Ohio and Oklahoma Challenge ESG Investing: A Growing National Debate
Overview
Ohio and Oklahoma are the latest states to push back against Environmental, Social, and Governance (ESG) investing. This move reflects a broader national debate on the role of ESG considerations in public finance and corporate governance.
Ohio and Oklahoma’s Legislative Actions
Ohio: Legislators passed a bill to limit the state’s five public pension funds from pursuing investments influenced by social and environmental policies. The bill also aims to ban funds from engaging in shareholder activism and awaits the governor's signature.
Oklahoma: The state's attorney general appealed to the Supreme Court to reinstate the Oklahoma Energy Discrimination Act, which prohibits public pension funds and state contracts from engaging with financial firms accused of discriminating against the oil and gas industry.
Growing Anti-ESG Movement
Ohio and Oklahoma join a growing list of mostly Republican-controlled states opposing ESG investing. At least 11 states have passed anti-ESG legislation, with several others considering similar bills. These efforts are part of a broader national debate, with significant variations influenced by political, economic, and ideological factors.
National Debate on ESG
The pushback against ESG investing is framed by critics as a rejection of what they see as left-wing activism that prioritizes ideological agendas over financial performance. U.S. Senator Bill Cassidy introduced a bill to prohibit asset managers from favoring ESG factors when evaluating retirement plans, emphasizing financial performance over progressive factors.
Advocates' Perspective
Advocates argue that ESG investing addresses current global challenges and offers broad potential benefits. Paul Polman, former CEO of Unilever, highlights the importance of ESG finance in tackling the climate crisis.
The actions by Ohio and Oklahoma underscore the contentious nature of ESG investing in the U.S. As more states take sides, the debate over the role of ESG in public finance and corporate governance continues to intensify.
Read the full insights here:
https://www.pwc.com/us/en/services/esg/library/eu-corporate-sustainability-reporting-directive
