More than a dozen Republican state attorneys general have criticized ESG financial practices, while Republicans in Congress plan to increase their scrutiny of what they call “woke capitalism.” One of their main complaints is that environmental, social and governance investing is part of a broader Democratic effort to prioritize climate change and other societal issues to the detriment of the fossil-fuel industry.
ERISA and benefits partner Joshua Lichtenstein told Bloomberg that “lawsuits like this will cause the red states to get smarter and more precise about what they try to restrict.”
Roughly 20 of the 35 anti-ESG-related bills introduced during the past two years failed to become law. “Given the success rate, it will be interesting to see going forward whether Democrat-led states press asset managers to uphold their ESG commitments in the face of GOP criticism. In 2022, the pressure was more one sided, but that may not hold in 2023 and beyond.’’ Joshua said.
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