Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.


The best of solutions journalism in the sustainability space, published monthly.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Tina Casey headshot

Support for the Anti-ESG Movement Is Dwindling, But Uncertainty Looms Ahead of Election Day

By Tina Casey
Texas State Capitol Building — public support is dwindling for anti-ESG laws in states like texas

The state capitol building in Austin, Texas, a state with some of the strictest anti-ESG laws on the books. (Image: SvetlanaSF/Adobe Stock) 

Pushback against the use of environmental, social and governance (ESG) factors in business gathered momentum in 2021 when legislators in approximately two dozen Republican-led states passed anti-ESG laws.

Some of these laws restrict state agencies or public pension funds from using ESG factors in their investments. Others ban state and local entities from doing business with specific financial companies that legislators deemed to be unfairly disinvesting from the oil and gas sector because of ESG screens.

In the following years, state attorneys general issued legal warnings and filed lawsuits, including a challenge to the new Securities and Exchange Commission rule supporting ESG investing principles.

Financial firms have used various approaches to navigate the anti-ESG trend. With signs the news cycle — and the general public — appear to be moving on from the narrative, can business leaders and financial professionals finally put the anti-ESG movement in the rear-view mirror?

Is public support for ESG really on the downturn?

Within the financial sector, some firms have responded to anti-ESG actions by lowering their media profile. Instead of substantially altering their ESG investing strategies, they are simply deploying alternative terms in corporate reports and client communications. Some high-profile targets of the anti-ESG movement, like the investment firm BlackRock, have also withdrawn from climate organizations while continuing to maintain ESG commitments through other entities.

In an article posted on Monday, the right-wing think tank Competitive Enterprise Institute, which has established a long association with climate change misinformation, warned the anti-ESG movement not to be fooled by corporate soft-pedaling on ESG principles.

“ESG is still alive and well, even at many of the firms that are publicly backing away from it,” wrote Stone Washington of the Institute. “Left-wing shareholder activism has shifted underground, as institutions adopt guerrilla tactics,” he added, noting that the aim of guerrilla warfare is to “wear the more powerful enemy down by depleting their time, manpower, and resources with constant asymmetrical skirmishes.” He went on to warn shareholders to “be wary of deceptive wording and ulterior methods used to advance ESG within corporations."

Somewhat ironically, Washington’s report reads more like a how-to manual for alternative ESG strategies rather than a criticism of ESG principles. The tell, though, is in the last paragraph where he observes that “public support for ESG has largely been on the downturn.”

But that's not what the data says. On Monday, for example, Forbes contributor Jamie Hailstone noted that the news cycle, and the ESG “debate” itself, have both moved on. He cited a poll by the research firm Verdantix, indicating that 62 percent of business leaders globally “agree that investment in ESG leads to increased revenue.”

“Fifty-two percent agree it would lead to lower costs, and 69 percent say it would lead to lower risks,” Hailstone added. Those findings are consistent with another survey released by the professional services firm EY last month.

“Right now, CEOs are focused on technology, especially artificial intelligence (AI) transformation, as a means to boost productivity and growth,” EY researchers led by Andrea Guerzoni advised. “But when they look into the not-too-distant future, their focus shifts to achieving net zero by decarbonizing their business and creating new revenue streams.”

As for support from the general public, one particularly useful bellwether is Texas, which passed a particularly harsh anti-ESG law in 2021. The financial fallout in terms of higher municipal borrowing costs has been growing. One recent study estimates the damage at $700 million from lack of competition as the state barred certain investment practices and financial firms. 

Against that backdrop, the progressive public opinion research firm Z to A polled Texas residents on behalf of the new ESG advocacy organization Unlocking America’s Future, which presented the results on May 16.

“Texans overwhelmingly (91 percent) trust banks and professional investors over politicians when deciding whether a company is a worthwhile investment,” the study found. “In fact, 83 percent of Texans believe it is not the role of the state government to tell private financial institutions how to invest their customer’s money."

Further, “a majority of Texas voters don’t support or see the need for these anti-ESG laws, with 56 percent of voters opposing ESG bans,” the study concluded. 

Winds shift on the anti-ESG movement, but uncertainty looms ahead of Election Day

Though the legislative successes of the anti-ESG movement have garnered substantial media attention, the movement has also faced considerable setbacks.

Many anti-ESG bills introduced over the past three years were watered down after pension managers and other stakeholders alerted lawmakers to the risk of financial harm, and others never became law at all.

The legal challenges are also beginning to mount. Earlier this month, an Oklahoma district court judge temporarily blocked enforcement of the state’s 2022 anti-ESG law, ruling it unconstitutional. The ruling could also impact similar anti-ESG laws in Texas and elsewhere.

Among other actions, on April 29 the 8th Circuit also allowed a group of 19 attorneys general from Democratic-led state and the District of Columbia to defend the new SEC rule against the Republican lawsuit.

Even if the legislative and legal pendulum is swinging over to the ESG side, advocates should take note that the Competitive Enterprise Institute and many other well-funded organizations are still determined to thwart ESG investing. They will all but certainly get another chance after Election Day, one way or another.

Former U.S. President Donald Trump and his allies are already laying the groundwork to contest the legitimacy of the 2024 presidential election months ahead of Election Day, just as they did in 2020, stoking fears of hacked machines and voter fraud.

Misinformation surrounding the 2020 election culminated in the insurrection of January 6, 2021. The attempt to install a permanent authoritarian ruler narrowly failed that time. Now Trump and his allies have another opportunity to establish a “unified Reich,” as mapped out by a Heritage Foundation book titled "Project 2025."

That sounds preposterous, but the implications for ESG investing are all too real. Business leaders who advocate for ESG should not depend on another Joe Biden administration to support them after Election Day. One way or another, it may not exist.

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.

Read more stories by Tina Casey