Anti-ESG Efforts Hit a Roadblock

Attempts by state legislatures across the country to put the brakes on responsible investing are meeting strong headwinds, according to a new report from business consulting firm Pleiades Strategy.

So far this year, the firm’s 2024 Statehouse Report says, out of 161 active bills and resolutions that have aimed to prohibit pension boards, state and municipal governments, and the private sector from considering such factors as a company’s effect on the climate or its treatment of employees in their investment decisions, only six have passed.

That’s a sharp drop from 2023, when 23 “anti-ESG” laws were approved.

The anti-ESG movement is employing a range of strategies. One of those claims that using ESG criteria as part of investment decisions constitutes “denial of financial services,” while another labels ESG efforts as boycotts or discrimination

The Pleiades study cites reasons for the pushback to these state measures. The main one is the high cost of implementing the laws that have already been enacted. “Such laws already have cost residents in states like Texas and Oklahoma hundreds of millions of dollars,” the study says.

Opposition to anti-ESG legislation is uniting groups that often find themselves on different sides in legislative battles, including business groups, financial officers, investors, labor unions, racial justice advocates and environmentalists.

Even bills that do make their way through the legislative process are affected by this trend. “Most anti-ESG laws that passed in 2023 and 2024 were significantly watered down before passage,” according to Pleiades. That weakening is usually achieved through “escape clauses” that limit a bill’s effect.

The study cautions that the efforts promoting anti-ESG legislation are still highly active and well-funded. It notes that the Heritage Foundation’s Project 2025 initiative has made anti-ESG campaigns a central part of its policy.

Pleiades, which advises mission-oriented organizations on strategic planning, policy research and design, and program management is headed by Frances Sawyer, who previously served as deputy director of external affairs to California Governor Jerry Brown.