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While speaking about energy policy in Texas yesterday, former Vice President Mike Pence, a potential 2024 Republican presidential contender, said he wanted to “rein in” E.S.G., or investing based on environmental, social and governance principles. He is not alone.
Some notable names are pushing back as businesses get increasingly tangled up in cultural and political fights, and as the federal government builds E.S.G. principles into regulations. A new financial firm, Strive, started by Vivek Ramaswamy, the author of “Woke, Inc.,” and backed by the billionaire investors Peter Thiel and Bill Ackman, has a similar mission: It will urge companies not to get involved in social, political or environmental issues.
Notably, even BlackRock, an outspoken leader in sustainable investing, is stepping back, saying in a memo on Tuesday that it is supporting fewer shareholder proposals on climate disclosures this proxy season than last because many are too “constraining” and “prescriptive.”
The Securities and Exchange Commission is feeling the pressure. This week, the agency extended the public comment period on proposed new climate disclosure rules without explanation. The move came days after Republicans on the House Financial Services Committee demanded a hearing with the commissioners, accusing the S.E.C. of overreach and of relying on “short and overlapping comment periods” to push “a scorched earth rule-making agenda.” Supporters of the climate proposal want action. The agency’s chairman argues that many companies have long measured their exposure to climate risks, only with no overarching regime to make the metrics meaningful.
Societally there is little alignment on values. Jeffrey Younger of the N.Y.U. Stern School of Business said the fights were the same in business schools across the country, with some professors backing the Milton Friedman-esque model focused on profits, and others pushing a broader stakeholder capitalism approach. But there is a profit motive to E.S.G., Mr. Younger told DealBook. If shoppers and investors are looking for environmentally positive offerings, then it makes sense for businesses to respond.
The pushback will probably gain steam as midterm elections approach. At the S.E.C., in Congress and beyond, many Republicans resist climate policies while many Democrats support them. This aligns with voter views. According to a Pew Research poll last year, only about 10 percent of people on the right called climate change a top concern, compared with about 49 percent on the left.
Article source: https://www.nytimes.com/live/2022/05/11/business/economy-news-stocks