News brief:
Republicans in the Mountain West are trying to fight against environmental, social and governance standards in investing – known by the shorthand ESG.
Sometimes called “woke capitalism,” ESG is a loosely defined term that can gauge companies on their approach to social issues like climate change. The vast majority of companies on the S&P 500 publish some sort of ESG report. And these issues can impact financial decisions on companies involved in businesses like oil and gas or firearms.
ESG has become a talking point for conservatives in recent years, even though it’s complicated to understand, said independent researcher Connor Gibson. He said carefully coordinated campaigns from right-wing lobbyists and think tanks are bringing this issue to mainstream politics.
“The opponents of so-called ESG are defining it in their own terms,” he said. “They're scaring people in terms of what the implications for ESG are and they are allowing it to be the basis for an agenda that ultimately is intended to subsidize the fossil fuel industry indefinitely.”
In recent years, this rhetoric has made it into statehouses across the country. Gibson worked with research firm Pleiades Strategy to track anti-ESG bills in 2023. The report found that 15 were introduced in state legislatures in the Mountain West, and at least one passed in Idaho, Utah and Montana.
Such bills often limit institutions like banks, credit unions or others from making investment decisions based on non-financial factors. Sometimes, they bar financial companies from boycotting industries like fossil fuels or firearms. Proponents argue that the bills protect vital local industries.
Meanwhile, anti-ESG efforts failed in Nevada, Colorado and Wyoming. Critics said the bills add unnecessary bureaucracy to lending and other financial decisions and could lead companies to disinvest in a state.
“The treasurers and financial officers in those states are warning Republicans, ‘You are cutting off both of our arms here by limiting our ability to do business with some of the cheaper firms,’” Gibson said. “If they alienated themselves from Wall Street, essentially, it wasn't going to be doing the state any favors.”
In Wyoming, politicians have vowed to try again next year to combat ESG.
The debate over social consciousness in investing has also reached Washington. A Republican-led proposal to prevent pension fund managers from basing decisions on ESG standards was approved by Congress, but was vetoed by President Joe Biden.
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, KUNC in Colorado and KANW in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.
