Among the latest conservative culture wars is a crusade against environmental, social, and governance (ESG) investing, a philosophy and practice in which companies take into account non-financial factors like greenhouse gas emissions when making business decisions. Using public records requests, American Oversight is investigating the impacts of anti-ESG bills and the influence networks working behind the scenes.

From January to June of 2023, more than 160 bills targeting ESG investing were introduced in 37 states. While the majority failed, more than 20 became law across 16 states. Groups like the American Legislative Exchange Council (ALEC), Heartland Institute, and Heritage Action have crafted several versions of model anti-ESG legislation. These include bills to prevent states from entering contracts with ESG-minded financial institutions, to restrict the investments of state retirement funds, and to ban states from considering ESG when selecting contractors.

Texas was an early leader in the attack on ESG. In 2021, the state legislature passed a law banning municipalities from using banks that limit financing for fossil fuel and firearms industries. Five municipal bond underwriters left the state as a result, leading to increases in borrowing costs for localities. Despite this financial hit, the legislature in 2023 passed another anti-ESG law prohibiting insurers from considering ESG factors when setting rates for almost all types of insurance. 

Along with increased costs to states, anti-ESG laws have resulted in a confusing patchwork that companies have reportedly found difficult to navigate. In addition, these efforts are roadblocks on the path to transitioning away from fossil fuel energy and mitigating the risks of climate change. In 2022, Oklahoma adopted a law — the “Energy Discrimination Act” — that requires the state to divest from companies that limit investment in the energy industry. In response, American Oversight filed records requests to the Oklahoma Treasury Department for records that identify whether the state had divested from any company in response to the new law.

In Florida in May 2023, Gov. Ron DeSantis signed one of the most sweeping pieces of anti-ESG legislation, a law banning state officials from favoring ESG goals when investing public money. Echoing the language of anti-ESG conservative activists, DeSantis’ office claimed that the law would “protect Floridians” by pushing back against “a worldwide effort to inject woke political ideology across the financial sector” by “placing politics above the fiduciary duty.” American Oversight has filed numerous records requests to state agencies in Florida seeking communications with anti-ESG groups and records related to divesting from companies with ESG policies.   

Republican attorneys general are also aggressively targeting ESG. In October 2022, Ken Paxton of Texas, Mark Brnovich of Arizona, and other conservative state leaders launched an investigation into six major banks’ involvement with the United Nations Net-Zero Banking Alliance, a group of institutions “committed to aligning their lending and investment portfolios with net-zero emissions by 2050.” In early 2023, a group of 25 Republican attorneys general sued the Biden administration over a Labor Department rule that allowed retirement account managers to consider ESG when selecting investments. 

American Oversight has filed records requests to several other states’ treasury departments and other agencies seeking communications about ESG as well as analyses of the financial impact of divesting from ESG institutions. We’ve also asked for communications with anti-ESG organizations such as the State Financial Officers Foundation, the Heritage Foundation, Consumers’ Research, and CRC Advisors, and for communications with lawyer and legal activist Leonard Leo and conservative commentator Andy Puzder, both of whom have reportedly advocated for anti-ESG policies.