HOMEGROWN ANTI-ESG — Yes, Republicans' "woke wars" are intensifying on some fronts. Florida Gov. Ron DeSantis wants to pull state money out of financial institutions engaging in ESG investing, and Vivek Ramaswamy is trying to parlay his anti-ESG crusade into a presidential bid. But if you look more closely, there's a quiet, conservative backlash going on in some unexpected corners. Bills to prohibit state support of ESG investing are sputtering out in deep-red states like Mississippi, North Dakota and Montana. A bill that would have allowed North Dakota's treasurer to refuse to do business with firms “boycotting” the fossil fuel industry failed 90-3 last week. A Mississippi bill that would have barred the state pension board from making decisions with the primary purpose of influencing ESG goals died in committee late last month. One common thread is the opposition of state-level banking groups, which are bristling at efforts to restrict their activities — and finding receptive ears in statehouses. The Montana Bankers Association, for example, persuaded Rep. Steve Gist to substitute a non-binding resolution for his not-yet-filed anti-ESG bill that calls on Congress to oppose ESG. See also: the Kentucky Bankers Association's October lawsuit challenging Attorney General Daniel Cameron over his anti-ESG probe of six large banks. "We have a philosophical issue about anytime the government puts together a list," said Rick Clayburgh, president and CEO of the North Dakota Bankers Association, who said he’s working with lawmakers to come up with a scaled-back version of the boycott bill. "All of a sudden a local bank could be added to the list, and it leads to the potential for a bank run if people don’t want to do business with that bank, which leads to instability and could shake the underpinning of our entire financial system.” Takeaway: Even as Republicans are pushing the front lines of the ESG war further in states like Florida, Texas and West Virginia, there's some principled pushback. Before Republicans can fully slay the “woke” dragons out of their states’ investments and dash straight to a neat and tidy blacklist of financial firms, they’re having to contend with key historical allies aiming to rein in their most extreme urges. “What we’re seeing is a core group of Republicans who are taking on this issue and trying to make it a retail political issue and are still hammering it out,” said John Miller, director of ESG and sustainability policy at the Cowen Washington Research Group. “The more extreme language could have some really chilling effects on how capital is allocated and limit some investment decisions." One potential consequence of bankers' moderating influence: The bills that eventually emerge could end up being more legally defensible, said Josh Lichtenstein, a partner at the Ropes & Gray law firm, which is monitoring some 45 anti-ESG bills in approximately 20 states. "If you are a state legislature and you're looking to pass some sort of anti-ESG or pro-boycott bill, listening to different constituencies and coming out with text that's a little bit more moderate might actually be more likely to actually be utilized or enforced," he said. Another voice for moderation? Former GOP congressmen who point out that Democrats likely won't have full control of Congress and the White House for another 10 years. "[R]elying exclusively on Democrats for continued climate progress would be a strategic blunder," former Reps. Ryan Costello and Francis Rooney write in an op-ed. "Bipartisanship is the only assured path to decarbonizing at scale and speed." The most strident anti-ESG activists are keeping up their pressure. On Monday, a new lobbying group crusading against sustainable investing launched its first public-facing campaign: driving billboards around the Indiana statehouse this week at a cost of roughly $10,000 as lawmakers there consider an anti-ESG bill that would restrict pension fund managers' decision-making.
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