States across the country are preemptively banning Environmental, Social and Governance (ESG) scoring, which some say would lead to a massive consolidation of wealth among the most powerful investment companies in America.
“In an attempt to secure vast amounts of wealth and influence over society, corporations, bankers, and investors, working closely with key government officials, have launched a unified effort to impose environmental, social, and governance (ESG) standards on most of the industrialized global economy. (ESG standards are also referred to as ‘sustainable investment’ or ‘stakeholder capitalism.’),” Justin Haskins at The Heartland Institute said.
According to data provided by that nonprofit, at least 25 states have either banned or are considering bills to ban the practice.
Among those states are Florida, Michigan and Tennessee.
“Both Florida and West Virginia are ahead of the curve, already divesting their states’ pensions to avoid ESG entanglement, and Florida lawmakers are likely to submit a bill next year,” The Heartland Institute said.
In Tennessee, two bills that would ban the practice are working through the state legislature, and lawmakers in Michigan are writing bills that would ban ESG scoring.
Some states are having a more difficult time than others.
“The Minnesota State House is stalling action on a well-crafted bill submitted earlier in the session, and Heartland will be following up next year in anticipation of new leadership,” the Heartland Institute said.
In many cases, like in that of America’s largest residential property owner, BlackRock, large holding companies can threaten to drop companies in which they have invested if those companies do not meet ESG scoring requirements.
BlackRock has done just that, and some worry that the practice could lead to a Communist Chinese-style “social credit scoring system,” where people or corporations are punished if they do not meet ESG requirements.
“Stakeholder capitalism is all about delivering long-term, durable returns for shareholders. And transparency around your company’s planning for a net zero world is an important element of that. But it’s just one of many disclosures we and other investors ask companies to make,” a recent letter from BlackRock CEO Larry Fink said. “As stewards of our clients’ capital, we ask businesses to demonstrate how they’re going to deliver on their responsibility to shareholders, including through sound environmental, social, and governance practices and policies.”
A U.S. senator from Florida is fighting back against ESG scoring at the federal level.
Sen. Marco Rubio (R-FL) introduced a bill in September called the “Mind Your Own Business Act” which would combat that practice.
Rubio says that “woke” practices like ESG scoring could be contrary to the fiduciary interests of stakeholders, and his bill would allow stakeholders to sue if a holding company makes financial decisions that are not in its best interest simply for the purpose of attaining some political objective.
If such a lawsuit were to arise, holding companies would be required to show that they are acting in the best interest of their stakeholders “in order to avoid liability for breach of fiduciary duty in shareholder litigation over corporate actions relating to certain social policies,” according to the text of the bill.
_ _ _
Pete D’Abrosca is a reporter at The Star News Network. Email tips to [email protected].
Photo “Larry Fink” by World Economic Forum. CC BY-NC-SA 2.0.
