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Tina Casey headshot

With Public Opinion on Their Side, Corporations Begin to Fight for ESG

The state-level movement against environmental, social and governance principles in businesses is beginning to run out of steam. Business leaders are pushing back, and a new study from Rokk Solutions indicates that voters on both sides of the political divide are siding with them.
By Tina Casey
capital rotunda washington DC with american flag - business pushes back on anti ESG laws

An organized effort to prevent corporations from practicing ESG (environmental, social and governance) principles has gained traction among state-level Republican officials in recent years. They typically deploy scary rhetoric about the evils of “woke capitalism” to make their case against ESG investing and corporate practices. However, the movement is beginning to run out of steam. Business leaders are pushing back, and a new study from Rokk Solutions indicates that voters on both sides of the political divide are siding with them.

The anti-ESG movement sowed the seeds of its own destruction

From the beginning, many have said the anti-ESG movement was nothing more than a thinly disguised effort to protect fossil energy industries and prevent investor dollars from flowing into decarbonization technologies, including energy storage as well as wind and solar power. Some anti-ESG measures are also aimed at protecting gun industry stakeholders.

In some cases, there has been no disguise at all. Republican office holders in Texas, for example, passed a state law in 2021 that explicitly prohibits state pension funds from doing business with financial firms that “boycott” fossil energy industries.

Anti-ESG laws are ostensibly aimed at protecting pensioners, but because they have no basis in actual bottom-line impacts, they can backfire. In some cases, banks and other investment firms can pack up and take their business elsewhere. In Texas, for example, competition dried up after the anti-ESG law passed, costing the small city of Anna $277,334 on its bond sale.

In addition to interfering with direct bottom-line decisions, the anti-ESG movement also interferes with businesses that are pursuing DEI (diversity, equality and inclusion) goals. A strong DEI policy helps businesses to attract and retain top talent while building stronger relations with communities, consumers and clients. In contrast, the anti-ESG position overlaps with the “woke capitalism” canard and with hate speech expressed by white supremacists and religious extremists, a sentiment that poses reputational risks for businesses.

Big business quietly finds its voice

To a great extent, businesses only have themselves to blame. Many U.S. corporations have provided financial support to help raise Republicans to power in both the legislative and judicial branches, only to see the “party of big business” suddenly turn around and become their enemy. 

But those financial ties may have helped some business leaders gain the ear of Republican office holders. Earlier this week, reporter Ross Kerber of Reuters took a deep dive into the issue. Among other leaders, he spoke with Lauren Doroghazi, senior vice president at the consulting firm MultiState Associates, who said businesses have seen some success lobbying against anti-ESG bills. Doroghazi estimates that businesses and their allies have succeeded in nipping more than 80 percent of state-level, anti-ESG proposals in the bud, though many still remain on the table.

Kerber also spoke with BlackRock Chief Financial Officer Martin Small, who also indicated that investment firms have had some success in alerting Republican office holders to the potential for anti-ESG bills to backfire and the resulting costs for public pension plans.

For example, earlier this month in Kansas, the state’s own Division of the Budget released an estimate that a newly proposed anti-ESG bill would cut state pension returns by $3.6 billion over a 10-year period, Kerber reported. Legislators made some changes in the bill, and a watered-down version eventually passed into law on April 24. However, it still includes provisions aiming to prevent public officials from considering ESG principles in financial transactions.

Your indoor voice is not working

So far, most of the corporate pushback against anti-ESG laws is happening in meetings behind closed doors. That strategy has met with much success, according to Doroghazi’s analysis. But the approximately 1 in 5 anti-ESG laws that do pass could do considerable damage. Even if banks and other financial firms suffer little direct impact, businesses could still feel the ripple effect and reputational loss of doing business in states with anti-ESG regulations and increasingly repressive social policies

Businesses can and should begin listening to public opinion and amplifying the public's voice. Survey after survey shows that the majority of U.S. voters and other adults support climate action, abortion rights, racial and gender equality, restrictions on gun ownership, and other progressive values that are consistent with corporate ESG principles.

The fact is that the public voice needs help. Minority rule by Republican office holders has become a feature in states like Wisconsin, where gerrymandering has provided Republican districts with outsized power relative to their population. 

With red-state Democratic representation concentrated in cities, state-level Republican office holders can also consolidate power by stripping municipalities of their authority to govern. In Texas, the state legislature is currently considering a bill that would pre-empt local control by cities and counties on a variety of issues including drought response, predatory lenders and worker protections. The Tennessee legislature has moved to undermine Democratic representation in Nashville, and the New York Times has described how state legislatures in Georgia and elsewhere are stripping power from local election boards.

It's time to pick sides on ESG

At the same time, the opinions of U.S. voters and consumers are becoming more aligned with ESG principles, and the up-and-coming generation of workers is turning away from employment in fossil energy industries.

Last week, the K Street communications firm Rokk Solutions issued an updated survey of voter opinions undertaken last year. The latest polling found that a majority of voters in both parties “believe corporate environmental action is relevant to their financial futures.”

“This belief increases for specific efforts like conservation and resource management,” the report reads. Strong majorities of both Republican and Democratic voters also view de-risking business as important to their financial futures. In particular, voters in both parties indicate that climate action is “important to their financial fortunes.”

“Republican support rises significantly for specific areas like water conservation, waste management and biodiversity,” Rokk found.

Republican voters are still skeptical of long-term climate goals, and a partisan difference of opinion persists on social issues, the report found. Still, the growing consensus on specific areas of sustainability provides businesses with a common ground on which to make the case for ESG investing, out loud and in public.

Image credit: Joshua Sukoff/Unsplash

Tina Casey headshot

Tina writes frequently for TriplePundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes.

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