States’ Anti-ESG Laws Will Harm Taxpayers
Boycotting financial-services companies over climate investment policies risks raising pension systems’ costs.
Texas has sought to prohibit municipalities from contracting with asset managers that take ESG policies into account.
Photographer: Jordan Vonderhaar/Bloomberg
The Securities and Exchange Commission is slated to soon release mandatory disclosure rules for environmental, social and governance policies that are expected to require companies to report climate-related risks likely to have a material impact on their businesses. It is unclear whether compliance with these rules will be merely onerous, or absolutely unreasonable. On the flip side, many state policymakers have been crafting proposals to prevent their states from contracting with companies that practice ESG.
Ironically, these policies will have the same effect as the heavy-handed federal government regulations they’re rebelling against: micromanaging US businesses and adding significant, unnecessary costs to achieve ideological aims. Think of it as right-wing ESG.