Right-Wing Attacks on the Freedom to Invest Responsibly Falter in Legislatures

In 2023 Republican lawmakers in 37 states introduced 165 pieces of legislation to weaponize government funds, contracts, and pensions to prevent companies and investors from considering basic, common-sense risk factors. The legislation is framed around restricting the use of Environmental, Social, and Governance (ESG) investment criteria, such as the safety and treatment of employees, the diversity of management and workforce, and readiness to withstand the impacts of climate change. Were they to become law, the inevitable result of the bills would be to manipulate the market to favor select industries, particularly the volatile fossil fuel and firearms sectors.

This coordinated legislative effort, commonly referred to as the anti-ESG movement, generated massive backlash from the business community, labor leaders, retirees, and even Republican politicians. It is not an issue that resonates with the public. Despite all the hype, the vast majority of anti-ESG bills failed to progress through legislative chambers, including in ten states fully controlled by Republicans. At present, 22 laws and 6 resolutions in 16 states have made it through legislatures this year. Many of the finalized bills were heavily amended to reduce most of the substantive portions. Broad escape clauses were added to limit the most draconian prohibitions, which experts have warned legally contravene the basic tenets of fiduciary duty, creating a “liability trap.”

This report is the first comprehensive look at this legislative campaign and the broad effort to counter it. It follows the general arc of these 165 bills — where they came from, who sponsored them, who supported and opposed them, and how they fared.

As of June, 2023, our tracking has concluded that:

• At least 165 distinct bills (including 9 resolutions) were introduced in 37 states.

• 83 bills are dead, across 23 states:

  • In 17 states where legislation was introduced, no laws passed. 10 of these
    states are controlled by Republicans.

  • 3 bills were vetoed by the governor in Arizona.

• 42 bills that did not pass will carry over into the 2024 legislative session.

• 22 bills and 6 resolutions were approved by state governments:

  • 19 laws and 6 resolutions have passed in 14 states this year.

  • 3 enrolled bills await governor action in 3 states.

• 12 active bills are pending. 6 have not had committee hearings.

In this report, we map the coordinated special interest groups that crafted model bills and lobbied for their introduction. We showcase the exceptionally diverse opposition to the bills, including the bankers, businesses, financial officers, labor advocates, and environmentalists who saw the campaign as an attack on the American economy itself. We also provide the first comprehensive analysis of the types of bills introduced, offering a taxonomy of bills, so that readers can understand the tactical options attempted by Republican legislators.

It is safe to assume that the interest groups behind this legislative push are revising their strategies by evaluating the success and failure of the bills so that new versions can be introduced across the country in 2024. To anticipate where this effort may go next, we find it critical to understand the network of actors behind this legislative push, the specific types of bills they proposed, and the ways they were received in the states.

Read the post on the Harvard Law School Forum on Corporate Governance.