This article is part of Climate Solutions, a special report on our commitment to making a difference. New York Times Climate Forward meeting and Climate Week NYC.
On a sultry day in Tampa this summer, Florida Governor Ron DeSantis took the podium to unleash an attack on what he claims is one of the major threats to the lives and liberties of upstanding American citizens. I was.
“This is something that’s crushing the little guy in a lot of ways,” he said.
DeSantis didn’t talk about attacks from abroad, rising gas prices, inflation, pandemic lockdowns, or even Democrats.
Instead, he was talking about the rise of ESG. ESG is an umbrella term in the corporate world used to denote a company’s focus on issues such as climate change and diversity.
DeSantis stood in front of a banner that read “The government of law, not the CEO who wakes up” and lashed out at companies he said were trying to use force to advance a liberal agenda. .
“We have seen corporate elites, from Wall Street banks to large asset managers and big tech companies, use their economic power to impose policies on nations that they failed to achieve at the ballot box.” He said.
DeSantis has announced measures intended to reduce the role of ESG (environmental, social and governance) policies in investing in Florida’s pension plans. In doing so, he said, he was “asserting the constitutional system’s authority over the power of ideological corporations.” It was a message.
For almost two decades, developed countries around the world have adopted ESG investment policies. It has set ambitious targets to reduce carbon emissions, use more renewable energy and add diversity to its workforce, with virtually no controversy.
More such policies this week, as scientists, corporate sustainability chiefs, government officials, and others, including former Vice Presidents Al Gore and John Kerry (now US Special President). and the need for financial commitments for climate mitigation and adaptation will be one of the topics discussed.Special climate envoys gather in New York New York Times Climate Forward meeting.
the event is part climate weekis an annual global summit held during the United Nations General Assembly that highlights the role of business in combating climate change and achieving social justice, with panels such as Investing in Stocks and the Economy.
But in recent months, what has become routine sustainability reporting in the rest of the world, along with the associated term “stakeholder capitalism,” is the latest frontier in the culture wars that is disrupting American politics. is emerging as
As companies and investment firms embrace efforts to reduce greenhouse gas emissions and address global and regional inequalities, conservatives in the United States are working closely with the oil and gas industry to advocate foul play. starting. And in recent months, they’ve gone beyond rhetoric and pushed to punish companies they claim are too focused on issues they claim have nothing to do with their bottom line.
“There is a lot of politics going on around the term ESG right now,” said Reid Thomas, managing director of fund manager JTC. “There are different sides that oppose each other.”
But even as rhetoric heats up and management braces for further attacks by Republican politicians, most companies and investment firms are holding their ground. Many corporate leaders say that as a long-term strategy, investing in climate change solutions and their employees is in their best interest, and in the short term they deserve an uncomfortable public relations moment.
More on Ron DeSantis and his administration
Lawrence D. Fink, CEO of BlackRock, the world’s largest asset manager, is a frequent ESG advocate and defended the company’s policies. in his annual letter CEO of the year.
“Stakeholder capitalism is not about politics,” he wrote. “It’s not a social or ideological agenda. It’s not ‘I woke up.’ is capitalismdriven by mutually beneficial relationships between your employees, customers, suppliers and communities on which you and your company depend prosper“
“Ongoing Culture Wars”
Tensions between conservatives and entrepreneurs in America have been building for years. After the election of former President Donald J. Trump, many chief executives took to the White House on issues such as immigration, race relations, and efforts to mitigate climate change by curbing oil and gas production and use. I realized that I was in conflict with
In addition to claiming policy positions unpopular with many Republicans, large corporations and investment firms are now working to integrate ESG more deeply into their businesses.
Setting such goals rarely results in rapid and dramatic changes in how a company operates. And indeed, many companies have been accused of greenwashing. In other words, it advertises his ESG efforts without implementing any real reforms.
Nonetheless, conservative leaders are now challenging the nation’s biggest companies, attacking ESG and trying to portray environmental and social priorities as negatively affecting business and politically motivated. is. left.
A record number of anti-ESG shareholder proposals were filed last year.
Texas becomes the first state pass the law If a major financial institution is deemed to be “boycotting” the oil and gas industry, it will be barred from state operations. In fact, the financial firms covered by this law still do well in dealing with the fossil fuel industry, but they do not lend to some of the oil and gas businesses that are considered underinvested. I am withdrawing.
How do Times reporters report politics? We trust journalists to be independent observers. As such, Times staff members may vote, but are not permitted to endorse or campaign for any candidate or political cause. This includes participating in marches or rallies in support of causes, making donations or fundraising to political candidates or electoral causes.
Several more states passed similar laws this year, including West Virginia and Oklahoma.
at the same time, Republican State Attorney General As BlackRock supports the goals set at the 2015 Paris Climate Conference and is committed to phasing out fossil fuels, it prioritizes the “climate agenda” over clients and engages with climate activists. Accusing them of being allies and targeting Blackrock. Global warming.
Former Vice President Mike Pence, a possible 2024 presidential candidate, said this summer, “Restraining” ESG.
Inspire Investing, a financial firm that claims to be guided by biblical principles, furious Companies pursuing ESG efforts say the term is “weaponized by liberal activists to advance a pernicious social Marxist agenda.”
Even the world’s richest man, Elon Musk, is unhappy with the term. “ESG is a scam,” he said. wrote on twitter Earlier this year. “It has been weaponized by false social justice warriors.”
And with each passing week, more states are taking steps to penalize companies they say focus too much on climate issues — institutions that include many of the world’s largest banks.
“We believe this anti-ESG movement is the next continuation of the ongoing culture wars,” said Christopher Inton, an analyst at research firm Morningstar. Recent reports“Many of these ideas, and even some legislation, have been written without a thorough understanding of sustainable investing. I will.”
But as the right wing has stepped up its attacks on companies, most executives have stuck with it, at least for now.
Gene Rogers, Head of ESG at Blackstone, the world’s largest private equity firm, said: “So we don’t really see any political strife.”
Companies say that efforts to reduce emissions are a sound long-term investment and efforts to promote workforce diversity improve corporate culture as the risks of climate change become increasingly significant.
“Fund managers and investors don’t really deter all the hype,” Thomas said. He said that “funds are flowing” towards investing in issues such as climate change and equity.
BlackRock has defended its stance as a sound investment strategy. “We believe that investors and companies that take a positive stance on climate risks and impacts on the energy transition will produce better long-term financial results.” company wrote.
Many other large companies have taken a similar position.
“The market recognizes this and it’s good for business, not because it’s part of the political agenda,” said the Ceres Accelerator for Sustainable Business, a group that supports sustainable business. said Steven M. Rothstein, managing director of Capital Markets.
Additionally, many opportunistic companies feel that more renewable energy projects are being built around the world, making them more profitable.
“This transition can lead to great opportunities,” Rothstein said. “Trillions of dollars will be invested in green technology.”
‘Confusing and inconsistent’
Given the lack of uniform standards, what people mean by the term ESG is constantly evolving. After Russia launched its full-scale invasion of Ukraine in February, analysts at Citi said the arms maker and defense contractor were seen as a socially positive investment because they helped protect democracy. argued that it should be
Meanwhile, a whole new industry of providers of reporting, data, metrics and technology services is emerging to help large companies track their ESG efforts.
“There are hundreds of different reporting frameworks, all confusing and inconsistent,” said Thomas. “There are hundreds of companies selling reporting software.
Worse still is the fact that even those who support corporate efforts to combat climate change admit that some funds and companies that boast of their environmental contributions exaggerate their impact. .
Mary Cerulli, founder of Climate Finance Action, said: “It has tainted the entire legitimacy of the wider framework.”
‘Climate is a risk’
For now, at least, conservatives seem to have the upper hand in the battle for control of public opinion.
“They are spinning the narrative that ESG has ‘woke up’ and have a big head start in messaging,” said Cerulli.
Prominent conservative commentators amplify the message and often misrepresent the meaning of the term.
Fox News host Tucker Carlson said: “ESG has no real definition, but effectively forces companies and countries to shut down their most productive sectors in the name of climate change and equity.” said. Said in this summer’s segment.
Despite the ongoing attacks, big companies appear to be making efforts to prioritize environmental issues.
A Morningstar report found that the majority of anti-ESG shareholder proposals failed to gain investor support. Over 90% of his companies in the S&P 500 index now publish his ESG reports. The Securities and Exchange Commission is also considering adopting new rules requiring listed companies to submit more detailed analyzes of their climate-related risks and greenhouse gas emissions.
“Private markets are talking,” Rothstein said. “And they say the climate is a risk.”