Anti-ESG Legislation

S/N

Metric

Description

State legislation

1.

Divestment

• Avoid or divest from ESG related investments
• Divest from financial institutions or companies that negatively screen using ESG criteria

2.

Boycotts

• Prohibit tracking, surveilling, or reporting the sales or purchase of firearms or ammunition
• Prohibit boycotts based on ESG considerations or fossil fuel, firearms, tobacco, agriculture, or mining companies among others
• Require statements from financial services providers certifying that do not negatively screen fossil fuel, firearms and ammunition, tobacco, mining or agricultural industries or any company based on ESG factors

3.

ESG criteria

• Prohibit ESG considerations in investments decisions
• Prohibit investment decisions with the purpose of influencing environmental or social policy
• Prohibit ESG criteria in employment decisions
• Prohibit ESG criteria in insurance ratemaking
• Prohibit discrimination based on subjective standards such as social media posts; participation or membership in any clubs, associations, or unions; political affiliation; employer; or ESG or values-based or impact criteria. The prohibitions will not take effect if they will foster discrimination based on race, religion, color, sex, age, national origin, or disability
• Emphasize that investments should be based on prudent investor criteria. Many legislations define “pecuniary factors” to exclude ESG considerations
• Prohibit social score or credit considerations
• Limit state public depositories to include only entities that do not deny or cancel services based on ESG criteria.

4.

Proxy voting

Require that proxy voting should be:

• Solely based on pecuniary factors unless no reasonable alternative is available
• Solely based on exclusive interest of public entity or beneficiaries
• Made public or details forwarded to state treasurer

5.

Government contract/procurement

• Prohibit governmental entities from entering contracts with companies that boycotts certain industries such as fossil fuel, firearms, tobacco, agricultural or livestock-based companies or companies with poor ESG credentials or certain political affiliation.
• Require certification that a contractor does not discriminate based on ESG criteria
• Cancel government contracts with financial institutions that use ESG criteria
• Prohibit preference of companies for awards based on ESG criteria

6.

Pension plans

• Prohibit ESG considerations in pension plans and requiring plans to solely consider pecuniary benefits for plan beneficiaries (some states allow for ESG considerations if the plans are optional or sufficient alternatives are provided)

7.

Legislation

• Prevent laws or legislation that promote ESG criteria or penalize companies not meeting or not establishing ESG criteria.

8.

Penalties

• Create civil penalties for violating anti-ESG legislation including fines

Federal legislation

9.

ESG Criteria in investment

• Congressional disapproval and nullification of the DOL rules on “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights”

10.

Government contract/procurement

• Prohibit the federal government from contracting with companies that boycott firearms, ammunition or related products and require prime contractors to certify that they have no policy that discriminates against firearms or related entities

11.

Materiality

• Support the current definition of materiality in the securities laws and oppose new disclosure requirements outside the core mission of the Securities and Exchange Commission.

12.

ESG considerations in proxy voting

• Prohibiting asset managers managing certain funds from making ESG considerations in voting considerations