Since anti-ESG reared its head in 2021, people have taken issue with its underlying legal approach. Despite having a significant impact on groups like Climate Action 100+ and the now-defunct Net Zero Insurance Alliance (NZIA), legal experts have been skeptical of the anti-ESG’s claims. Jenner & Block joined the chorus of skeptics with one of the most thorough takedowns of Anti-ESG legal theory to date. The firm’s memo discusses the anti-ESG legal position in granular detail.
“On March 30, 2023, twenty-one state attorneys general issued a letter to dozens of asset managers warning that consideration of climate factors to guide investment and shareholder voting decisions risked fiduciary duty, antitrust, and securities law violations. The violations alleged by the state AGs and their representation of the law, which the AGs timed to coincide with the start of the 2023 proxy season, are an overreach at best and a misrepresentation of the law and facts at worst.”
While it is nice to see someone calling out anti-ESG’s legal theories for what they are, it still doesn’t speak to the heart of the matter. I think most AG’s know that their legal threats are empty, which is why we’ve yet to see them bring a major enforcement action. Instead, as I suggested previously, the goal is to muddy the waters with just enough risk that companies and financial institutions feel more comfortable not pursuing ESG than they otherwise would. That risk, from a legal perspective, is illusory. For anti-ESG to be successful, the legal risk doesn’t need to be real, it only needs to appear to be real. Hopefully, memos like this one from Jenner & Block will help provide clarity and comfortability for leadership looking to pursue ESG. But just because a state AG can’t win a case doesn’t mean they can’t force costly litigation or a burdensome investigation.
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