As the adoption of ESG criteria becomes more widespread in Europe, a heated debate is mounting across the Atlantic: despite the increasingly tangible effects of climate change, sustainable finance has never before been the brunt of such virulence. The epicentre is in the southern United States, where – against the backdrop of a nascent election campaign – the debate on progressive ideas, blending minority rights and energy transition issues, is raging. Let’s look at the reasons behind an “anti-ESG” crusade that is now firmly in the headlines.
Sustainable finance: a political debate
The debate is above all political, and highlights the difficulty for the private sector – and the world of finance in particular – to move forward faster than broader society on sustainability issues. It pits desirable and sometimes conflicting outcomes against the reality of people’s lives. “Our mission is to give citizens back their voice […] in the U.S. economy by pushing businesses to focus on excellence rather than politics,” is in essence the message of the camp opposing the inclusion of ESG criteria. The Republican governor of Florida has slammed the “corporate elite [using] their economic power to impose policies on the country that they could not achieve at the ballot box”. It all goes to show just how difficult it is for financial players to play their part in financing the transition without the support of clear public policies.
From words to deeds
The opposition is taking legal avenues first of all. Florida, leading an alliance of 18 states, has just adopted a law aimed at prohibiting the use of ESG criteria in public investment, bond issuance, and national and local purchasing policies. The financial sector is the main focus, with boycotts of major institutions including BlackRock and JPMorgan, accused of being overly concerned with the climate or the fight against firearms. Some, like Vanguard, the world’s second-largest asset manager, which has withdrawn from the Net Zero Alliance climate finance coalition, are cracking under the pressure. The ideological tug-of-war also extends to company general meetings. The number of shareholder resolutions condemning companies’ social or environmental ambitions has never been higher than in 2023.