ESG Is On the Ropes. Who Woulda Thunk?

Corporate America is discovering the obvious: Progressivism makes for bad business

If Florida is where “woke goes to die,” then Tennessee may become the place where woke’s more refined corporate cousin—ESG—goes bankrupt. 

That’s because Tennessee Attorney General Jonathan Skrmetti is suing one of the top proponents of the ESG—that’s “Environmental, Social, and Governance”—agenda. In the lawsuit filing, Skrmetti alleges Blackrock, the world’s largest asset manager, has misled consumers on how the firm uses ESG to make investment decisions. Furthermore, Blackrock’s own statements make it difficult for consumers to understand whether or not investment returns—which Blackrock is legally obligated to prioritize—or ESG considerations are the main priority.

This lawsuit is important because it strikes at the heart of what makes ESG such a big problem. Essentially, it’s a philosophy of keeping score on what businesses do to further the Left’s political agenda and directing investment dollars to the companies that fall in line. ESG seeks to reward companies that put boys in girls’ restrooms and on their sports teams, promote the idea that America is racist, and develop “green” initiatives while punishing businesses that provide critical conventional energy sources like oil and gas. Think of it as Antifa mobs trading out their riot gear for business suits.

(RELATED: Bank of America Teams Up With Feds to Target Everyday Americans)

What ESG doesn’t do is prioritize finding and investing in the most profitable, well-run companies. Instead, Blackrock uses its $9 trillion under management to reshape the business landscape. But while it makes for good New York Times headlines, it’s really bad for business. A study released last year by Europe’s largest asset manager, the Amundi Institute, found that business fundamentals like believable forward-looking projections matters far more to ethical and smart investors than ESG politics. 

Gee, ya think?

Skrmetti’s lawsuit is the first of its kind, but Tennessee isn’t the first state to push back against Blackrock or ESG. As of June 2023, a coalition of 12 states had divested or were in the process of enacting legislation to divest state funds from Blackrock management. One of those states, South Carolina, has even unloaded $105 million of its Disney investments because, according to State Attorney General Curtis Loftis, the company’s adoption of ESG violates the fundamental principles by which people invest their money. 

The turning tide—and legal battles on the horizon—are probably why Blackrock’s own CEO, Larry Fink, has started walking back the ESG rhetoric. Last summer at the Aspen Ideas Festival, Fink told attendees he had stopped using the term “ESG” because it had been “entirely weaponized…by the far left and weaponized by the far right.”

But while he may only be changing his rhetoric, other executives are recognizing that ESG just isn’t good for business. A CNBC survey found over half of chief financial officers opposed a Securities and Exchange Commission climate disclosure proposal central to ESG standards, and only 25 percent were in favor of the measure. Even Martin Whittaker, CEO of the ESG corporate ranking nonprofit Just Capital, said that “the ESG community itself has created a lot of its own problems” because “there are no standard metrics and no validation of the underlying data.”

It’s common for the Left to say Republicans are pouncing—look at The Associated Press’ laughable “article” about the resignation of Harvard President Claudine Gay, where her own plagiarism (not racism) led to her demise. But Skrmetti and other AGs aren’t fooled or intimidated, because they know the truth: ESG is the Left’s weapon against anyone who doesn’t agree with their agenda.

It’s just done in corporate boardrooms over a drink, instead of with masks and looting.