DON’T SLEEP ON ESG — Now that we're into the final sprint phase of the 2024 presidential race, it has become clear that "ESG" hasn't become the major campaign issue that some hoped — or feared — it would be. But make no mistake, the war is still raging behind the headlines. On the anti- side: Red-state financial officers recently warned the Business Roundtable, a group whose members are CEOs of major U.S. companies, to knock off the nonsense of environmental, social and governance principles that has amounted to an “abject failure.” The Republican officials in their letter to the business group even pointed to Exxon’s lawsuit against activist shareholders as a template for what companies should do: “The pressure from activists is real, but as Exxon has shown, standing up to bullies is the best way to end the destructive behavior,” the letter reads. “Standing up requires courage and courage is contagious.” Cue the backlash to the backlash. The American Sustainable Business Council has sued Texas officials over the state law that punishes financial firms accused of boycotting fossil fuels, putting them on a blacklist including companies that continue to invest in oil and gas. The left-leaning Washington business group is arguing in federal court that the law is preventing two of its investment firm members from competing for business in the state, which “muzzles” companies and violates the First and 14th amendments. A similar law was struck down in court in Oklahoma earlier this year. Texas Comptroller Glenn Hegar, who along with Attorney General Ken Paxton was named as a defendant in the suit, called the case “absurd.” Paxton didn’t respond to a request for comment. “The plaintiff has filed a purported First Amendment lawsuit that seeks to undermine state sovereignty and force the state of Texas and Texas taxpayers to invest their own money in a manner inconsistent with their values and detrimental to their own economic well-being,” Hegar said in a statement. In here somewhere might be a middle ground of sorts — or at least conservatives approaching the ESG issue with a recognition of the wider ramifications. Louisiana Treasurer John Fleming, who served as former President Donald Trump’s deputy chief of staff, signed the Business Roundtable letter to act as a “counterweight to the hard left.” But he also signaled in an interview that Texas’ hardline approach may not always be the best move. “There’s a potential (for those efforts to go too far),” Fleming said when asked about the opposition to anti-ESG bills that has spread into red states. “Any time you’re eliminating contracts with vendors based on one single criteria that is absolute, you’re going to have unintended consequences. That’s the thing that we worry about. We would much rather work with institutions to encourage them to our position, which is that we don’t believe there should be conservative activism in banks, and we don’t believe there should be liberal activism.”
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