ImpactAlpha, Nov. 8 – Republicans are feeling emboldened as Americans head to the polls for today’s midterm elections.
Just days ago, a group of conservative senators sent threatening letters to 51 law firms warning of possible antitrust violations for pursuing environmental, social and governance, or ESG, initiatives.
“Over the coming months and years, Congress will increasingly use its oversight powers to scrutinize the institutionalized antitrust violations being committed in the name of ESG, and refer those violations to the FTC and the Department of Justice,” wrote Iowa Sen. Charles Grassley and four of his Republican colleagues.
Law firms and their ESG clients should preserve relevant documents, they warned.
The latest attacks, like the broader anti-ESG agenda, are riddled with contradictions. And the efforts of the five senators to dictate how attorneys advise their clients, in particular, could blow back on them. But they represent a dangerous escalation of the anti-ESG rhetoric that has been building for months.
Republicans have seized on ESG – which helps identify company-level risks – as an unlikely red meat issue, painting it as “woke” capitalism, “climate cartels” and “collusion” to restrict fossil fuels.
Red state governors and treasurers have taken aim at ESG in pension funds and muni markets.
If the U.S. House of Representatives tips Republican, as expected, watch for bank CEOs, asset management honchos like Larry Fink, and agency heads such as the SEC’s Gary Gensler to be hauled before Congress.
The threats have already caused banks in the Global Financial Alliance for Net Zero to roll back their commitments to phase out fossil fuel support.
Also at risk: climate disclosure rules, reproductive rights and election integrity.
“I agree with President Biden when he says democracy itself is at risk,” Morningstar’s Jon Hale said on ImpactAlpha’s weekly podcast.