September 24, 2023
ESG is a long-running movement in the corporate world that has recently encountered stronger Republican pushback. Here is what it is and how it affects the public.

ESG is a long-running movement in the corporate world that has recently encountered stronger Republican pushback
. Here is what it is and how it affects the public.

ESG is short for environmental, social, and governance — a movement that centers on compelling social change through investment and divestment. It is a corporate model that doesn’t solely look at maximizing profit but also incorporates other elements into financial decisions — for instance, how an investment might affect fossil fuel emissions.

Activists, activist investors, and some major corporations have for years gained support for tying investment decisions to ESG considerations. The ESG movement is closely tied to the idea of transitioning away from shareholder capitalism in favor of “stakeholder capitalism,” which bucks the notion that the sole purpose of a corporation is to serve its shareholders and rather also focuses value on customers, employees, suppliers, and communities.


Who are ESG’s supporters?

There are a growing number of titans in the finance world who have embraced the shift toward ESG. Those who support further integrating ESG into investment decisions and finance more generally see it as a way that the private sector can help mold the world into a better place. Some of its proponents are concerned about climate change or social inequality and see ESG as a way to use markets to help.

Still, other proponents of ESG see it as part of an investment strategy that can drive high profits. Companies have sprung up to meet the demand for more corporate ESG — for example, carbon offset providers and corporate climate advisers.

BlackRock CEO Larry Fink has emerged as one of the most prominent faces of the ESG push (and a public punching bag for opponents). For instance, in 2020, Fink’s much-anticipated annual letter focused on climate change, saying the matter was becoming a “defining factor” in BlackRock’s assessment of companies.

While BlackRock and Fink have been accused of trying to harm the energy industry, BlackRock contends that it merely asks companies to provide disclosures on material issues that affect their businesses so that investors can appraise risks, such as climate change, and make informed financial decisions.

Who are ESG’s detractors?

Pushback to the ESG movement has grown, and quickly, over the past couple of years. For instance, the conservative nonprofit group Consumers’ Research has dedicated tens of millions of dollars to advertising and awareness campaigns against ESG and has launched broadsides against Fink specifically.

Most of the opposition to ESG comes from the Right, with the issue becoming an increasingly political matter. The State Financial Officers Foundation, which is composed of the top Republican financial officers — for instance, state treasurers — has been active in coordinating pushback.

Taking corporate focus away from merely providing quality products or services for customers and shareholder value for investors causes consumers to suffer, critics of ESG argue. Republicans see the growing push as an attempt to distort the free market and, in some respects, even culture through capital and influence.

ESG has also entered the national discourse through the efforts of media juggernauts such as Twitter owner and Tesla founder Elon Musk. Musk has used his social media company to bash ESG in front of his 130 million followers.

“The S in ESG stands for Satanic,” Musk said in January.

“I am increasingly convinced that corporate ESG is the Devil Incarnate,” he said last year.

How can ESG affect consumers?

Will Hild, the executive director of Consumers’ Research, said that the biggest effect of ESG on consumers is being felt in their checkbooks. He said corporate ESG initiatives have added to the high rate of inflation, particularly when it comes to energy costs.

Many companies are pushing net-zero targets, which drive up costs because it makes it more expensive to process their goods, according to Hild.

“What the ESG policies do in terms of the ‘E’ is to push up energy costs. Energy is a variable in the cost of every good and service in the United States. So any time you’re pushing up energy costs through things like reduced oil discovery and recovery, you are raising costs for consumers,” he told the Washington Examiner.

“It’s hurting consumers at the pocketbook from everywhere from the gas station pump to the grocery store,” Hild said.

Hild also struck out at the “S” in ESG — the social dynamic. He argues companies are taking the focus of the corporation, which is supposed to be serving consumers, and “forcing them to instead pay attention to ‘woke’ social issues,” such as abortion, racial inequality, and gay and transgender matters.

West Virginia Treasurer Riley Moore, who is also running as a Republican for Congress, told the Washington Examiner on Friday that most people are paying into ESG without even being aware of it. He said an overwhelming majority of those who have retirement plans are getting ESG exposure.

“And no one, most anybody, has given any type of permission or has agreed to invest in this movement, but their dollars are being used in that manner by asset managers without their knowledge and/or approval,” he said.

Several states, including West Virginia, have made moves to protect pension funds. For example, Florida announced earlier this year it is prohibiting state-run fund managers from considering ESG factors when making investments. Some states have also announced big divestments from money managers such as BlackRock.

What’s next?

ESG doesn’t appear to be fading away anytime soon, and it is likely that pushback to ESG and “woke” capitalism will feature prominently on the Republican campaign trail leading up to 2024. One candidate, Vivek Ramaswamy, has even tethered much of his campaign entirely to fighting ESG.

Moore, who was the first elected official in the U.S. to divest from BlackRock and has been a leader in the anti-ESG crusade, said while he has been out on the campaign trail this time around, he has heard constituents talk more about ESG.


“People are becoming more and more aware of it. … As I get around and talk to folks, I hear about it all the time,” Moore said. “There is a lot that needs to be done on the federal level. It’s one of the reasons that I am running for Congress.”

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