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- Hundreds of state-level bills have attempted to limit the consideration of climate risk in investment decisions, but some have succeeded, with over 30 anti-ESG rules, guidelines, boycotts, and laws being passed since 2021.
- Recent legal victories have validated responsible investment decisions and challenged anti-ESG legislation, highlighting the importance of considering financial risks of climate change in investment strategies.
- Cases such as SIFMA v. Ashcroft and Oklahoma’s anti-ESG law demonstrate the importance of fiduciary duty and free speech in investment decisions, with implications for the future of climate-related financial regulations.
The Republican-led “anti-ESG” (environmental, social, governance) movement over the last two years has largely been a legislative effort, comprised primarily of state-level bills that attempt to halt the consideration of climate risk and other commonplace factors in investment decisions connected with government funds, contracts, and pensions. Hundreds of these proposals have failed in state legislatures across the country. But some have succeeded. Since 2021, more than 30 rules, guidelines, boycotts and laws have been passed by various states to thwart ESG goals and bolster industries such as fossil fuels and firearms.
Investors who want the flexibility to consider all relevant risks to their investments have challenged these rules and laws in court, and, in both state and federal cases, the effort has succeeded. Recent wins depend on a range of claims, with one particularly significant victory involving the freedom of speech in Missouri, another based on pension obligations set forth in Oklahoma’s state Constitution, and a third addressing fiduciary duties in the state of New York.
Read the full post at Climate Change Law at Columbia Law School.
