arguments about ESG's impact on society and the environment[edit]

This section lists arguments about whether ESG is good or bad for society and the environment.

Thesis: ESG is ineffective for advancing environmental and social goals

* Argument: ESG does not deliver on environmental promises
* Claim: ESG investing does not prevent climate change but rather seeks to mitigate portfolio damage
* Claim: ESG talk allows businesses to deflect responsibility for climate change, avoiding real solutions
* Argument: ESG causes social harm
* Claim: ESG funds are favor Chinese companies with slave labor ties'
* Claim: ESG approaches boycotting Israel harm Israeli children
* Argument: ESG misleads stakeholders
* Claim: ESG commitments mislead regulators and customers by overstating corporate responsibility
* Claim: ESG scores favor high-performing companies and fail to account for real environmental or social progress
* Claim: ESG is a superficial marketing tactic rather than a substantive strategy for change

Thesis: ESG helps promote social and environmental responsibility

* Argument: ESG is good for the environment
* Claim: ESG helps cut carbon emissions, directly contributing to climate goals
* Claim: ESG commitments promote innovation that leads to more sustainable business models
* Claim: Business-to-business ESG pressure encourages widespread environmental responsibility
* Argument: ESG commitments are good for society
* Claim: ESG compels companies to solve problems facing society
* Claim: Stakeholder capitalism benefits society by balancing shareholder interests with the public good
* Claim: ESG compliance helps businesses recognize that societal health is directly connected to business success

Arguments opposing ESG

Arguments supporting ESG

Recent conflicts

* Reform proposals
* Supporting ESG
* Corporate board diversity
* Corporate disclosure
* ESG contract requirement
* Industry divestment
* Non-financial criteria consideration
* Opposing ESG
* Anti-boycott
* Anti-discrimination and anti-ESG-scoring
* Consumer and investor protection
* Federal mandate opposition
* public disclosure requirement
* Sole fiduciary
* Legislative approaches supporting ESG
* Legislative approaches opposing ESG
* Enacted state ESG legislation by trifecta status
* Ballotpedia's ESG legislation tracker
* Areas of inquiry and disagreement

ESG reforms and legislative approaches

* * *

• Reform proposals
• Legislative approaches supporting ESG
• Legislative approaches opposing ESG
• Enacted state ESG legislation by trifecta status
• Ballotpedia's ESG legislation tracker
• Areas of inquiry and disagreement

## Thesis: ESG undermines business and investment goals

This thesis argues that ESG policies detract from the primary objectives of businesses and investment firms by compromising financial performance, increasing risks, and creating inefficiencies.

### Argument: ESG hurts investment outcomes

This argument claims that ESG strategies underperform compared to traditional investment approaches, reduce diversification, and introduce inefficiencies that hurt investors.

#### Claim: ESG stocks cannot and do not match or outperform the market

The following statements posit that ESG investments fail to generate returns comparable to traditional investments, leading to weaker financial outcomes for investors.

* Two ESG opponents—William Hild (the executive director of Consumers’ Research) and Eric Bledsoe (a senior fellow at the Foundation for Government Accountability)—gave testimonies before the Texas Senate on October 17, 2024. They argued the state’s anti-ESG laws produced positive results and said non-ESG investment funds tended to outperform investments that considered other factors.[1]

* Terrence Keeley—an ESG critic and former Blackrock senior adviser—argued that ESG investments were self-defeating in an interview at RealClear’s 2024 Energy Future Forum. Keeley said, "So, you really need to look at the extent to which you've taken a decision with portions of your portfolio to be ethically invested or you're willing to take lower returns. That’s all well and good. But one would think that taking lower returns in your portfolio should be accompanied by some type of advancement of a social or environmental cause. And that is simply not the case with ESG. I'll quote Bill Gates, he of much fame, saying that so far ESG investment—that multitrillion-dollar market I've spoken about—has not taken one ton of carbon out of the air."[2]

* A study by Canada’s Fraser Institute examined the performance of ESG-related investments and argued that ESG supporters’ claim that the strategy improved returns was wrong.[3]

* Fortune released on November 9, 2023, the results of an examination of 235 companies conducted by Christos Makridis and Majeed Simaan. The study argued that “the explicit targeting of ESG metrics leads to a portfolio allocation that is economically and environmentally worse than the market allocation” and that “[i]nvestors should be wary of overemphasizing ESG at the expense of established measures that have stood the test of time.”[4]

* New Hampshire Governor Chris Sununu (R) said, "The most important responsibility we have is getting the best return for our retirees. And this ESG stuff doesn’t get the returns. It hurts returns, it increases risk, and it doesn’t fulfill the mission."[5]

* Policy analyst Rupert Darwall wrote, "Insofar as material ESG factors boost corporate profits, ESG investment strategies must assume that the market fails to incorporate this into higher valuations because once the market has priced in those factors, investors must be satisfied with lower expected returns. As Eugene Fama, a founder of modern portfolio theory, puts it, 'virtue is its own reward since investors get lower expected returns from the shares of virtuous firms.'"[6]

* Darwall also wrote, "In contrast to the older ethical investment movement, which accepted that morally constrained investment strategies incur costs, ESG proponents claim that investors following ESG precepts earn higher risk-adjusted returns because companies with high ESG scores are lower-risk. Thus, their stock prices will outperform, whereas those firms with low ESG scores are higher-risk, leading them to underperform. ... This supposition conflicts with finance theory. Once lower risk is incorporated into a higher stock price, the stock will be more highly valued, but investors will have to be satisfied with lower expected returns. Unsurprisingly, claims of ESG outperformance are contradicted by studies."[7]

* Darwall also wrote, "Claims that ESG-favored stocks outperformed during the Covid-19 market meltdown disappear once other determinants of stock performance are controlled for. ESG factors were negatively associated with stock performance during the market recovery phase in the second quarter of 2020."[7]

#### Claim: ESG investing strategies reduce diversification and are thus riskier

The following statements posit that ESG strategies narrow the pool of potential investments, increasing portfolio risk and reducing opportunities for diversification.

* Policy analyst Rupert Darwall wrote, "Modern investment theory emphasizes the importance of portfolio diversification. The MSCI KLD 400 Social Index, used by BlackRock’s iShares MSCI KLD 400 Social Index, comprises less than one-fifth of the MSCI USA IMI Index. No investment theory says that shrinking the universe of potential investment options by 80% is conducive to producing higher returns. The 2000 decision by CalPERS, the nation’s largest state pension fund, to divest itself of tobacco stocks is reckoned to have cost it $3 billion in lost returns."[6]

* New Hampshire Governor Chris Sununu (R) said, "The most important responsibility we have is getting the best return for our retirees. And this ESG stuff doesn’t get the returns. It hurts returns, it increases risk, and it doesn’t fulfill the mission."[8]

#### Claim: ESG is less efficient than alternative investment strategies

The following statements posit that free-market approaches produce better economic outcomes, while ESG strategies create inefficiencies that hinder growth and innovation.

* Andrew Stuttaford wrote, "Underpinning the notion of 'stakeholder capitalism,' a concept that has taken the C-suites of some of America’s largest companies by storm, is the idea that a company should be run for the benefit of all its 'stakeholders,' a conveniently hazy term that can be defined to include (among others) workers, customers, and 'the community,' as well as the shareholders who, you know, own the business. It’s a form of expropriation based on the myth that a corporation that puts its shareholders first must necessarily put everyone else last. In reality, an enterprise that, to a greater or lesser extent, fails to consider the needs of various — to use that word — stakeholders in mind, customers, most obviously (but certainly not only) is unlikely to flourish, and nor, therefore, will its owners."[9]

#### Claim: ESG considerations distract from the interests of beneficiaries

This claim posits that ESG considerations distract from beneficiaries' financial interests (such as those of public or private pensioners) and therefore violate the fiduciary responsibilities of those who manage assets on behalf of other people and institutions.

* In a ruling against the ESG considerations in American Airlines' retirement plan, U.S. District Judge Reed O’Connor argued the approach was self-interested and violated the fiduciary standard of loyalty to retirees. O'Connor said, "The Court concludes that Defendants acted disloyally by failing to keep American’s own corporate interests separate from their fiduciary responsibilities, resulting in impermissible cross-pollination of interests and influence on the management of the Plan. The most obvious manifestation of this is found in American’s relationship with BlackRock. Because of American’s corporate goals and as a complement to them, Defendants did not sufficiently monitor, evaluate, and address the potential impact of BlackRock’s non-pecuniary ESG investing. Together, the influences of these non-Plan interests constituted a breach of loyalty, allowing BlackRock to engage in ESG-oriented proxy voting and investment strategies using Plan assets."[10]

#### Claim: ESG investing creates conflicts of interest

This claim posits that ESG investing sets up conflicts of interest between corporations and institutional investors like BlackRock.

* In a ruling against the ESG considerations in American Airlines' retirement plan, U.S. District Judge Reed O’Connor argued the relationship between the company and BlackRock created a conflict of interest that harmed investors. O'Connor said, "Start with BlackRock’s influence. Defendants acted disloyally by allowing their various ties to BlackRock to influence management of the Plan. To begin, Defendants knew that the Plan’s largest investment manager, BlackRock, was also one of American’s largest shareholders. BlackRock managed billions of dollars in Plan assets at the same time it owned 5% of American stock. BlackRock also financed approximately $400 million of American’s corporate debt at a time when American was experiencing financing difficulties. Defendants’ own personnel put it best when describing this “significant relationship [with] BlackRock” and “this whole ESG thing” as “circular.” It is no wonder Defendants repeatedly attempted to signal alignment with BlackRock."[10]

### Argument: ESG harms core business functions

This argument claims that ESG policies distract companies from sound business practices, harm internal relations, and misinterpret the fundamental role of corporations.

#### Claim: ESG distracts from sound business decision-making

The following statements posit that ESG diverts attention from customer needs, market trends, and profitability, undermining business effectiveness.

* Policy analyst Rupert Darwall wrote, "The cost, on the other hand, can be viewed in terms of loss of focus; in the first instance, loss of focus on the essentials of business and of investing. For business, it is the focus on customers, anticipating market trends and innovating to create them and doing so profitably for shareholders. For investors, it is the hard search for risk-adjusted returns. Going green can lead business and investors to take their eye off the ball—or worse. Edmans reminds us that all that is green isn’t necessarily good: shortly before its collapse in 2001, Enron was lauded for its corporate social responsibility, winning six awards in a single year from the US Environmental Protection Agency and a corporate conscience award from the US Council on Economic Priorities."[7]

* Wall Street Journal columnist James Mackintosh argued, "There are obvious benefits of diverse corporate leadership for society, both in providing role models and in showing a commitment to promoting the best people, irrespective of skin color or gender. But doing it because it is the right thing is not the same as doing it because it makes more money. Since 2015, the approach has been tested in the fire of the marketplace and failed. Academics have tried to repeat McKinsey’s findings and failed, concluding that there is in fact no link between profitability and executive diversity. And the methodology of McKinsey’s early studies, which helped create the widespread belief that diversity is good for profits, is being questioned."[11]

#### Claim: ESG creates unnecessary tension between management and employees

The following statements posit that ESG initiatives can introduce conflicts within organizations, harming employee morale and productivity.

* F. Vincent Vernuccio—the president of the Institute for the American Worker—and Sam Adolphsen—the policy director for the Foundation for Government Accountability—argued in an op-ed for The New York Post that unions used ESG pressure to create tension between employers and employees, even where no such tension existed before.[12]

#### Claim: ESG strategies fail to recognize the only responsibility of corporations is to generate profits

The following statements posit that ESG undermines the primary role of corporations, which is to maximize shareholder returns while adhering to ethical standards.

* A group of Republican state treasurers sent a letter on August 28, 2024, asking the Business Roundtable to change its 2019 statement defining the purpose of corporations. The treasurers argued the definition deprioritized shareholder interests in profit and risk management and promoted ESG investing. They said, "American companies must focus on maximizing returns ... That process necessarily includes taking care of stakeholders along the way."[13]

* Milton Friedman wrote, "But the doctrine of 'social responsibility' taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book 'Capitalism and Freedom,' I have called it a 'fundamentally subversive doctrine' in a free society, and have said that in such a society, 'there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.'"[14]

* Friedman also wrote, "In a free‐enterprise, private‐property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose—for example, a hospital or school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services."[14]

## Thesis: ESG threatens political and economic structures

This thesis argues that ESG policies undermine democratic governance, centralize power in unelected entities, and disrupt economies dependent on traditional industries.

### Argument: ESG detracts from the democratic process and consolidates power

This argument claims that ESG allows private institutions to exercise undue influence over public policy, bypassing democratic accountability.

#### Claim: ESG hurts free speech

* Exxon Mobil filed a lawsuit in the United States District Court for the Eastern District of California, challenging California ESG disclosure requirement laws under the First Amendment, arguing the requirements required the company "to trumpet California’s preferred message even though Exxon Mobil believes the speech is misleading and misguided."[15]

#### Claim: ESG turns companies into political instruments

The following statements posit that ESG transforms businesses into tools for advancing ideological agendas, undermining democratic deliberation.

* Securities and Exchange Commission Chair Paul Atkins argued in October 2025, "In the past few proxy seasons, perhaps nothing has epitomized the politicization of shareholder meetings more than shareholder proposals focused on environmental and social issues."[16]

* Columnist George Will argued, "Regarding ESG, last year, $13 billion was withdrawn from asset managers making investment decisions based on “environmental, social and governance” considerations. Unpacked, those categories mean the woke agenda: decarbonizing the economy, social engineering based on identity politics, gender equality, union power and more."[17]

* Louisiana Attorney General Jeff Landry (R) said, "ESG investing puts politics over people and raises significant concerns that companies guided by these green-energy fantasies may be engaging in unfair and deceptive practices."[18]

* A joint statement of 19 states opposing federal ESG policies said, "The proliferation of ESG throughout America is a direct threat to the American economy, individual economic freedom, and our way of life, putting investment decisions in the hands of the woke mob to bypass the ballot box and inject political ideology into investment decisions, corporate governance, and the everyday economy."[19]

* U.S. House Financial Services Committee Chairman Patrick McHenry (R) said, "Progressives are trying to do with American businesses what they already did to our public education system—using our institutions to force their far-left ideology on the American people. Their latest tool in these efforts is environmental, social, and governance proposals."[20]

* Ralph Ginorio wrote, "In other words, instead of an enterprise being judged by their objective business practices they are increasingly being judged by subjective standards of ideological conformity. It is no longer sufficient for an entrepreneur to provide a useful product or service at a fair price and with good customer service. Nor is it enough for an owner to build an effective organization staffed by dynamic and skilled professionals who are dedicated to earning a profit. Today, business leaders are being manipulated into warping their enterprises so they serve a decidedly Left-wing agenda. This is a great reason why, in the face of intensifying consumer backlash, so many companies are stubbornly implementing increasingly divisive ideological policies."[21]

* Ginorio also wrote, "It is this system that the international Left has brought to bear on private businesses in the West. And, if companies betraying their customers to curry favor with ideologues is any indication, it seems to be working! ESG is the 'Critical Race Theory' of today's business climate, a political power grab designed to bypass democratic deliberation by politicizing commerce."[21]

* Policy analyst Rupert Darwall wrote, "ESG is supposedly about the objective assessment of investment risk. The stated purpose of the Sustainability Accounting Standards Board (SASB), a body supported and funded by Michael Bloomberg, is to provide a disclosure regime that better enables investors to assess risk, climate risk being a major one. ... At the same time, the SASB aims to harness the power of capital markets for political ends. Just as the Covid pandemic was sweeping the globe, Bloomberg declared climate change the biggest threat to America and the world. 'How do you replace dirty energy?' he asks. 'Stop rewarding companies from making it.' ESG thus becomes politics pursued by other means."[7]

* Ginorio also wrote, "Yet, from a corporate viewpoint, making some effort to implement ESG's has just become part of the cost of doing business. This is not by any means the first time that contemporary companies have bowed the knee to political imperatives. Any business who wants to function in the People's Republic of China must be silent about the Communist's genocide against the Uighurs of Xinjiang, their efforts to eliminate Tibetans within Tibet, their crushing of a free people in Hong Kong, and their threats to do the same after conquering Taiwan. In fact, ESG is based on the Chinese Communist Party's Social Credit Score. Every single person under Communist control is stringently assessed in their every utterance and observable action. Abetted by U.S. tech companies, cameras everywhere with face-recognition software enable the CCP to discern more about individual conduct than George Orwell's telescreens from his dystopian novel '1984.'"[21]

* Milton Friedman wrote, "The businessmen believe that they are defending free enterprise when they declaim that business is not concerned 'merely' with profit but also with promoting desirable 'social' ends; that business has a 'social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are—or would be if they or any one else took them seriously— preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades."[14]

* Friedman wrote, "The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This justification disappears when the corporate executive imposes taxes and spends the proceeds for 'social' purposes. He becomes in effect a public employe, a civil servant, even though he remains in name an employe of private enterprise. On grounds of political principle, it is intolerable that such civil servants—insofar as their actions in the name of social responsibility are real and not just window‐dressing—should be selected as they are now. If they are to be civil servants, then they must be selected through a political process. If they are to impose taxes and make expenditures to foster 'social' objectives, then political machinery must be set up to guide the assessment of taxes and to determine through a political process the objectives to be served. This is the basic reason why the doctrine of 'social responsibility' involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scarce resources to alternative uses."[14]

#### Claim: ESG consolidates power in large investment funds

The following statements posit that ESG centralizes decision-making in financial institutions, limiting diversity and competition in markets.

* Utah State Treasurer Marlo Oaks wrote, "ESG shifts the political process from our democratic institutions to those managing money. Whoever has the most money wins. And they are driving their political agendas using other people’s money, including Americans’ retirement funds. BlackRock uses the trillions of dollars it manages as leverage to compel companies to implement certain policies and argues 'forcing behaviors' is necessary to achieve its goals."[22]

* Policy analyst Rupert Darwall wrote, "ESG investing thus turns out to be politics continued by other means. Far from a vision of inclusive capitalism, it is the culmination of a trend away from democratically accountable law-making. In 2009, despite large Democratic majorities in both houses of Congress, cap-and-trade was passed only narrowly by the House and died in the Senate. After the 2010 midterm elections, such efforts became the purview of the administrative state and the Obama administration’s Clean Power Plan – until the Supreme Court ordered a stay on its implementation. Now, society is apparently to be regulated by the top executives of multitrillion-dollar index funds and a handful of activist shareholders."[6]

* Darwall also wrote, "Inclusive it is not. Americans’ savings are to be deployed for wider societal ends, ones determined not by them or by elected politicians but by Wall Street oligarchs. The end point is the socialization of American capital. Rather than being inclusive, ESG is pure insider capitalism: it excludes the many from power exercised by the few."[6]

* Darwall also wrote, "The weaponization of finance by billionaire climate activists, foundations, and NGOs threatens to end capitalism as we know it by degrading its ability to function as an economic system that generates higher living standards. This usurpation of the political prerogatives of democratic government invites a populist backlash."[7]

#### Claim: ESG is corporatist

These statements posit that ESG fosters corporatist collaboration between business executives, fund managers, and governments, which destroys market competition and ensures the government only does business with companies that align with its political agenda.

* Professors Allen Mendenhall and Daniel Sutter argued, "In a level playing field, ESG-weighted portfolios struggle against market-tracking index funds, which provide better diversification and risk reduction. Government regulations mandating climate-related disclosures benefit ESG funds by reducing investor options, making securities in ESG portfolios more attractive than they would be under (more) perfect competition."[23]

* Andrew Stuttaford wrote, "The wider vision underlying stakeholder capitalism is one in which different interest groups such as employers, employees, and consumers collaborate in pursuit of mutually (if sometimes mysteriously) agreed objectives under the supervision of the state. It would never be quite post-democratic, not quite, in any likely American form, but what it would be is a variety of corporatism. Corporatism takes many, many forms. It can range from the relatively (relatively) benign — it runs through European Christian Democracy, and it can be detected in early-20th-century American Progressivism — to the infinitely more heavy-handed. It has been an important element in the theory, if not the practice, of some variants of fascism, most notably in Mussolini’s Italy, but not only there."[24]

* Ralph Ginorio wrote, "We should inquire of our elected officials about the feasibility of eliminating the use of ESG scores in the regulation of banking and in the awarding of government contracts. ESG scores corrupt free enterprise and compromise our citizenship rights. We should each endeavor to bring such practices to light and root them out as an insidious danger to our liberty."[21]

#### Claim: ESG establishes an unelected tax on businesses and consumers

The following statements posit that ESG imposes hidden costs on businesses and consumers to fund social and environmental objectives without public consent.

* Milton Friedman wrote, "The executive is exercising a distinct 'social responsibility,' rather than serving as an agent of the stockholders or the customers or the employes, only if he spends the money in a different way than they would have spent it. But if he does this, he is in effect imposing taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other. This process raises political questions on two levels: principle and consequences. On the level of political principle, the imposition of taxes and the expenditure of tax proceeds are governmental functions. We have established elaborate constitutional, parliamentary and judicial provisions to control these functions, to assure that taxes are imposed so far as possible in accordance with the preferences and desires of the public— after all, 'taxation without representation' was one of the battle cries of the American Revolution. We have a system of checks and balances to separate the legislative function of imposing taxes and enacting expenditures from the executive function of collecting taxes and administering expenditure programs and from the judicial function of mediating disputes and interpreting the law. Here the businessman—self‐selected or appointed directly or indirectly by stockholders—is to be simultaneously legislator, executive and jurist. He is to decide whom to tax by how much and for what purpose, and he is to spend the proceeds—all this guided only by general exhortations from on high to restrain inflation, improve the environment, fight poverty and so on and on."[14]

#### Claim: ESG pursues governmental goals without the checks and balances of normal politics

The following statements posit that ESG circumvents traditional legislative and regulatory processes, eroding transparency and accountability.

* Utah State Treasurer Marlo Oaks wrote, "Given the intense feelings about the environment, it is easy to misconstrue my opposition to ESG as 'fighting against climate change.' However, that is simply not the case. I support developing solutions to address climate concerns. What I am against is the use of economic force to drive political agendas."[22]

* Milton Friedman wrote, "Aside from the question of fact—I share Adam Smith's skepticism about the benefits that can be expected from 'those who affected to trade for the public good'—this argument must be rejected on grounds of principle. What it amounts to is an assertion that those who favor the taxes and expenditures in question have failed to persuade a majority of their fellow citizens to be of like mind and that they are seeking to attain by undemocratic procedures what they cannot attain by democratic procedures. In a free society, it is hard for 'good' people to do 'good, 'but that is a small price to pay for making it hard for 'evil' people to do 'evil,' especially since one man's good is anther's evil."[14]

* Joel Kotkin wrote, "This powerful front consists of a new alliance between large corporate powers, Wall Street, and the progressive clerisy in government and media. Its agenda consists of several goals. On the corporate front we have the emergence of 'stakeholder' capitalism, which embraces the state’s priorities implicitly and those of the progressives generally, as a way to please regulators, the woke among their employers, and, to some extent, their own consciences. In this they resemble companies in authoritarian states—like Mussolini’s Italy, Hitler’s Germany, and today’s China—where private capital accumulation is permitted but dissent from the agreed norms of the media-government-academy, once the privilege of individuals and corporations, is now largely verboten."[25]

### Argument: ESG harms local and national economies

This argument claims that ESG policies harm industries critical to economic stability and national security while increasing consumer costs.

#### Claim: ESG weakens state economies reliant on coal, oil, and gas

The following statements posit that ESG divestment from fossil fuels reduces state tax revenues, damaging regional economies.

* West Virginia State Treasurer Riley Moore (R) argued, "This ESG movement, in its current form, is really an existential threat to our jobs, our economy, and our tax revenue. We generate hundreds of millions of dollars in tax revenue from coal and gas specifically."[26]

#### Claim: ESG drives up consumer prices

The following statements posit that ESG initiatives increase the cost of goods and services, placing a financial burden on consumers.

* The Buckeye Institute—a Columbus, Ohio-based think tank—published a report February 7, 2024, arguing that ESG hurts farmers and agriculture and drives up the prices of food and other consumer goods.[27]

* Agriculture commissioners from 12 states sent a letter on January 29, 2024, to the heads of six banks, arguing that ESG efforts to promote net-zero carbon policies would hurt farmers and inflate consumer food prices.[28]

* Florida Governor Ron DeSantis (R) said, "But I think I’m concerned about this ESG, I’m concerned about them trying to say climate change and everything because that’s going to make some of these things very, very expensive if they’re pricing in all these things that very well may not happen. And that’s new from where we were 20 or 30 years ago."[29]

#### Claim: ESG hurts farmers

This claim argues ESG policies hurt farmers and threaten agricultural industries.

* Alabama State Auditor Andrew Sorrell (R) argued in an op-ed published October 13, 2024, that ESG threatened farmers—especially those in his state. Sorrell said environmental regulations and corporate policies would increase farming costs and damage large agricultural industries.[30]

* The Buckeye Institute—a Columbus, Ohio-based think tank—published a report February 7, 2024, arguing that ESG hurts farmers and agriculture and drives up the prices of food and other consumer goods.[31]

#### Claim: ESG weakens America's national security and increases dependence on foreign countries for energy

The following statements posit that ESG compromises energy independence, increasing reliance on foreign resources and weakening national security.

* Congressmen Andy Barr (R-Ky.) and Bryan Steil (R-Wis.) wrote a letter concerning the sale of Institutional Shareholder Services (ISS), the world’s largest proxy advisory service, to a German financial services firm. They argued ISS proxy votes supporting ESG had a significant impact on corporate decisions that reduced American energy independence and harmed national security.[32]

* Florida Governor Ron DeSantis (R) argued that "[ESG] affects our national security. When you have to go to foreign countries that are hostile to us to try to get energy, that is not a good place to be in. ... What ESG wants to do is put a premium against that type of business. It’s also bad for our national security, when you’re doing this stuff with ESG, you are increasing the costs that businesses have to comply with in the United States."[33]

#### Claim: ESG regulations make businesses less competitive globally

This claim argues ESG regulations make corporations less competitive with businesses under less restrictive rules.

* The European Banking Federation argued that proposed E.U. climate regulations would make it harder to compete with U.S. banks, according to Bloomberg. The pushback came as the U.S. slowed its regulatory activity while E.U. regulators like the European Central Bank promoted more ESG considerations in the financial sector.

#### Claim: ESG is anti-competitive and monopolistic

This claim argues ESG practices often result in anti-competitive collusion between companies to discriminate against certain industries or promote unprofitable policies in violation of antitrust laws.

* An 11-state, Texas-led lawsuit alleged in 2024 that BlackRock, State Street, and Vanguard colluded to suppress coal production, violating antitrust laws.

## Thesis: ESG is ineffective for advancing environmental and social goals

This thesis argues that ESG policies fail to achieve their stated environmental and social objectives, often serving as superficial gestures that mislead stakeholders and preserve the status quo.

### Argument: ESG does not deliver on environmental promises

This argument claims that ESG policies fall short of achieving significant environmental benefits and may even hinder necessary regulatory reforms.

#### Claim: ESG investing does not prevent climate change but rather seeks to mitigate portfolio damage

The following statements posit that ESG strategies focus on financial risk mitigation rather than actively addressing environmental challenges.

* Tariq Fancy, BlackRock's first global chief investment officer for sustainable investing, wrote, "I suspected that every time people read the latest such headline about guarding against climate change-related risks in the financial system, they mistakenly believed that these efforts were helpful in the fight against climate change itself. In fact, the survey found that not only was that true, but that most people think that this kind of work is just as helpful as any other pledge, such as large-scale organizational commitments to become net zero carbon emitters. Unfortunately, protecting an investment portfolio from the disastrous effects of climate change is not the same thing as preventing those disastrous effects from occurring in the first place."[34]

#### Claim: ESG talk allows businesses to deflect responsibility for climate change, avoiding real solutions

The following statements posit that ESG discussions create the illusion of action while enabling companies to avoid substantive environmental commitments.

* Tariq Fancy, BlackRock's first global chief investment officer for sustainable investing, wrote, "Unfortunately, it gets even worse: the deadly distraction is real. For half the respondents we removed the headlines entirely, and then compared the views of both groups — those who had seen the headlines and those who hadn’t — on who should lead the way in building a sustainable society. In Canada, it didn’t make that much difference: people generally trust their elected representatives to lead the way regardless. But there was a large and statistically significant difference in the US. Exposure to the headlines made people 17% more likely to say that business, not government, will lead the way in building a more sustainable economy."[34]

* Fancy wrote, "Today, given the short-term financial incentives of many business leaders, they profit most from maintaining a status quo in which they can delay tax increases and overdue regulation in order to squeeze out as much in share price appreciation and bonuses as possible. And all of this creates a long-term mess that someone else — meaning the public and future generations — will have to pay the bill for later on. Pennies in shareholder value today, steamroller for someone else tomorrow."[34]

* Fancy wrote, "Every year, companies invest more and more in sustainability initiatives. The tools, such as ESG data and reporting standards, can be useful since they help us to start measuring the side effects we need to manage better, and the people, who bring sustainability expertise, are also critically needed. But the overarching narrative that these alone will matter without rule changes risks rendering all of these efforts meaningless or even counterproductive. Having coaches who teach clean play doesn’t do much if cheating and dirty play still wins games. Should we wait for profits and purpose to magically overlap on their own, or does an outside and rather visible hand need to enforce new rules of the game to make it happen faster?"[34]

* Fancy wrote, "Second, these leaders must know that there is no way the set of ideas they’ve proposed are even close to being up to the challenge of solving the runaway long-term problems that we desperately need solved. A hodgepodge of voluntary commitments and non-binding words about caring more for all stakeholders in society will not give us what we need to solve the massive systemic problems we face. Inessa Liskovich, who was careful and measured on every thought she offered, was clear on this point: 'There’s absolutely no reason to believe that societal demands, whether from consumers or employees, would ever get to exactly the right level that we’d want for ourselves from a policy perspective.' Yet at a time that we need leadership to make necessary changes before it’s too late, we get bland words intended to preserve the status quo."[34]

* Fancy also wrote, "For years now we’ve been buying a cheap knockoff placebo and calling it the ‘prevention’ — and all that’s really happening is that the eventual bill we’ll need to pay for an actual ‘cure’ is silently rising. And when that bill comes, we’ll have no money left because everything has been milked dry. This is not limited to business leaders only. Politicians, who tend to face reelection every few years, don’t have an incentive to tell people that Santa Claus doesn’t exist if they can point to a vaguely plausible (but ultimately ineffective) way to maintain our current way of life. Greenwashing a product is one thing, but this amounts to something far worse: this is greenwashing our entire economic system."[34]

* Analysts Kenneth P. Pucker and Andrew King wrote, "Most importantly, the boom in ESG investing helps to create the impression that the trillions of dollars needed to finance the transformation to a low carbon economy are on the way. This misconception likely relieves pressure on necessary regulatory reforms and the massive public private partnerships that are required to avert building threats to environmental and social welfare. If so, this deferral would represent the latest installment of a 50-year trope positing that market based voluntary action can supplant the need for public regulation of private externalities. As but one illustration of the limits of voluntary action, consider Coke’s voluntary efforts to reduce one of its most material ESG risk factors: water usage. After years of effort and NGO partnerships in close to 100 countries to save and replenish local watersheds, Coke declared itself 'water neutral' in 2015 — five years ahead of its self-selected target. In part as a result, Coke’s ESG rating via MSCI is 'AA,' or market leader. However, Coke’s chosen boundary for water neutrality is the water used in manufacturing, distribution, and cooling, not the more than 90 percent of water it estimates that it uses in its agricultural supply chain, primarily in the fields to irrigate farmed sugar."[35]

### Argument: ESG causes social harm

This argument claims that ESG policies harm (not help) social structures and human rights.

#### Claim: ESG funds are favor Chinese companies with slave labor ties

This claim argues ESG funds favor Chinese companies while unfairly holding American and European corporations to higher standards:

* An Ignites Asia study argued several ESG funds, including funds operated by BlackRock, were exposed to electric vehicle and solar companies with possible slave labor ties in China’s Xinjiang province.[36]

#### Claim: ESG approaches boycotting Israel harm Israeli children

This claim argues ESG investing approaches opposing the sales of weapons and other goods or services to Israel would harm innocent Israeli children.

* Isaac Willour, a corporate relations analyst at Bowyer Research, argued against shareholder resolutions that proposed ceasing business relations with Israel, saying, "Divesting from Israel, despite what groups ranging from ESG activists to the virulently pro-Hamas protestors currently taking over Columbia University seem to think, means innocent children die—there’s no getting around that."[37]

### Argument: ESG misleads stakeholders

This argument claims that ESG frameworks often present misleading information to stakeholders, overstating their contributions to social and environmental progress.

#### Claim: ESG commitments mislead regulators and customers by overstating corporate responsibility

The following statements posit that ESG ratings and commitments exaggerate environmental and social achievements, misleading both regulators and the public.

* Gianpaolo Parise and Mirco Rubin, professors from the EDHEC Business School in France, examined the portfolios of investment funds that claimed to consider ESG factors in their investments. The authors argued that many such funds were misleading regulators and clients about their holdings. The paper called the practice of overstating, in their view, ESG investment commitments “Green Window Dressing.”[38]

#### Claim: ESG scores favor high-performing companies and fail to account for real environmental or social progress

The following statements posit that ESG scoring systems prioritize financial success over genuine environmental or social outcomes.

* A research paper from Columbia Business School argued that "[I]ndex construction incentives affect the production of ESG ratings, highlighting the need for greater transparency in the production of ESG ratings. ... [W]e find that ESG ratings from a rater with high index incentives are systematically higher (lower) than those of a rater with low index incentives for firms added (dropped) from the ESG indexes, even after controlling for rating methodology differences."[39]

#### Claim: ESG is a superficial marketing tactic rather than a substantive strategy for change

The following statements posit that ESG initiatives are often designed as public relations efforts to enhance corporate reputations rather than address meaningful issues. This claim suggests ESG is a marketing scheme that allows companies to sell overpriced products that they say are environmentally friendly to boost profits.

* Tariq Fancy, BlackRock's first global chief investment officer for sustainable investing, wrote, "This would be less irresponsible were it not so obviously clear that business leaders must know that what they’re peddling won’t work over the long term. Most of them absolutely must know by now that the incentives of the system do not, in the aggregate, lean toward the outcomes they claim to want and need from that system. As it stands, the system is so focused on squeezing out profits as fast as possible that the private sector, which has aggressively lobbied for less rules and referees, is now reacting to society’s growing angst about our direction by selling a host of overpriced ‘green’ products with little to no real-world impact into the resulting void: good for profits in the near term but terrible for society in the long run. And faced with growing public doubts about the wisdom of self-regulation, especially after their pursuit of self-interest has damaged society for decades, business leaders are now arguing that, in this wonderful new world, profits and purpose now magically overlap all by themselves."[34]

* Analysts Kenneth P. Pucker and Andrew King wrote, "One of Wall Street’s motivation for the frenzy of ESG product creation and overselling of planetary impact is the fees associated with ESG products. According to BCG, as passive funds have continued to grow in popularity, asset management revenues as a percentage of AUM have fallen by 4.6 basis points over the past five years. ESG funds typically charge fees 40 percent higher than traditional funds making them a timely answer to asset management margin compression. All too often these higher fees are unwarranted given that ESG funds often closely mirror 'vanilla' funds. Vanguard’s largest and longest standing ESG fund, its ESG U.S. Stock ETF, was .9974 correlated with the S&P 500."[35]

* Reform proposals
* Supporting ESG
* Corporate board diversity
* Corporate disclosure
* ESG contract requirement
* Industry divestment
* Non-financial criteria consideration
* Opposing ESG
* Anti-boycott
* Anti-discrimination and anti-ESG-scoring
* Consumer and investor protection
* Federal mandate opposition
* public disclosure requirement
* Sole fiduciary
* Legislative approaches supporting ESG
* Legislative approaches opposing ESG
* Enacted state ESG legislation by trifecta status
* Ballotpedia's ESG legislation tracker
* Areas of inquiry and disagreement

ESG reforms and legislative approaches

* * *

• Reform proposals
• Legislative approaches supporting ESG
• Legislative approaches opposing ESG
• Enacted state ESG legislation by trifecta status
• Ballotpedia's ESG legislation tracker
• Areas of inquiry and disagreement

## Thesis: ESG enhances business and investment goals

This thesis argues that adopting ESG principles leads to improved business and investment outcomes by fostering long-term stability, profitability, and risk mitigation.

### Argument: ESG enhances investment outcomes

This argument claims that ESG practices enable businesses and investors to achieve better financial results by mitigating risks, reducing borrowing costs, and ensuring compliance with regulations.

#### Claim: ESG strategies can outperform the market in the long term

The following statements posit that companies prioritizing ESG mitigate risks effectively, enhancing long-term financial performance.

* Researchers affiliated with Stanford University’s Long-Term Investing Initiative (SLTI) and British Columbia Investment Management Corporation (BCI) released a paper in January 2026 arguing ESG integration can generate measurable financial gains in private equity portfolios.[40]

* Analysts John Rotonti and Alyce Lomax wrote, "It's time to put to rest the conventional wisdom that investing for anything other than shareholder value results in poor investor outcomes. There's plenty of evidence that companies prioritizing ESG issues actually generate superior long-term financial performance across a range of metrics -- including sales growth, return on equity (ROE), return on invested capital (ROIC), and even alpha (market outperformance)."[41]

* Rotonti and Lomax also wrote, "When companies pursue a stakeholder-centric approach to value creation by incorporating ESG into their long-term investment strategy, they're able to attract the best talent, build loyal customer bases, prosper through strong corporate governance oversight, mitigate risk, and drive profitable growth by investing in sustainable innovations that positively impact the world."[41]

* Matthew Heimer, the lead editor for Fortune, wrote, "There's a growing body of evidence to suggest that stocks of companies that meet high standards for environmental, social and governance factors (ESG) are actually likely to outperform the market. In other words: Investors can do well by backing companies that do good. Data from asset management start-up Arabesque, for example, found that S&P 500 companies that ranked in the top quintile for ESG factors outperformed those in the bottom quintile by more than 25 percentage points between the beginning of 2014 and the end of June 2018, while their stock prices were less volatile. Other research, from organizations including consulting giant McKinsey & Co. and advocacy group JUST Capital, has reached similar conclusions."[42]

* An investor relations article from Morgan Stanley said, "We believe sustainability creates business value. A growing body of research demonstrates that resource-efficient companies produce higher financial returns than benchmark indexes. They also exhibit higher levels of innovation and corresponding margins, returns on assets and returns on equity. A 2015 Harvard Business School study of more than 2,300 firms found that companies that commit to and invest in strategic sustainability efforts have higher risk-adjusted stock performance, sales growth and margins -- and that these sustainability activities drive business value."[43]

* An article on the Impact Investor website said, "By recognizing that capital allocation makes a real impact on the environment, investors can hope to make healthy long-term investment decisions. Through rigorous research, one can identify businesses with the right ESG metrics and invest in them to ensure environmental and social responsibility."[44]

* An article on the Impact Investor website said, "Another effective reason why ESG investing is important is that ESG stocks not just perform well over time but also minimize risk options for investors. If an investor or consumer can evaluate a genuine ESG firm, they will most likely be taking on a less risky investment. Since ESG focused businesses are committed to adhering to government regulations and following a fair ESG framework, they tend to be less volatile and have stronger reputations."[44]

* Hari Bhambra wrote, "For some investors, the lower risk offered by these investments makes them even more attractive. Stronger governance, as highlighted above, may also lead to sustainable businesses that could improve investor confidence. Investment with a value can actually result in strong and sustainable commercial value."[45]

#### Claim: ESG doesn't harm investment returns

The following statement posits that ESG investing strategies do not damage financial returns.

* PitchBook, a market research company that provided information for investment banking, private equity, and venture capital firms, released a report March 21, 2024, arguing that ESG investment strategies did not harm returns. The report said, "The financial performance of ESG-committed asset managers varies, but quantitative evidence that the use of ESG in the private markets necessitates sacrificing returns has not emerged."[46]

#### Claim: Investment strategies must consider environmental risks and opportunities

This claim argues ESG considerations are critical for managing downside risks and capitalizing on upside opportunities.

* Maryland Comptroller Brooke Lierman said, "When I think about risk and securing our pension funds, that includes climate risk, managing human capital risk issues, and more."[47]

### Argument: ESG improves core business functions

This argument claims that ESG principles drive internal operational improvements, including enhanced employee engagement, cost savings, and supply chain efficiency.

#### Claim: ESG reduces risks that can hurt businesses

The following statements posit that ESG practices reduce risk, making companies that practice it better options for loans and other financial services.

* Denisa Avermaete, a senior policy adviser for the European Banking Federation, argued reduced ESG regulations in Europe would hurt banks and lending practices. She said reduced regulations would "introduce complexity and a need for bilateral engagement, as banks will always need certain key data that is necessary for sound business and risk management."[48]

* Ashish Lodh wrote, "In the MSCI World Index, the average cost of capital of the highest-ESG-scored quintile was 6.16%, compared to 6.55% for the lowest-ESG-scored quintile; the differential was even higher for MSCI EM. Previously, we have found that high-ESG-rated companies have been less exposed to systematic risks — i.e., risks that affect the broad equity market or market-like sectors or industries — than low-ESG-rated companies. This finding is consistent with the capital asset pricing model (CAPM), where lower systematic risk (beta) implies lower cost of equity. Similarly, we found that the average cost of debt of high-ESG-rated companies was lower than that of low-ESG-rated companies. This was in line with expectations, as the corporate-governance standard, one of the pillars of ESG, is known to reduce a firm's default risk, which directly impacts its cost of debt."[49]

* An article on the VelocityEHS website said, "Attracting the attention of investors and lenders is one of the biggest advantages of having an ESG program. It seems no matter where you look for ESG benefits, the top thing that comes up is that investors and lenders are gaining interest in companies with an ESG program in place over those without. Study after study has shown companies that made ESG a priority stand out to both investors and lenders because they tend to outperform their competition."[50]

#### Claim: ESG ensures compliance with emerging government regulations

The following statements posit that adopting ESG practices positions businesses to stay ahead of regulatory trends, avoiding penalties and ensuring operational continuity.

* An article on the Impact Investor website said, "Another effective reason why ESG investing is important is that ESG stocks not just perform well over time but also minimize risk options for investors. If an investor or consumer can evaluate a genuine ESG firm, they will most likely be taking on a less risky investment. Since ESG focused businesses are committed to adhering to government regulations and following a fair ESG framework, they tend to be less volatile and have stronger reputations."[44]

#### Claim: ESG boosts employee engagement, satisfaction, and productivity, which enhances overall business performance

The following statements posit that ESG fosters a more committed and motivated workforce, improving business outcomes.

* An article on the Impact Investor website said, "Another reason why ESG investing is important is that it can help businesses engage and retain quality employees, boost employee motivation by giving a sense of purpose, and increase overall productivity. Employee satisfaction is entirely linked to shareholder returns. Also, it has been seen that staff with a sense of not only satisfaction but also connection perform better. Moreover, the more robust an employee’s belief of impact on the beneficiaries of their work, the better their motivation to work in a 'prosocial' manner."[44]

* An article on the VelocityEHS website said, "Today, many job seekers are no longer looking for just a paycheck. They want to enjoy their jobs, feel appreciated, and make a positive impact. Working for a company with strong ESG goals appears to be the top factor for employees’ job satisfaction, along with evidence that the company “walks the walk” by putting its stated goals into practice. Adding to that, the “Great Resignation” has shown many employers that at least some of their employees have other options, and will use them if their current job doesn’t fulfill their needs and values."[50]

#### Claim: ESG practices can cut costs and improve supply chain prospects, contributing to profitability

The following statements posit that integrating ESG into operations reduces costs and creates more resilient supply chains.

* An article on the VelocityEHS website said, "Much like investors are paying more attention to ESG, many companies are looking for supply chain partners that embrace sustainability efforts. For example, many retail stores are making decisions not to stock products made by companies considered to have poor ESG performance. Companies’ supply chains have an effect on the environment, people, and society, so companies that take their ESG goals seriously find it to be in their best interest to partner with suppliers who share the same vision. Multiple large companies have already made the move to implementing ESG, making it more beneficial for them to partner with suppliers that have an ESG program in place, as well as easier to attract partners who insist on better ESG performance as a condition for partnership."[50]

* An article on the Impact Investor website said, "ESG can also minimize costs substantially. Besides other benefits, incorporating ESG practices effectively can help companies cut down greenhouse gas emissions and deal with rising operating expenses. Overall, you can significantly lower utility costs and demonstrate good practice by implementing eco-friendly facilities across your business structure."[44]

#### Claim: ESG can foster stronger customer loyalty

The following statements posit that ESG programs can improve goodwill towards companies and boost customer loyalty as a result.

* Christine Lellis wrote, "Customers, too, want to know that the businesses they’re supporting are good stewards of the environment. ESG performance is a major predictor of customer loyalty; one study found that 88% of consumers will be more loyal to a company that supports social or environmental issues. But today’s consumers are savvier than ever before, and they can see through greenwashing. That’s true for both B2C and B2B customers. For this reason, organizations have begun shunning fluffy, feel-good sustainability narratives in favor of evidence-based ESG targets."[51]

#### Claim: ESG commitments promote innovation

The following statements posit that ESG commitments such as cutting carbon emissions can force companies to innovate faster than they otherwise would, setting them up for stronger future growth.

* An article on the Quantive website said, "Depending on your industry, ESG commitments are challenges that you must overcome. If you are in manufacturing for instance, energy efficiency and waste management will be two of your primary ESG concerns. But instead of framing these challenges as an inconvenience to your business, you can change your perspective to use it as an opportunity for innovation. After all, solving problems should be the primary reason for a business's existence in the first place. In addition, external pressure from stakeholders is going to force you to address these issues regardless, so it makes more sense to embrace the opportunity. Use ESG pressure as a mechanism to unlock the creative ability of your team. Make your processes more environmentally friendly and come up with business models and products that have greater social impact. Eventually, it’s these green products and processes that will displace less sustainable practices."[52]

## Thesis: ESG promotes healthier political and economic structures

This thesis argues that ESG aligns business practices with the broader interests of society, fostering inclusivity and balancing profit with community well-being.

### Argument: Stakeholder capitalism brings more voices into decision-making

This argument claims that ESG promotes stakeholder capitalism, which ensures that employees, consumers, and communities have a say in corporate decision-making.

#### Claim: ESG frameworks encourage inclusive governance and platform diverse perspectives

The following statements posit that ESG frameworks encourage inclusive governance by factoring in diverse perspectives.

* An article on the ESG the Report website said, "The best way to fix this problem [of companies pursuing short-term profit] is to democratize companies so that they are controlled by all of their stakeholders rather than maximizing the profits of a tiny group of shareholders. This is known as Triple Bottom Line and requires changing corporate laws, tax laws and regulatory policies in ways that will empower employees with real bargaining power. It is now imperative that shareholders encourage companies to invest in long-term value instead of extracting value, and create a more sustainable financial system that isn't so focused on speculative bubbles."[53]

## Thesis: ESG helps promote social and environmental responsibility

This thesis argues that ESG encourages businesses to adopt responsible practices, address global challenges like climate change, and foster stronger consumer relationships.

### Argument: ESG is good for the environment

This argument claims that ESG drives direct contributions to environmental sustainability through innovation, emission reduction, and societal benefits.

#### Claim: ESG helps cut carbon emissions, directly contributing to climate goals

The following statements posit that ESG-aligned companies actively reduce their environmental footprint and help achieve sustainability targets.

* An article on the Impact Investor website said, "Besides other benefits, incorporating ESG practices effectively can help companies cut down greenhouse gas emissions and deal with rising operating expenses. Overall, you can significantly lower utility costs and demonstrate good practice by implementing eco-friendly facilities across your business structure."[44]

* Joe Speicher wrote, "The global economy has been structured on an energy system dependent on fossil fuels to power the means of production. This system has yielded great benefits—specifically incredible economic growth—which, however, have come with great costs—one of which has manifested in climate change. Environmental initiatives encourage companies to adopt sustainable operating models, like using renewable energy, sourcing sustainable materials, reducing waste, and greening supply chains. These efforts can reduce the amount of carbon emissions associated with economic growth."[54]

* Joe Speicher wrote, "As more companies embrace ESG, equality will increase and emissions will decrease, which is ultimately good for society and the planet. The new SEC rules will speed up the process. Companies are joining movements like the UN’s Race to Zero Campaign and The Climate Pledge and committing to become carbon neutral by doing things like buying renewable energy and carbon offsets, like Autodesk has. With every company doing its part, the world will be better off."[54]

#### Claim: ESG commitments promote innovation that leads to more sustainable business models

The following statements posit that ESG inspires businesses to create innovative solutions that balance profitability with environmental responsibility.

* An article on the Quantive website said, "Depending on your industry, ESG commitments are challenges that you must overcome. If you are in manufacturing for instance, energy efficiency and waste management will be two of your primary ESG concerns. But instead of framing these challenges as an inconvenience to your business, you can change your perspective to use it as an opportunity for innovation. After all, solving problems should be the primary reason for a business's existence in the first place. In addition, external pressure from stakeholders is going to force you to address these issues regardless, so it makes more sense to embrace the opportunity. Use ESG pressure as a mechanism to unlock the creative ability of your team. Make your processes more environmentally friendly and come up with business models and products that have greater social impact. Eventually, it’s these green products and processes that will displace less sustainable practices."[52]

#### Claim: Business-to-business ESG pressure encourages widespread environmental responsibility

The following statements posit that ESG practices create a ripple effect, compelling other businesses to adopt environmentally responsible behaviors.

* An article on the VelocityEHS website said, "Much like investors are paying more attention to ESG, many companies are looking for supply chain partners that embrace sustainability efforts. For example, many retail stores are making decisions not to stock products made by companies considered to have poor ESG performance. Companies’ supply chains have an effect on the environment, people, and society, so companies that take their ESG goals seriously find it to be in their best interest to partner with suppliers who share the same vision. Multiple large companies have already made the move to implementing ESG, making it more beneficial for them to partner with suppliers that have an ESG program in place, as well as easier to attract partners who insist on better ESG performance as a condition for partnership."[50]

* Joe Speicher wrote, "ESG investing is a spectrum. Companies typically begin their ESG journey for compliance reasons, which is simply to 'do less bad.' They’re offsetting carbon and starting diversity initiatives to check certain boxes. But compliance is the gateway drug for authentic ESG and 'doing more good,' paired with the realization that business doesn’t do well when society isn’t doing well."[54]

### Argument: ESG commitments are good for society

This argument claims that ESG frameworks compel businesses to acknowledge their societal impacts, driving meaningful action.

#### Claim: ESG compels companies to solve problems facing society

The following statements posit that ESG frameworks compel businesses to address societal issues, promoting long-term sustainability.

* An article on the Quantive website said, "Depending on your industry, ESG commitments are challenges that you must overcome. If you are in manufacturing for instance, energy efficiency and waste management will be two of your primary ESG concerns. But instead of framing these challenges as an inconvenience to your business, you can change your perspective to use it as an opportunity for innovation. After all, solving problems should be the primary reason for a business's existence in the first place. In addition, external pressure from stakeholders is going to force you to address these issues regardless, so it makes more sense to embrace the opportunity. Use ESG pressure as a mechanism to unlock the creative ability of your team. Make your processes more environmentally friendly and come up with business models and products that have greater social impact. Eventually, it’s these green products and processes that will displace less sustainable practices."[52]

#### Claim: Stakeholder capitalism benefits society by balancing shareholder interests with the public good

The following statements posit that ESG principles harmonize corporate objectives with societal well-being, ensuring equitable outcomes.

* An article on the ESG the Report website said, "This is a win-win situation for shareholders and stakeholders because they share the same interests. This is known as stakeholder capitalism, which puts business at the service of society by creating a system where businesses operate in ways that benefit all major constituencies, not just shareholders. Stakeholder relationships are reciprocal - it's not one way."[53]

* An article on the ESG the Report website said, "Shareholder capitalism runs counter to our shared values of democracy, equality and fairness. Decision-making power in corporations should be shared- not hoarded by a tiny group of shareholders who don't care about the environmental or social impact of its business operations. The negative effects of shareholder capitalism are readily apparent and include labor exploitation, shareholder enrichment and unsustainable growth. It's long past time for shareholder capitalism to be replaced by a more sustainable model of economic production."[53]

#### Claim: ESG compliance helps businesses recognize that societal health is directly connected to business success

The following statements posit that ESG frameworks demonstrate how societal well-being contributes to long-term business viability.

* Joe Speicher wrote, "ESG investing is a spectrum. Companies typically begin their ESG journey for compliance reasons, which is simply to 'do less bad.' They’re offsetting carbon and starting diversity initiatives to check certain boxes. But compliance is the gateway drug for authentic ESG and 'doing more good,' paired with the realization that business doesn’t do well when society isn’t doing well."[54]

* Reform proposals
* Supporting ESG
* Corporate board diversity
* Corporate disclosure
* ESG contract requirement
* Industry divestment
* Non-financial criteria consideration
* Opposing ESG
* Anti-boycott
* Anti-discrimination and anti-ESG-scoring
* Consumer and investor protection
* Federal mandate opposition
* public disclosure requirement
* Sole fiduciary
* Legislative approaches supporting ESG
* Legislative approaches opposing ESG
* Enacted state ESG legislation by trifecta status
* Ballotpedia's ESG legislation tracker
* Areas of inquiry and disagreement

ESG reforms and legislative approaches

* * *

• Reform proposals
• Legislative approaches supporting ESG
• Legislative approaches opposing ESG
• Enacted state ESG legislation by trifecta status
• Ballotpedia's ESG legislation tracker
• Areas of inquiry and disagreement

This section highlights recent conflicts related to state and local policies, highlighting arguments in favor of the policies, counterarguments against the policies, and responses to the claims against the policies. Click one of the conflicts below to learn more.

* The debate over Oklahoma's anti-ESG law

Read more

* The debate over the Texas Permanent School Fund's divestment from BlackRock

Read more

* The debate over California's climate disclosure requirements

Read more

* The debate over NYC's fossil fuel divestment

Read more

## The debate over Oklahoma's anti-ESG law

Oklahoma's Energy Discrimination Elimination Act (2022) prohibits state agencies from contracting with financial firms that boycott fossil fuels in the state treasurer's assessment. A November 2023 lawsuit challenged the act, asking courts to block its enforcement. An Oklahoma district court judge issued a permanent injunction against the law in July 2024, and Oklahoma Governor Attorney General Gentner Drummond (R) appealed the ruling to the state Supreme Court in December 2024.

Proponents argue the law protects important industries from coordinated opposition and ensures investment decisions prioritize financial returns. Critics argue the law breaches fiduciary duties, raises borrowing costs, and infringes on free speech.

This section presents arguments on both sides of the debate relevant to the broader national conflict over ESG policies and the public policy landscape. Click an argument below to learn more.

Claims

* Anti-ESG laws protect jobs, tax revenue, and economic health
* Anti-ESG laws are necessary to ensure fiduciary responsibility and prevent nonfinancial or political decisions
* Anti-ESG laws prevent discrimination against industries disfavored by ESG activists
* Anti-ESG laws help keep fossil fuel production in America instead of shifting it overseas

Counterclaims

* Anti-ESG laws raise borrowing costs for local governments
* Anti-ESG laws play politics with pension funds, conflicting with fiduciary duties
* The cost to implement anti-ESG laws conflicts with fiduciary duties
* Anti-ESG laws infringe on the First Amendment
* Anti-ESG definitions of energy boycotts are too vague

Responses to Counterclaims

* Anti-ESG laws don't raise borrowing costs
* Anti-ESG laws prevent politics in investments and don't harm fiduciary duties
* The costs of switching asset managers don't violate fiduciary duties
* Anti-ESG laws don't infringe on freedom of speech

### Claims

This section lists claims supporting the enactment of Oklahoma's anti-ESG law.

#### Anti-ESG laws protect jobs, tax revenue, and economic health

This claim argues that ESG investing approaches hurt industries (like fossil fuels) that are important to the economies of some states, and anti-ESG laws help protect jobs, tax revenue, and wealth generated from those industries.

* Oklahoma Representative Mark Lepak (R) argued, "ESG goals weaken industries important to Oklahoma’s economy, which means fewer jobs, which reduces our collective wealth and in turn reduces tax collections and everything tax dollars support."[55]

#### Anti-ESG laws are necessary to ensure fiduciary responsibility and prevent nonfinancial or political decisions

This claim argues anti-ESG bills help protect public portfolio performance and prevent public funds from being invested for purposes other than maximizing financial returns.

* Paul Tice, senior fellow at the National Center for Energy Analytics, argued, "Even if ESG is not an explicit part of an investment management contract, asset owners such as OPERS are potentially exposing their portfolio performance to a sustainable investing framework and allowing their capital to be leveraged for ESG engagement purposes—both of which are problematic from a fiduciary perspective—unless their outsourced assets are tightly ring-fenced."[56]

#### Anti-ESG laws prevent discrimination against industries disfavored by ESG activists

This claim argues coordinated ESG financing approaches threaten the ability of fossil fuel producers and other disfavored companies to raise and borrow money. Proponents of this claim say anti-ESG laws help prevent coordinated discrimination.

* Paul Tice argued, "These anti-ESG laws are mainly defensive moves aimed at protecting the in-state energy industry from the existential funding threat posed by the climate-driven sustainable finance movement."[56]

#### Anti-ESG laws help keep fossil fuel production in America instead of shifting it overseas

This claim argues ESG investing and regulations shift fossil fuel production out of America to other countries, and anti-ESG laws keep America strong and independent.

* Jason Isaac, a former Texas House member and founder and CEO of the American Energy Institute, argued, "When we increase regulations in the United States, all we do is shift production to other countries. We don’t reduce demand, we just ship production. That’s why this ESG agenda is really the China ESG agenda. China is adding a coal-fired power plant every single week."[55]

### Counterclaims

This section lists counterclaims opposing the enactment of Oklahoma's anti-ESG law.

#### Anti-ESG laws raise borrowing costs for local governments

This counterclaim argues anti-ESG laws reduce options for local governments in seeking loans since they can't enter contracts with some large institutions on the state's restricted list. Proponents of this counterclaim say the reduced competition forces municipalities to borrow money at higher rates.

* Travis Roach, chairperson of the Department of Economics at the University of Central Oklahoma and founder of the Central Policy Institute, argued, "Policymakers should carefully consider these downstream impacts when evaluating the merits of anti-ESG legislation, because at present, it has caused a statistically significant and economically meaningful increase in borrowing costs."[57]

#### Anti-ESG laws play politics with pension funds, conflicting with fiduciary duties

This counterclaim argues that anti-ESG bills introduce politics into investment decision-making, prevent fiduciaries from making investments exclusively for the benefit of beneficiaries, and harm investment returns.

* The 2023 lawsuit against Oklahoma's anti-ESG law argued, "By requiring state agencies to deal with financial institutions that do not boycott energy companies, the state is no longer expending state funds “in trust for the exclusive 10 purpose of providing for benefits, refunds, investment management, and administrative expenses,” but rather, expending state funds to make a political statement (i.e., the State of Oklahoma opposes boycotts of energy companies)."[58]

* Tony DeSha, executive director of the Public Employees Association, argued, "We will not allow Todd Russ to play politics with state employees and retirees’ money. The pension system is not taxpayer money, it is compensation earned by active employees who currently pay into the system and the pensioners who contributed to the same system for decades."[59]

#### The cost to implement anti-ESG laws conflicts with fiduciary duties

This counterclaim argues that the administrative costs to re-contract allocations from companies that violate anti-ESG laws to companies that comply conflict with fiduciary duties.

* The 2023 lawsuit against Oklahoma's anti-ESG law argued, "[A]ccording to the Oklahoma Public Employees Association, 'divesting from BlackRock and State Street would cost the pension system approximately $10 million, with the potential for even greater losses.' The lost pension funds caused by the Act are in direct contravention of Okla. Const. Art. 23, § 12 because the funds are no longer being held in trust for their 'exclusive purpose.'"[58]

#### Anti-ESG laws infringe on the First Amendment

This counterclaim argues that people and businesses have a constitutional right to boycott companies and industries under the First Amendment, and anti-ESG laws illegally infringe on that right.

* The initial brief opposing Oklahoma's anti-ESG law in 2023 argued, "[T]he court in Koontz provided a detailed legal analysis as to why the plaintiff was correct. The court began by noting that '[u]nder the First Amendment, states cannot retaliate or impose conditions on an independent contractor 'on a basis that infringes his constitutionally protected freedom of speech.'" The brief said Oklahoma's law, which prohibited contracts with companies that boycotted fossil fuel companies, infringed on freedom of speech.[58]

#### Anti-ESG definitions of energy boycotts are too vague

This counterclaim argues that laws defining illegal boycotts as "without an ordinary business purpose, refusing to deal with [or] terminating business activities with" a company or industry are too vague.

* The lawsuit opposing Oklahoma's anti-ESG law in 2023 argued, "By everyone’s admission, including the Treasurer, the [Energy Discrimination Elimination] Act is unconstitutionally vague. Accordingly, Mr. Keenan is entitled to an injunction."[58]

### Responses to counterclaims

This section lists arguments defending Oklahoma's anti-ESG law against the counterclaims.

#### Anti-ESG laws don't raise borrowing costs

This response argues that anti-ESG laws don't hurt states' abilities to borrow, as ESG supporters claim.

* Paul Tice, senior fellow at the National Center for Energy Analytics, argued, "Oklahoma has not seen an absolute or relative increase in municipal bond borrowing costs since the roll-out of the EDEA. To the contrary, the average YTW for Oklahoma state and local government issuers has actually tightened by 14 basis points since October 31, 2022."[56]

#### Anti-ESG laws prevent politics in investments and don't harm fiduciary duties

This response argues that anti-ESG laws eliminate politics from investment decision-making, which is consistent with the fiduciary requirement to invest funds for the exclusive benefit of beneficiaries.

* Paul Tice argued that non-financial approaches exist in state investments and that Oklahoma's anti-ESG law would eliminate, not introduce, political investment considerations. He said, "Here, the anti-EDEA side is turning the legitimate criticism of ESG—that it is progressive politics masquerading as financial risk management and investment policy—on its head by arguing that the anti-ESG is the real political threat to free markets, fiduciary duty and pecuniary interest, which is quite rich."[56]

#### The costs of switching asset managers don't violate fiduciary duties

This response argues that administrative costs incurred to avoid asset managers on state-restricted financial institution lists are relatively low and don't substantively reduce financial performance for public portfolios.

* Paul Tice argued, "$10 million of incremental (and importantly, one-time) administrative costs spread out over an OPERS portfolio with a market value of $11.7 billion as of June 30, 2023, equates to only 8 basis points, which is a rounding error in terms of net investment performance. ... For proper perspective, the OPERS pension fund posted a total return of -14.5% during fiscal year 2022, losing $1.8 billion of market value when the U.S. debt and equity markets both traded down sharply in the wake of the shift in monetary policy by the Federal Reserve. Market beta is the main risk to OPERS portfolio performance and pension plan beneficiaries, not the drag from investment management fees (whether recurring or not)."[56]

#### Anti-ESG laws don't infringe on freedom of speech

This response argues that anti-ESG laws don't compel speech and are strictly designed to protect the state's economic and financial interests.[56]

## The debate over the Texas Permanent School Fund's divestment from BlackRock

The Texas Permanent School Fund’s decision to divest from BlackRock has sparked a contentious debate centered around ESG policies and their impact on state economies. Texas State Board of Education Chairman Aaron Kinsey defends the move, asserting that BlackRock’s emphasis on decarbonization and ESG policies, particularly its pressure on fossil fuel companies, contradicts the state's economic interests, especially in oil and gas, which are crucial to funding the Permanent School Fund. Kinsey argues that BlackRock’s actions undermine the fund’s fiduciary responsibilities to maximize returns for Texas schools.

Opponents, including BlackRock, counter that the firm’s investment practices are in compliance with Texas law, emphasizing that it continues to invest heavily in the energy sector and has provided significant returns for the fund. BlackRock claims the decision is politically motivated and risks harming long-term financial stability for Texas schools.

This section presents arguments from both sides of the debate, highlighting the broader national conflict surrounding ESG policies and their influence on public policy.

Claims

* BlackRock’s ESG policies effectively boycott fossil fuel companies
* Boycotts make asset management companies ineligible for state contracts under TX SB 13
* BlackRock’s decarbonization initiatives and proxy voting patterns actively harm the Texas oil and gas industry and school funding
* Using BlackRock’s services undermines fiduciary responsibility
* The Texas PSF divestment was necessary to oppose ESG ideology

Counterclaims

* BlackRock does not boycott fossil fuels
* BlackRock complied with Texas law
* BlackRock delivered financial benefits to the TPSF
* Texas law included a fiduciary exception that applied to BlackRock's contract
* The decision to terminate BlackRock's contract violated TPSF’s fiduciary duty
* The decision to terminate was politically driven and lacked transparency

Responses to Counterclaims

* BlackRock’s energy investments are insufficient to disprove a boycott
* BlackRock’s ESG policies and proxy voting practices actively harm fossil fuels
* BlackRock’s fiduciary exemption claim does not justify continued investment
* BlackRock’s financial performance does not outweigh the harm it causes to Texas interests
* The TPSF’s decision aligns with fiduciary responsibility

### Claims

This section outlines the arguments made by Aaron Kinsey, Chairman of the Texas State Board of Education, to justify the Texas Permanent School Fund's decision to terminate its investment relationship with BlackRock.

#### BlackRock’s ESG policies effectively boycott fossil fuel companies

This argument asserts that BlackRock’s ESG policies, including decarbonization initiatives, pressure companies to transition away from fossil fuels. Under Texas Senate Bill 13, such practices are interpreted as a boycott.[60]

* Aaron Kinsey, Chairman of the Texas State Board of Education, stated, "BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF."[60]
* Kinsey continued that "BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans."[60]

#### Boycotts make asset management companies ineligible for state contracts under TX SB 13

This claim states that Texas Senate Bill 13 prohibits state agencies from contracting with firms engaged in fossil fuel boycotts, forming the legal basis for the Texas Permanent School Fund's divestment from BlackRock.

* Kinsey explained, "The PSF’s relationship with BlackRock was not in compliance with Texas Government Code Section 809, commonly referred to as Senate Bill 13, which prohibits state investment in companies like BlackRock that boycott energy companies."[60]

* Kinsey remarked, "The PSF will not stand idle as our financial future is attacked by Wall Street. This bold action helps ensure our PSF remains in fact permanent and will continue to support bright futures and opportunities for generations of Texas students."[60]

#### BlackRock’s decarbonization initiatives and proxy voting patterns actively harm the Texas oil and gas industry and school funding

This claim argues that BlackRock’s voting and engagement practices support policies and disclosures that reduce fossil fuel demand, potentially harming the Texas oil and gas industry, a significant revenue source for public school funding.

* Kinsey emphasized, "The Texas Permanent School Fund (PSF) has a fiduciary duty to protect Texas schools by safeguarding and growing the approximately $1 billion in annual oil and gas royalties managed by the Texas General Land Office."[60]

#### Using BlackRock’s services undermines fiduciary responsibility

This claim argues that BlackRock’s policies conflict with its fiduciary duty to maximize financial returns for Texas schools, particularly given the state’s economic reliance on oil and gas revenues.

* Kinsey declared, "BlackRock’s approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans. Today represents a major step forward for the Texas PSF and our state as a whole."[60]

* Will Hild, Executive Director for Consumers' Research, stated that "Under Larry Fink's leadership, BlackRock has been misusing client funds to push a political agenda for years. Nowhere was that more egregious than in Texas, where BlackRock was simultaneously trying to destroy the domestic oil and gas industry while managing funds that depended on royalties derived from that very same industry. A more flagrant violation of fiduciary duty is difficult to imagine."[61]

#### The Texas PSF divestment was necessary to oppose ESG ideology

This claim highlights the broader implications of the Texas PSF’s decision, framing it as a stance against ESG ideology and its perceived impact on industries critical to state economies.

* Hild argued, "By divesting $8 billion from BlackRock, Chairman Kinsey and the Permanent School Fund are not only fulfilling their role as fiduciaries to one of the largest education funds in the country but sending a clear message to Wall Street elites that people can no longer be bullied into complying with ESG's destructive ideology."[61]

### Counterclaims

This section lists counterarguments presented by Mark McCombe, the vice chair of BlackRock, regarding the divestment decision by the Texas State Board of Education.

#### BlackRock does not boycott fossil fuels

This counterclaim asserts that BlackRock does not discriminate against fossil fuels, highlighting its energy investments.

* Mark McCombe argued, "The notion that we discriminate against oil and gas is simply false based on the investments we make on behalf of our clients. BlackRock holds more than $320 billion in global energy investments, including approximately $120 billion in Texas-based, publicly traded energy companies."[62]

#### BlackRock complied with Texas law

This counterclaim asserts that BlackRock fully complies with Senate Bill 13 because its investments do not meet the legal definition of a boycott under the law.

* McCombe stated, "We fully comply with Texas law and fundamentally disagree with your assessment based on BlackRock’s performance for Texas PSF and our investments in Texas energy companies."[62]

#### BlackRock delivered financial benefits to the TPSF

This counterclaim emphasizes that BlackRock has provided significant long-term financial benefits, generating over $250 million in excess returns for the Texas PSF during an 18-year relationship, while maintaining competitive fees.

* McCombe argued, "BlackRock has been a trusted partner to Texas PSF in fulfilling this duty for nearly two decades - delivering consistently strong performance for Texas PSF over that time. Our international mandate outperformed Texas PSF’s own benchmark since our partnership began in 2006 – generating in excess of $250 million for Texas PSF – with competitive fees. Fiduciaries should prioritize performance and fees when executing their duty."[62]

#### Texas law included a fiduciary exception that applied to BlackRock's contract

This counterclaim asserts that even if compliance were questioned, Senate Bill 13 explicitly allows state entities to avoid divestment when it conflicts with fiduciary duties. The counterclaim argues that BlackRock’s outperformance aligns with these fiduciary obligations.

* McCombe stated, "Additionally, Senate Bill 13 makes clear divestment is not required when a government entity determines divestment is inconsistent with its fiduciary responsibilities. The outperformance BlackRock has demonstrated shows divestment would not be in the best interest of Texas PSF."[62]

#### The decision to terminate BlackRock's contract violated TPSF’s fiduciary duty

This counterclaim argues that terminating the partnership undermines the financial future of Texas schools, jeopardizing a reliable and productive relationship for political reasons.

* McCombe stated, "The welfare of all Texans remains our shared priority. We are fiduciaries with a mandate to maximize performance for the people that entrust us to manage their money. That has been our guiding principle since our founding in 1988. We are asking for a reevaluation of your decision in order to preserve the productive and mutually advantageous relationship between Texas PSF, our company, and the Texans we serve."[62]

#### The decision to terminate was politically driven and lacked transparency

This counterclaim asserts that the decision-making process lacked transparency and that not all board members were adequately informed. It further argues that the termination was politically motivated, prioritizing short-term politics over long-term financial interests.

* McCombe claimed, "We’ve come to learn that not all Texas PSF board members were made aware of your decision before it was announced and did not have an opportunity to ask questions or share views. How our clients invest and whom they entrust to manage their money is entirely their decision, but we feel an action of this magnitude warrants transparency and consensus – not political-driven decision making. Texas schools and families deserve that."[62]

### Responses to counterclaims

This section lists responses to BlackRock's counterarguments presented by The State Financial Officers Foundation (SFOF).

#### BlackRock’s energy investments are insufficient to disprove a boycott

This response argues that the mere existence of BlackRock’s $320 billion in energy investments, including $120 billion in Texas-based companies, does not negate claims of a boycott. It highlights that BlackRock’s energy portfolio is disproportionately allocated toward renewable energy and decarbonization projects, rather than traditional oil and gas, which undermines the fossil fuel industry.

* The State Financial Officers Foundation's (SFOF) response to BlackRock's claims arguing that "BlackRock, the world’s largest asset manager, has taken significant steps to promote decarbonization, claiming that “climate risk is investment risk.” In its 2030 net zero statement, BlackRock outlines its vision for our future—by 2030, all issuers should develop and implement 2 robust transition plans."[63]

#### BlackRock’s ESG policies and proxy voting practices actively harm fossil fuels

This response argues that BlackRock’s ESG policies and proxy voting practices go beyond simple investment decisions and directly undermine fossil fuel companies. It emphasizes that BlackRock pressures companies to transition away from oil and gas through corporate governance advocacy and shareholder votes, which qualifies as a boycott under Texas Senate Bill 13.

* The State Financial Officers Foundation report continued, "Furthermore, advocating reductions in fossil fuel production would, if effective, inflict economic harm on the companies. Taking actions to discourage consumption of those fossil fuels hurts that industry. Finally, pressure to decrease the use of energy coming from fossil fuels, if effective, would limit commercial relations with such companies."[63]

#### BlackRock’s fiduciary exemption claim does not justify continued investment

This response argues that BlackRock’s reliance on the fiduciary exemption in Senate Bill 13 is invalid because its ESG priorities conflict with the PSF’s long-term obligation to maximize revenues for Texas schools. It claims that BlackRock’s practices, by undermining the oil and gas industry, threaten a critical revenue source for the PSF, thereby failing to align with fiduciary duties.

#### BlackRock’s financial performance does not outweigh the harm it causes to Texas interests

This response argues that while BlackRock claims $250 million in excess returns for the PSF over 18 years, this short-term financial performance is outweighed by the long-term harm to Texas schools caused by BlackRock’s policies. It asserts that undermining oil and gas revenues—an essential funding source for the PSF—represents a far greater threat to Texas schools than the benefits of any temporary outperformance.

* State Financial Officers Foundation argued, "However, having a large amount of investment in the energy sector does not demonstrate a lack of boycotting of oil and gas. BlackRock is a very large private asset manager, the largest in the world—whatever it holds, it will tend to hold quite a lot of. But with assets of roughly ten trillion dollars, it is not clear that 320 billion represents a proportionate share compared to the rest of the industry. In addition, investing in the energy sector is not the same as investing in oil and gas."[63]

#### The TPSF’s decision aligns with fiduciary responsibility

This response argues that divesting from BlackRock is consistent with the PSF’s fiduciary duty because it prioritizes protecting long-term revenues from oil and gas royalties, which fund Texas schools, over BlackRock’s short-term investment performance.

* SFOF asserts, "How exactly does PSF's action violate its fiduciary duty? In other contexts, BlackRock's allies have argued that firing BlackRock violates fiduciary duty because of the transition costs of selling the investment. But that occurs whenever a portfolio switches from one investment to another. If it’s non-fiduciary to incur any transition costs, then it’s non-fiduciary almost ever to change investment portfolios. Sometimes it has been suggested that firing BlackRock violates fiduciary responsibility because of BlackRock's low fees. However, there are other large firms with comparably low fees and new entrants willing to match or beat BlackRock's cost of managing money."[63]

## The debate over California's climate disclosure requirements

California Governor Gavin Newsom (D) signed California Senate Bills 253 and 261 into law on October 7, 2023. These bills, titled the Climate Corporate Data Accountability Act (CCDAA) and Climate-Related Financial Risk Act (CRFRA), respectively, require business entities conducting business within California with total revenues above $1 billion to report greenhouse gas emissions and climate-related financial risks annually. The CCDAA requires businesses to report Scope 1, Scope 2, and Scope 3 emissions, which include indirect upstream and downstream greenhouse gas emissions such as those generated through purchased goods and services, business travel, employee commutes, and consumer use of sold products. Newsom said the climate disclosure laws demonstrated a bold response to climate change and that they turned information transparency into climate action. He pushed the implementation date of the legislation due to concerns about feasibility and expressed concern about inconsistent reporting according to the protocol specified in the bill and the financial impacts of the bill.[64][65][66][67]

The U.S. Chamber of Commerce, among other plaintiffs, sued the California Air Resources Board on January 30, 2024, over the climate disclosure laws. The lawsuit alleged that they violated the First Amendment, the Supremacy Clause, and the United States Constitution’s limitations on extraterritorial regulation. A judge denied the plaintiff's motion for summary judgment on November 5, 2024.[68]

This section presents arguments from both sides of the debate, highlighting the broader national conflict surrounding ESG policies and their influence on business.

Claims

* Requiring companies to disclose greenhouse gas (GHG) emissions and climate risks ensures greater transparency for investors
* Climate disclosures empower stakeholders to make informed decisions and hold companies accountable for their environmental impact
* Disclosure requirements help identify vulnerabilities and enable better risk management
* Climate-related risk reports help ensure businesses are prepared for climate-related disruptions
* The policies set a positive precedent for national and global climate governance, encouraging other jurisdictions to follow suit
* The regulations align with increased investor demand for standardized and comprehensive climate-related data

Counterclaims

* The disclosure requirements compel companies to speak on topics they may not wish to address, violating free speech rights
* Forcing companies to disclose value-chain emissions (Scope 3) imposes an excessive burden and is overly prescriptive
* California's laws would regulate companies operating beyond its borders, burdening interstate commerce under the Supremacy Clause
* Climate disclosures are inaccurate and ineffective
* The disclosure requirements hurt farmers

Responses to Counterclaims

* The disclosure laws caused no harm under the First Amendment
* Many companies already track emissions and risks voluntarily, so the laws are not overly burdensome
* The disclosure laws do not burden interstate commerce in violation of the Supremacy Clause
* The disclosure laws are effective in filling an information gap for investors and consumers about climate risks

### Claims

Claims in this section argue in favor of California's climate disclosure laws.

#### Requiring companies to disclose greenhouse gas (GHG) emissions (including Scope 3) and climate risks ensures greater transparency for investors, consumers, and stakeholders

This claim argues that climate change poses financial risks and is relevant to investors when considering which companies to invest in.

* In a motion to dismiss a lawsuit challenging California Senate Bills 253 and 261, the defendants argued: "In passing Senate Bills 253 and 261, the Legislature noted that the current reporting initiatives 'lack the full transparency and consistency' needed by California residents, consumers, and investors to fully understand climate risks ... The Legislature sought to resolve the problem of inconsistent reporting among companies doing business in the State by crafting laws that comprehensively serve to 'inform investors, empower consumers, and activate companies to improve risk management in order to move towards a net-zero carbon economy,' ... and 'set mandatory and comprehensive risk disclosure requirements for public and private entities to ensure a sustainable, resilient, and prosperous future'."[69]

#### Climate disclosures empower stakeholders to make informed decisions and hold companies accountable for their environmental impact

This claim argues that climate disclosure laws allow citizens to allocate their money according to their values.

* Clara Vondrich, senior policy council with Public Citizen’s Climate Program, reacted to the passage of California climate disclosure laws saying: "This legislation will let the public and regulators track companies’ decarbonization progress and hold them accountable to their climate promises. And it will let investors safeguard their savings against climate-related risks and invest in ways that align with their values."[70]

#### Disclosure requirements help identify vulnerabilities and enable better risk management

This claim argues that climate disclosure laws help companies assess and mitigate climate risks to maintain and improve financial performance.

* Contributing authors Mike Eardley, Tara Copas, and Kyle Sullivan argued in Corporate Compliance Insights: "Climate risks can significantly impact financial performance and long-term viability. Incorporating climate-related disclosures into broader risk management frameworks enables companies to better identify, assess, and mitigate these risks. This proactive approach strengthens organizational resilience and prepares companies for a future where climate-related challenges are increasingly prevalent."

#### Climate-related risk reports help ensure businesses are prepared for climate-related disruptions

This claim argues that climate disclosure laws help companies prepare for what it calls an increasingly uncertain future as it pertains to climate risks.

* Contributing authors Mike Eardley, Tara Copas, and Kyle Sullivan argued in Corporate Compliance Insights: "Notwithstanding the challenges facing the SEC’s climate disclosure rule, the strategic integration of climate disclosure programs into risk management is essential for businesses navigating an increasingly uncertain future, particularly as insurers tighten their requirements for coverage."[71]

#### The policies set a positive precedent for national and global climate governance, encouraging other jurisdictions to follow suit

This claim argues that California's climate disclosure laws set the stage for the U.S. Securities and Exchange Commission (SEC) to implement national reporting regulations, since California's disclosure laws apply to a vast number of American businesses and implementation costs for the SEC regulations would be low.

* Climate policy researcher Sadie Frank argued: "Overall, the California laws mean that a substantial amount of American firms are now likely subject to a strong climate disclosure rule. Practically speaking, the compliance costs of the SEC rule have now plummeted, since any costs for companies to produce emissions inventories or physical risk assessments will already be incurred under California’s laws for covered firms. For firms that need to disclose their risks in annual reports and elsewhere under the SEC rule, compliance will now mean looking up and reporting back information that has already been collected. And while the SEC has faced substantial pushback regarding the inclusion of Scope 3 emissions disclosure, which opponents argue is costly to collect, SB 253’s Scope 3 mandate means that as the rule is implemented, data quality will likely go up, while data costs go down. In other words, the California laws have now cleared the path for the SEC to pass its own rule with reduced costs for both the agency and US companies."[72]

* Law firm Vinson and Elkins wrote: "Some commentators have hypothesized that the California Climate Accountability Package may provide the SEC with some political cover to push more aggressive positions in its own final climate rules, as the California legislation would already provide significant burdens related to Scope 3 GHG emissions reporting for a large swath of publicly listed companies that would be swept under both reporting mandates given their size and California nexus."[65]

#### The regulations align with increased investor demand for standardized and comprehensive climate-related data

This claim argues that climate change poses a significant financial risk for certain companies and that climate disclosure laws help investors make holistic financial decisions.

* Contributing author Sadie Frank argued in Green Central Banking: "These disclosures are increasingly important to the functioning of capital markets. As climate risks begin to drive losses across the global economy, surveys of investors consistently confirm the importance of climate risk disclosures in capital allocation and risk management. Regulators like the SEC have responded to the growing need for climate risk information with a wave of climate risk disclosure initiatives and mandates."[73]
* EarthJustice, an environmentally focused law firm, argued: "The [SEC's climate disclosure] rule comes amid a growing consensus among financial regulators in the U.S. and around the world that climate change poses significant risks to financial systems, and that securities regulators have an important role to play in mitigating those risks in order to protect investors and the economy. Even fossil fuel companies like Exxon and Chevron have begun to selectively concede that their assets are at risk for impairment due to climate change and the energy transition, which could have major impacts on investors and markets."[74]

### Counterclaims

These claims oppose California's climate disclosure laws.

#### The disclosure requirements compel companies to speak on topics they may not wish to address, violating free speech rights

This claim argues that climate disclosure laws compel businesses to speak noncommercially on controversial political matters and are therefore unconstitutional under the First Amendment.[75]

* In a lawsuit filed by the U.S. Chamber of Commerce and others against the California climate disclosure laws, the plaintiffs argued the following: "Senate Bills 253 and 261 impermissibly compel thousands of businesses to make costly, burdensome, and politically fraught statements about 'their operations, not just in California, but around the world,' ... in order to stigmatize those companies and shape their behavior. Both laws unconstitutionally compel speech in violation of the First Amendment."[76]

#### Forcing companies to disclose value-chain emissions (Scope 3) imposes an excessive burden and is overly prescriptive

This claim argues that disclosure laws impose excessive costs that are particularly burdensome for small businesses.

* In a lawsuit filed by the U.S. Chamber of Commerce, among others, against the California climate disclosure laws, the plaintiffs argued: "Estimating greenhouse-gas emissions is enormously burdensome. The requirement to estimate and report Scope 3 emissions alone will cost many companies more than $1 million per year. ... The burden of estimating Scope 3 emissions flows up and down the supply chain. Small businesses nationwide will incur significant costs monitoring and reporting emissions to suppliers and customers swept within the law’s reach. For example, scores of family farm members of AFBF will need to report emissions to business partners that do business with entities covered by S.B. 253."[76]

* Law firm Vinson and Elkins wrote: "Although Scope 3 GHG emissions often account for over 90% of an organization’s overall carbon inventory, such emissions are exceptionally challenging to measure. Companies would also be required to have their emissions data validated by an independent auditor and publicly disclose such reporting via a digital platform, which must be capable of allowing stakeholders, consumers and investors to view the data in an 'easily understandable' manner."[65]

#### California's laws would regulate companies operating beyond its borders, burdening interstate commerce under the Supremacy Clause

This claim argues that because many businesses operate in multiple jurisdictions, California's climate disclosure laws regulate areas outside of California's jurisdiction, violating the Supremacy Clause of the U.S. Constitution.

* In a lawsuit filed by the U.S. Chamber of Commerce and others against the California climate disclosure laws, the plaintiffs argued the following: "Senate Bills 253 and 261 ... seek to regulate an area that is outside California’s jurisdiction and subject to exclusive federal control by virtue of the Clean Air Act and the federalism principles embodied in our federal Constitution. These laws stand in conflict with existing federal law and the Constitution’s delegation to Congress of the power to regulate interstate commerce." The plaintiffs continued: "While federal law may permit California to regulate greenhouse gas emissions within the State’s own borders, California has no right to regulate emissions in other states or in other parts of the world, let alone to do so through a novel program of speech regulation."[76]

* Contributing authors argued the following in a post on the Harvard Law School Forum on Corporate Governance: "Once finalized, these laws will have a profound impact, extending well beyond the border of California. Any company that “does business” in California and has revenues above the relevant threshold (regardless of the geographic source of the revenues) is subject to the laws’ requirements, regardless of where its operations are located. As discussed below, “doing business” is a standard that is likely satisfied by fairly minimal interactions with California. It is estimated that S.B. 253 and S.B. 261 will cover over 5,000[3] and 10,000[4] companies, respectively, including many privately-held companies unlikely to have assessed the scope of their GHG emissions or adopted the TCFD recommendations (which are designed for public companies). They also include disclosure requirements that go beyond the far-reaching requirements of the SEC’s proposed climate-related disclosure rule or the current practices of most public companies."[77]

#### Climate disclosures are inaccurate and ineffective

This claim argues that there is little evidence that estimating a company's climate impact is accurate, making disclosure requirements expensive and ineffective in reducing climate impact or increasing investor information.[76]

#### The disclosure requirements hurt farmers

This claim argues that disclosure laws incur excessive costs that are particularly burdensome for small businesses.

* In a lawsuit filed by the U.S. Chamber of Commerce against the California climate disclosure laws, the American Farm Bureau Federation, an additional plaintiff, argued the following: "Nearly every farmer touches the value chain of those that will be directly regulated by the laws and thus will be caught up in those companies’ efforts to report Scope 3 emissions, incurring burdensome compliance costs, regardless of their contacts with California. Moreover, some regulated companies may favor larger farms that can more easily supply the information, to the detriment of smaller operations, leading to increased consolidation and integration."[76]

### Responses to counterclaims

This section contains arguments supporting California's climate disclosure laws against the opposing counterclaims.

#### The disclosure laws caused no harm under the First Amendment

This claim argues plaintiffs opposing the laws did not plead a sufficient injury under the First Amendment to justify the lawsuit's standing in federal court.

* In a motion to dismiss a lawsuit challenging California Senate Bills 253 and 261, the defendants argued: "While Plaintiffs plead a purported injury for their First Amendment claim, they fail to plead a sufficient injury to support standing with respect to their preemption and extraterritoriality challenges."[78]

#### Many companies already track emissions and risks voluntarily, so the laws are not overly burdensome

This claim argues that since many companies already report emissions and climate risks under other climate disclosure programs, such as the European Union’s Corporate Sustainability Reporting Directive, California's climate disclosure laws would not be overly burdensome.

* In a motion to dismiss a lawsuit challenging California Senate Bills 253 and 261, the defendants argued: "Both climate-related disclosure bills were enacted against the backdrop of other reporting frameworks under which many of Plaintiffs’ member companies already operate. ... The Legislature sought to resolve the problem of inconsistent reporting among companies doing business in the State by crafting laws that comprehensively serve to 'inform investors, empower consumers, and activate companies to improve risk management in order to move towards a net-zero carbon economy,' 2023 Cal. Stats., ch. 382 § 1, and 'set mandatory and comprehensive risk disclosure requirements for public and private entities to ensure a sustainable, resilient, and prosperous future.' 2023 Cal. Stats., ch. 383 § 1."[78]

#### The disclosure laws do not burden interstate commerce in violation of the Supremacy Clause

This claim argues that no federal laws preempt state climate impact disclosure laws, including the Clean Air Act, which preserves state authority over air pollution. It includes claims arguing that California's law doesn't regulate the environment and instead only creates an informational reporting requirement.

* In a motion to dismiss a lawsuit challenging California Senate Bills 253 and 261, the defendants argued: "Moreover, Plaintiffs have not stated a claim under the Supremacy Clause, as they failed to identify any federal law that preempts these state disclosure laws. The only law they do identify—the Clean Air Act—is inapplicable to these reporting frameworks, and in any event, preserves state authority in the field of air pollution."[78]

* In a motion to dismiss a lawsuit challenging California Senate Bills 253 and 261, the defendants argued: "The Plaintiffs’ second claim rests on an incorrect premise: that these statutes 'regulate greenhouse-gas emissions outside of [California’s] own borders.' These statutes require informational disclosures; they are not laws regulating the emissions themselves. Plaintiffs admit that 'the laws do not directly require reductions in greenhouse-gas emissions.' In fact, the entire basis of the Plaintiffs’ First Amendment claim is that these statutes regulate speech, not emissions."[78]

#### The disclosure laws are effective in filling an information gap for investors and consumers about climate risks

This claim argues that California's climate disclosure laws filled a gap in climate governance, giving investors the information about climate risk they need to make investment decisions.

* In a motion to dismiss a lawsuit challenging California Senate Bills 253 and 261, the defendants argued: "In passing Senate Bills 253 and 261, the Legislature noted that the current reporting initiatives 'lack the full transparency and consistency' needed by California residents, consumers, and investors to fully understand climate risks ... The Legislature sought to resolve the problem of inconsistent reporting among companies doing business in the State by crafting laws that comprehensively serve to 'inform investors, empower consumers, and activate companies to improve risk management in order to move towards a net-zero carbon economy,' ... and 'set mandatory and comprehensive risk disclosure requirements for public and private entities to ensure a sustainable, resilient, and prosperous future.'"[78]

## The debate over NYC's fossil fuel divestment

The New York City Teachers’ Retirement System, the New York City Employees’ Retirement System, and the New York City Board of Education Retirement System divested from publicly traded fossil fuel reserve owners.[79] The decision aligned with New York City's commitment to "divest major pension funds from fossil fuels by 2022, increase investments to $8 billion in climate change solutions – such as renewable energy, energy efficiency, and green real estate – by 2025, further ramp up investments in climate solutions to $50 billion by 2035, and achieve net-zero portfolio emissions by 2040."[80]

Four public employees filed a lawsuit (Wong et al v. NYCERS) in May 2023, challenging the divestment decision. They claimed the pension plans divested from fossil fuel stocks without doing a proper financial analysis, that climate change is unrelated to financial considerations, and that fossil fuels are a financially profitable investment.[81] The motion was dismissed because the four plaintiffs were determined by the court not to have suffered any injury as a result of the divestment.[79]

Claims

* Divesting from fossil fuels mitigates material financial risks
* Investing in fossil fuels would threaten the pension board's fiduciary duty
* Divesting from fossil fuels is good for the environment
* Investing in clean energy expedites the implementation of climate solutions

Counterclaims

* Divestment prioritizes ideological goals over fiduciary duty
* Underfunding of the pension plan would be detrimental to New York's taxpayers
* The plans divested without first doing a proper financial analysis
* Over the last decade, fossil fuel stocks overall did not perform worse than the market as a whole

Responses to Counterclaims

* Pension fund beneficiaries have not and will not suffer injury due to divestment
* Addressing climate change is not a political choice but an economic imperative
* Fossil fuel investments pose long-term financial risks due to the risks of climate change
* The divestment decision was well-researched and a financially sound decision

### Claims

This section lists claims supporting the divestment of New York City's pension funds from fossil fuel investments.

#### Divesting from fossil fuels mitigates material financial risks

This claim argues that the use of fossil fuels poses a financial risk, and companies that transition to other energy sources are better positioned for success.

* NYC Comptroller Brad Lander stated, “Our pension funds are implementing ambitious and well-researched plans to address the material risks of climate change — including divesting from fossil fuels, investing in renewable energy and climate solutions, and actively engaging with our asset managers and portfolio companies to reduce their financed emissions."[79]

#### Investing in fossil fuels would threaten the pension board's fiduciary duty

This claim argues that fossil fuels have not performed well in the stock market and that investing in such stocks would threaten the pension board's fiduciary duty.

* The Mayor's Office of Climate & Environmental Justice wrote, "By committing to remove fossil fuel assets from investment portfolios and increasing assets in sustainable companies and projects, NYC recognizes the dangerous business models of fossil fuel companies. They not only emit planet-warming and health-harming pollution, but also have experienced lagging stock market performance and weak outlooks, putting pension fund trustees at risk of breaching their fiduciary duty."[80]

#### Divesting from fossil fuels is good for the environment

This claim argues that divesting from companies that are responsible for large greenhouse gas emissions can have a positive impact on climate change.

* Queens Borough President Donovan Richards Jr. said, “From the destruction inflicted on our coastal communities during Superstorm Sandy to the unprecedented flooding of our inland neighborhoods during Hurricane Ida, no borough has felt the severe sting of climate change like Queens. By successfully divesting billions of dollars from fossil fuel-related securities that directly contribute to a warming planet, New York City is once again claiming its place at the forefront of the global green revolution. Divesting from fossil fuel is itself a direct investment in the future health and well-being of our families, ensuring our children have a fighting chance against the perils of climate change.”[82]

#### Investing in clean energy expedites the implementation of climate solutions

This claim argues that investing in clean energy and divesting from fossil fuels makes the implementation of climate solutions possible.

* The Mayor's Office of Climate & Environmental Justice wrote, "In March 2021, the City announced that it had invested $6 billion in climate solutions, surpassing its initial goal nearly a year ahead of schedule. If all U.S. pensions sustainably invested the same percentage of assets as NYC, half of the homes in the country could be solarized."[80]
* NYC Comptroller Scott M. Stringer stated, “Today is a major victory for our planet, our children, and our pensioners. The successful divestment of $3 billion out of fossil fuels is proof-positive that environmental and fiscal responsibility go hand in hand. New York City is leading the way toward a clean, green and sustainable economy, and the impacts of the actions we are announcing today will be felt for generations to come."[82]

### Counterclaims

This section lists counterclaims opposing the divestment of New York City's pension funds from fossil fuel investments.

#### Divestment prioritizes ideological goals over fiduciary duty

This claim argues that divestment from fossil fuel companies prioritizes ideological goals and deprioritizes financial returns for pension fund beneficiaries.

* In the decision and order on motion for Wong et al v. NYCERS, "Plaintiffs assert that they have a stake in the outcome of this litigation because defendants’ investment decisions have had 'a detrimental impact on the financial health' of their retirement plans and on their plans’ 'ability to pay the pension benefits they owe.'"[83]

#### Underfunding of the pension plan would be detrimental to New York's taxpayers

This counterclaim argues that if the pension plans didn't have enough money to pay all the beneficiaries due to mismanaged portfolios, New York's taxpayers would have to make up the difference.[83]

* In the motion to dismiss for Wong et al v. NYCERS, "The four individual Plaintiffs do not claim that the Plans have denied them any benefits. Nor do they allege that the Plans will be unable to pay their benefits when they ultimately retire (which they allege will happen between 2027 and 2048, respectively). Rather, they correctly acknowledge that any shortfall between the Plans’ assets and the benefits ultimately owed must be covered by contributions from the government."[78]

#### The plans divested without first doing a proper financial analysis

This counterclaim argues that the plans did not do a proper financial analysis before divesting from fossil fuel stocks and mismanaged their funds.[81]

#### Over the last decade, fossil fuel stocks overall did not perform worse than the market as a whole

This counterclaim argues that fossil fuel stocks did not perform worse than the market as a whole and are therefore a viable investment.

* In the motion to dismiss for Wong et al v. NYCERS, "Plaintiffs allege that fossil-fuel stocks have delivered 'exceptional returns' for shareholders and outperformed the broader market 'by orders of magnitude' in 2022. In particular, Plaintiffs allege that, in 2022, the S&P 500 Energy Sector index 'rose 58 percent, and was the only segment of the S&P 500 index that did not experience a loss for the year.'"[78]

### Responses to counterclaims

This section lists arguments defending New York City's pension funds' divestment against the counterclaims.

#### Pension fund beneficiaries have not and will not suffer injury due to divestment

This response argues that the beneficiaries of the pension funds will not suffer injury due to divestment, regardless of whether or not divesting from fossil fuels is a sound investing strategy.

* In the decision and order on motion for Wong et al v. NYCERS, "The Court reasoned that the plaintiffs did not suffer such an injury because their retirement plan was a 'defined benefit plan,' entitling them to receive a 'fixed payment each month' that does 'not fluctuate with the value of the plan or because of the plan fiduciaries’ good or bad investment decisions.' Therefore, the outcome of the 'suit would not affect their future benefit payments' and the plaintiffs had 'no concrete stake' in the lawsuit."[83]
* In the decision and order on motion for Wong et al v. NYCERS, "Finally, plaintiffs argue that they have standing to bring this action as citizen taxpayers pursuant to General Municipal Law § 51. They do not, however, indicate in their complaint that they are suing under General Municipal Law § 51. In addition, absent fraud, 'or a waste of public property in the sense that [it] represent[s] a use of public property or funds for entirely illegal purposes,' which is not alleged in the complaint, a taxpayer suit does not lie under General Municipal Law § 51."[83]

#### Addressing climate change is not a political choice but an economic imperative

This response argues that addressing climate change risks isn't a political choice, but rather economically necessary.

* New York City Comptroller Brad Lander argued, “The Systems are implementing ambitious and well-researched plans to address the responsibility that investment managers and portfolio companies have to assess the material risks of climate change. Rather than advancing the actual interests of our City’s public employees and retirees, the lawsuit seeks to protect companies that continue to focus on fossil fuels despite the ongoing and necessary transition to a low carbon economy. The courts should call this lawsuit what it is and dismiss it with prejudice.”[81]

#### Fossil fuel investments pose long-term financial risks due to the risks of climate change

This response argues that companies reliant on fossil fuels face long-term financial risks from climate change.

* New York City Mayor Eric Adams stated, “At a time when the impacts of climate change are intensifying, this lawsuit would take our city in the wrong direction. The decisions to divest from fossil fuels were based on determinations that these investments presented too much risk for too little reward. We believe this lawsuit is meritless, and the plaintiffs have even admitted that divestment has not affected their retirement benefits.”[81]

#### The divestment decision was well-researched and a financially sound decision

This response argues that the divestment decision was made based on research and data that supports the idea that fossil fuel divestment is economically beneficial.

* The NYC Comptroller responded in a press release that, "Throughout the lawsuit, the plaintiffs attempt to make three meritless arguments against divestment. They falsely claim that the Plans divested without financial analysis. They pretend that climate-related risks are wholly “unrelated” to financial considerations. And they ignore that, over the last decade, fossil-fuel stocks performed substantially worse than the market as a whole."[81]

## See also[edit]

* State legislative approaches supporting ESG investing
* State legislative approaches opposing ESG investing
* Reform proposals related to environmental, social, and corporate governance (ESG)
* Opposition to environmental, social, and corporate governance (ESG) investing

## Footnotes[edit]

1. ↑ The Dallas Express, "Texas’s Bold ESG Law is Delivering Real Results," accessed October 22, 2024
2. ↑ RealClear Energy, "Terrence Keeley: Why ESG Investments Are Self-Defeating," accessed July 30, 2024
3. ↑ Fraser Institute, "No reliable evidence that ESG investing produces above-average returns," accessed July 14, 2024
4. ↑ Fortune, "We studied 235 stocks–and found that ESG metrics don’t just make a portfolio less profitable, but also less likely to achieve its stated ESG aims," accessed November 16, 2023
5. ↑ NH Journal , "Sununu Steps Up Anti-ESG Fight With Executive Order," accessed April 20, 2023
6. ↑ 6.0 6.1 6.2 6.3 RealClearWire via Center Square, "Op-Ed: ESG investing – politics by other means," May 13, 2021
7. ↑ 7.0 7.1 7.2 7.3 7.4 RealClearPolitics, "Capitalism, Socialism and ESG," May 2021
8. ↑ NH Journal , "Sununu Steps Up Anti-ESG Fight With Executive Order," accessed April 20, 2023
9. ↑ National Review, "Stakeholder Capitalism: Corporatism by Another Name," June 25, 2021
10. ↑ 10.0 10.1 [https://storage.courtlistener.com/recap/gov.uscourts.txnd.377577/gov.uscourts.txnd.377577.157.0.pdf Court Listener, "BRYAN P. SPENCE v. AMERICAN AIRLINES, INC., and AMERICAN AIRLINES EMPLOYEE BENEFITS COMMITTEE," accessed January 13, 2025]
11. ↑ The Wall Street Journal, "Diversity Was Supposed to Make Us Rich. Not So Much." accessed July 4, 2024
12. ↑ New York Post, "Unions using ESG to control workers — and drain Americans’ retirement savings," accessed March 27, 2024
13. ↑ Bloomberg, "GOP State Treasurers Urge Business Group to Put Shareholders First," accessed September 3, 2024
14. ↑ 14.0 14.1 14.2 14.3 14.4 14.5 New York Times, "A Friedman doctrine‐- The Social Responsibility of Business Is to Increase Its Profits," accessed January 7, 2025
15. ↑ New York Times, "Exxon Sues California Over New Climate Disclosure Laws," accessed October 29, 2025
16. ↑ Securities and Exchange Commission "Keynote Address at the John L. Weinberg Center for Corporate Governance’s 25th Anniversary Gala," accessed October 13, 2025
17. ↑ Washington Post, "Opinion: Those beloved progressive initials, DEI and ESG, have lost their gleam," accessed September 25, 2024
18. ↑ Washington Examiner, "Louisiana announces ESG investigation into major climate fund," accessed May 4, 2023
19. ↑ The Hill, "DeSantis, 18 states to push back against Biden ESG agenda," accessed April 3, 2023
20. ↑ Fox News, "House GOP announces aggressive, first-of-its-kind effort to combat ESG movement," accessed February 6, 2023
21. ↑ 21.0 21.1 21.2 21.3 Cour d'Alene/Post Falls Press, "Op-Ed: ESG vs. USA," February 4, 2022
22. ↑ 22.0 22.1 Fox Business, "Why I oppose ESG: Use politics, free markets to decide policy, not coercion," August 22, 2022
23. ↑ American Institute for Economic Research, "Governments, Not Markets, Impel ESG," accessed June 10, 2024
24. ↑ National Review, "‘Stakeholder capitalism’ is corporatism in disguise," July 9, 2020
25. ↑ Claremont Institute, "The Rise of Corporate-State Tyranny," May 17, 2021
26. ↑ The Intelligencer, "West Virginia Treasurer Riley Moore Joins Other Financial Officers Opposing ESG," June 9, 2022
27. ↑ Buckeye Institute, "NET-ZERO CLIMATE-CONTROL POLICIES WILL FAIL THE FARM," February 7, 2024
28. ↑ Fox Business, "Dozen state GOP agriculture commissioners launch probe of US banks over ESG investing: 'It must be stopped,"' accessed February 1, 2024
29. ↑ Florida Politics, "Ron DeSantis blames high insurance costs on ‘ESG’, accessed December 19, 2023
30. ↑ 1819 News, "State Auditor Sorrell: ESG and the death of Alabama agriculture," accessed October 14, 2024
31. ↑ Buckeye Institute, "NET-ZERO CLIMATE-CONTROL POLICIES WILL FAIL THE FARM," February 7, 2024
32. ↑ Fox Business, "'National security concerns' raised as German group purchases influential US advisory firm," accessed May 17, 2024
33. ↑ WFLA 8, "DeSantis announces new legislation to ban ESG, ‘woke’ banking in Florida," accessed February 16, 2023
34. ↑ 34.0 34.1 34.2 34.3 34.4 34.5 34.6 Medium, "The Secret Diary of a ‘Sustainable Investor’ — Part 3," August 20, 2021
35. ↑ 35.0 35.1 Harvard Business Review, "ESG Investing Isn’t Designed to Save the Planet," August 1, 2022
36. ↑ Financial Times, "ESG funds found to have $1.4bn exposure to Xinjiang labour camps," accessed January 8, 2025
37. ↑ RealClear Markets, "The ESG Anti-Israel Push Isn't Taking Sides, It's Choosing Lives," accessed May 2, 2024
38. ↑ VOXEU, "Smoke and mirrors: A look inside ESG fund portfolios," accessed October 20, 2023
39. ↑ SSRN, "ESG Ratings of ESG Index Providers, accessed November 30, 2023
40. ↑ SSRN, "ESG Value Creation in Private Equity: From Rhetoric to Returns," accessed January 14, 2026
41. ↑ 41.0 41.1 The Motley Fool via Yahoo News, "Does ESG Investing Produce Better Stock Returns?" May 22, 2019
42. ↑ Fortune, "Doing Well By Doing Good: 5 Stocks to Buy for 2019," December 5, 2018
43. ↑ Morgan Stanley, "Sustainable Value: Communicating ESG to the 21st Century Investor," accessed September 22, 2022
44. ↑ 44.0 44.1 44.2 44.3 44.4 44.5 The Impact Investor, "8 Reasons Why ESG Investing is Important," accessed September 24, 2022
45. ↑ Chief Investment Officer, "Op-Ed: Europe’s New ESG Rules Create an Opportunity for US Investors," March 31, 2021
46. ↑ PitchBook, "The State of Private Market ESG and Impact Investing in 2024," accessed April 4, 2024
47. ↑ Institutional Investor, "More Fiduciaries Fight Back Against ‘Politically Motivated’ Anti-ESG Movement," accessed March 5, 2025
48. ↑ The Straits Times, "Europe’s banks warn of hidden credit risk in sudden ESG retreat," accessed March 5, 2025
49. ↑ MSCI, "ESG and the cost of capital," February 25, 2020
50. ↑ 50.0 50.1 50.2 50.3 Velocity EHS, "Five Amazing Benefits of ESG for Companies of Any Size," March 21, 2022
51. ↑ Perillon, "Why is ESG Important? 5 Benefits of ESG," May 11, 2021
52. ↑ 52.0 52.1 52.2 Quantive, "What is ESG and Why Does it Matter to your Business?" accessed September 7, 2023
53. ↑ 53.0 53.1 53.2 ESG the Report, "What is Stakeholder Capitalism," accessed September 24, 2022
54. ↑ 54.0 54.1 54.2 54.3 Redshift by Autodesk, "What Is ESG, and Why Is ESG Investing Good for the Planet and for Business?" August 11, 2022
55. ↑ 55.0 55.1 Oklahoman, "Despite legal challenges and exemptions, GOP lawmakers remain committed to anti-ESG law," accessed December 3, 2024
56. ↑ 56.0 56.1 56.2 56.3 56.4 56.5 RealClearEnergy, "Oklahoma’s Anti-ESG Law Is Not Hurting Sooner State Taxpayers or Retirees," accessed December 3, 2024
57. ↑ Oklahoma Rural Association, "Unintended Consequences of the Energy Discrimination Elimination Act in Oklahoma," accessed December 3, 2024
58. ↑ 58.0 58.1 58.2 58.3 Adobe Acrobat, "DON KEENAN v. THE STATE OF OKLAHOMA and TODD RUSS, in his capacity as the TREASURER OF THE STATE OF OKLAHOMA," accessed December 4, 2024
59. ↑ Oklahoma Voice, "State retiree files legal challenge over Oklahoma’s bank boycott law," accessed December 4, 2024
60. ↑ 60.0 60.1 60.2 60.3 60.4 60.5 60.6 National Review, "Kinsey statement about TPSF divestment from Blackrock," March 19, 2024
61. ↑ 61.0 61.1 Twitter.com, "Will Hild's tweet about Blackrock, March 19, 2024
62. ↑ 62.0 62.1 62.2 62.3 62.4 62.5 Blackrock.com, "McCombe response to Kinsey," March 21, 2024
63. ↑ 63.0 63.1 63.2 63.3 SFOF.com, "Rebutting BlackRock’s allegations against the Texas Permanent School Fund," accessed December 10, 2024
64. ↑ California Legislative Information, "SB-253 Climate Corporate Data Accountability Act." accessed December 17, 2024
65. ↑ 65.0 65.1 65.2 Vinson and Elkins, "California’s Bold Move on Climate Disclosures," accessed December 17, 2024
66. ↑ Office of the Governor of California, "To the Members of the California State Senate," accessed December 17, 2024
67. ↑ Office of the Governor of California, "To the Members of the California Senate," accessed December 17, 2024
68. ↑ Climate Case Chart, "Chamber of Commerce of the United States of America v. California Air Resources Board," accessed December 17, 2024
69. ↑ Climate Case Chart, "Memorandum of Points and Authorities in Support of Defendents' Motion to Dismiss Plaintiffs' Amended Complaint for Declaratory and Injunctive Relief," accessed December 16, 2024
70. ↑ Public Citizen, "California Lawmakers Approve Groundbreaking Climate Disclosure Bill," accessed December 10, 2024
71. ↑ Corporate Compliance Insights, "After Hurricane Helene: Companies Can’t Afford to Wait on Climate Disclosures," accessed December 13, 2024
72. ↑ Green Central Banking, "Why California’s climate disclosure laws change the game for the SEC," accessed December 16, 2024
73. ↑ Green Central Banking, "Why California’s climate disclosure laws change the game for the SEC," accessed December 16, 2024
74. ↑ EarthJustice, "SEC Climate Disclosure Rule Represents Important Progress, But Falls Short on Key Metrics of Financial Risk," accessed December 16, 2024
75. ↑ Vinson and Elkins Law, "Business Groups Sue California to Block Climate Disclosure Laws," accessed December 17, 2024
76. ↑ 76.0 76.1 76.2 76.3 76.4 Climate case chart - Climate Change Litigation Databases, "Complaint for Declaratory and Injuctive Relief," accessed December 10, 2024
77. ↑ Harvard Law School Forum on Corporate Governance, "California enacts major climate-related disclosure laws," accessed December 13, 2024
78. ↑ 78.0 78.1 78.2 78.3 78.4 78.5 78.6 Climate Case Chart, "Memorandum of Points and Authorities in Support of Defendents' Motion to Dismiss Plaintiffs' Amended Complaint for Declaratory and Injunctive Relief," accessed December 16, 2024 Cite error: Invalid `<ref>` tag; name "motiontodismiss" defined multiple times with different content
79. ↑ 79.0 79.1 79.2 Comptroller.nyc.gov, "NYC Comptroller Lander & Pension Trustees Celebrate Dismissal of Lawsuit Challenging Fossil Fuel Divestment by New York City Pension Funds," December 23, 2024
80. ↑ 80.0 80.1 80.2 climate.cityofnewyork.us, "Divest-Invest," January 24, 2025
81. ↑ 81.0 81.1 81.2 81.3 81.4 Comptoller.nyc.gov, "NYC Pension Funds: Lawsuit Challenging Fossil Fuel Divestment is a 'Waste of Time' and Courts Should End this 'Drain on Public Resources,'" December 23, 2024
82. ↑ 82.0 82.1 Comptroller.nyc.gov, "Comptroller Stringer and Trustees Announce Successful $3 Billion Divestment from Fossil Fuels," January 24, 2025
83. ↑ 83.0 83.1 83.2 83.3 New York County Clerk, "Decision and order on motion for Wong et al v. NYCERS," December 23, 2024

v • e

Environmental, social, and corporate governance (ESG)

Index|

Index of articles about environmental, social, and corporate governance (ESG)

Overviews|

ESG arguments‎ • Opposition to ESG • Reform proposals related to ESG • Federal ESG rules and regulations

Legislation|

State legislative approaches opposing ESG investing • State legislative approaches supporting ESG investing • Enacted state ESG legislation by trifecta status, 2020-2024

Terms|

Environmental, social, and corporate governance • Socially responsible investing • Shareholder model of the corporation • Stakeholder model of the corporation (stakeholder capitalism) • Applied business ethics  • Sustainability (ESG) • Materiality (ESG)

Influencers|

R. Edward Freeman • BlackRock • Sustainability Accounting Standards Board (SASB) • As You Sow • Free Enterprise Project • Institutional Shareholder Services The Great Reset (World Economic Forum) • Stephen Soukup • Vivek Ramaswamy • Net Zero Asset Managers Initiative

Public pensions|

State public pension plans

Newsletter|

Economy and Society (weekly)

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