Donald Trump's re-election in November boosted anti-environmental, social, and governance efforts, prompting 11 Republican state attorneys general to sue BlackRock, State Street, and Vanguard in December for allegedly pushing ESG investment options at the expense of the energy industry. And now, there are over 60 bills nationwide introduced by state legislatures targeting environmentally responsible investing.
But the movement may be losing momentum. As Institutional Investor previously reported, plans like the $101 billion Oregon Public Employees Retirement Fund and $275 billion New York State Common Retirement Fund reaffirmed their commitments to making their portfolios carbon-free. And many of these bills are facing legal challenges, watered-down language, or outright failure.
More fiduciaries, state leaders, and labor advocates are pushing back, arguing that these efforts prioritize short-term gains for fossil fuel companies over the long-term financial security of retirees and workers. During a February 25 webinar hosted by Americans for Financial Reform titled State Pension Power: How Policymakers Are Deploying It to Grow a Strong Economy, Minnesota Attorney General Keith Ellison criticized the anti-ESG movement as “coordinated bullying,” arguing that Congress has no place to tell a teacher who’s been teaching kindergarten for 30 years what she should do with her money.
“It’s our money, it’s the money of the people of our state,” Ellison said, adding he welcomes arguing the state’s case for ESG, since they’ve “got great answers.” As he explained: “The much harder case is anti-ESG, because the short-term share price is the only thing you can consider” under that rubric, “and any sophisticated investor knows that’s not the case.”
Ellison, who is currently suing Exxon Mobil for alleged climate-related deception, noted that over 80 percent of institutional investors view ESG strategies as critical to managing systemic risks like climate disasters and corporate misconduct. It’s not just money managers — individual investors also understand the value of ethical investing: a recent Moneywise survey found that two-thirds of Americans factor ethics into their investment decisions.
He added that socially responsible investing is “not just about avoiding risk, it’s about seizing opportunities.”
Climate Change Must “Be Treated as Investment Risk”
The Minnesota AG wasn’t the only panelist to note how ESG frameworks aren’t just about mitigating risk but about targeting investment opportunities. Maryland Comptroller Brooke Lierman highlighted her state’s $70 billion pension system, which prioritizes investments in sustainable infrastructure and diverse asset managers. Plus, the pension system recently approved the creation of a climate advisory panel to advise the board on addressing and mitigating climate risk in its investment portfolio.
“When I think about risk and securing our pension funds, that includes climate risk, managing human capital risk issues, and more,” Lierman said, adding that climate change “has to be treated as investment risk.”
Lierman emphasized the importance of considering both the physical impacts of climate change, such as real estate vulnerabilities in high-risk areas like Los Angeles or Florida, and the transitional costs associated with shifting to newer technologies. She also highlighted the need to explore opportunities in emerging technologies as part of a comprehensive approach to managing investment risks — and seeking investment opportunities.
Panelists like Lierman said that ESG and diverse investing isn’t about politics — it’s about identifying opportunities Wall Street’s short-termism overlooks. “Research consistently shows diverse teams deliver stronger returns,” Lierman said, citing climate-resilient real estate and clean energy tech as examples.
Randi Weingarten, president of the American Federation of Teachers, echoed this stance, framing pensions as “deferred wages” requiring vigilant stewardship. “Working people are really at the whims of Wall Street,” she said, advocating for the secured, guaranteed income from defined benefit plans and trustee autonomy to reject investments in sectors like private prisons or overvalued tech firms.
“The investor class has engaged in short-termism,” Weingarten added. “There are other longer-term horizons that we should be looking at.”
Despite a surge in anti-ESG bills, many are stalling due to legal challenges and political hurdles. While 61 bills remain pending, several have been watered down or failed outright. In Texas, for example, a 2023 law banning municipalities from working with ESG-aligned banks cost the state up to $500 million in higher borrowing costs. Similar backlash has emerged in Oklahoma and West Virginia, where lawmakers quietly rolled back restrictive provisions after pension managers warned of financial harm.
“We Are Struggling With Terrible Bills”
During the webinar, Arizona State Senator Lauren Kuby highlighted her state’s right-wing legislature reviving “zombie bills” targeting ESG, including Senate Bill 1093. The bill would bar the $55 billion Arizona State Retirement System from considering ESG factors, which Kuby called emblematic of a “ginned-up war on ESG” driven by culture-war politics, not financial logic.
“We are struggling with terrible bills,” Kuby said, warning that if enacted, SB 1093 could force Arizona’s retirement systems to ignore climate risks and renewable energy investments, though she expects Governor Katie Hobbs to veto it.
Also on the panel was the Americans for Financial Reform Education Fund’s Natalia Renta, who recently authored a report identifying the biggest threats to state and local pensions making investment decisions — decisions that benefit workers whose deferred wages make up these funds — misguided anti-ESG pension-related policies, deregulation, and the anti-ESG campaign’s effects on large asset managers. Renta’s report also offers a way for fiduciaries and state officials to protect against these attacks and expand their ability to make investment decisions.
Webinar participants urged workers to amplify local advocacy. Lierman pushed for workers to attend local meetings, write letters to the editor for their local papers — to “humanize the challenges, that helps people see what the real impact” is on workers. Weingarten added: “Local actions on the ground … are almost more important than anything else.” She noted that people in the community want to have a better life, they want the price of eggs to go down. So, Weingarten said “we need to show up in our communities and fight.”
Ellison emphasized that the case against ESG is “a silly argument. But we got to stand up and never shrink from the opportunity to talk about it.”
