Press Release

ESG Investment Factors – Adding Value, not Values

17 AGs tell Congress that ESG analysis has a key role in sound investment decisions.

New York, NY Dis­trict of Colum­bia Attor­ney Gen­er­al Karl Racine led a coali­tion of 17 attor­neys gen­er­al (AGs) in sub­mit­ting a let­ter today to the Sen­ate Com­mit­tee on Bank­ing, Hous­ing, and Urban Affairs and the House Com­mit­tee on Finan­cial Ser­vices regard­ing the use of envi­ron­men­tal, social, and gov­er­nance (ESG) fac­tors in invest­ment deci­sion-mak­ing. The let­ter details the finan­cial harms of ban­ning ESG-relat­ed invest­ment strate­gies and also warns against green­wash­ing. It explains that con­sid­er­ing ESG fac­tors allows investors to weigh all of the nec­es­sary infor­ma­tion need­ed to make informed invest­ment deci­sions, includ­ing in their man­age­ment of pen­sions and retire­ment savings. 

Here’s the truth: con­sid­er­ing envi­ron­men­tal, social, and gov­er­nance fac­tors is the best prac­tice of invest­ment pro­fes­sion­als through­out the world and the over­whelm­ing major­i­ty of trustees in Repub­li­can-led states agree,” said AG Racine. Mil­lions of work­ers rely on finan­cial experts to help them retire and sup­port their fam­i­lies in their gold­en years. Thor­ough­ly con­sid­er­ing all poten­tial risks before mak­ing invest­ment deci­sions is a fun­da­men­tal prin­ci­ple of cap­i­tal­ism. These anti-ESG efforts are akin to putting a blind­fold on investors.”

State AGs who are active­ly work­ing to pro­tect their com­mu­ni­ties from the harms of cli­mate change are increas­ing­ly see­ing the impact of those changes on the finan­cial sec­tor,” said Bethany Davis Noll, Exec­u­tive Direc­tor of the State Ener­gy & Envi­ron­men­tal Impact Cen­ter. Today’s let­ter shows a com­mit­ment to safe­guard­ing the finan­cial well­be­ing of every­day Amer­i­cans while not los­ing sight of the dan­gers of cli­mate inaction.”

Back­ground — On August 4, a sep­a­rate group of 19 AGs sent a let­ter to Black­Rock express­ing con­cern about the company’s con­sid­er­a­tion of ESG fac­tors in eval­u­at­ing invest­ments. And a coali­tion of AGs has launched an inves­ti­ga­tion into banks’ ESG prac­tices. Var­i­ous states also have leg­is­la­tion that is pend­ing or enact­ed lim­it­ing the con­sid­er­a­tion of ESG in investing. 

In April 2022, the Secu­ri­ties and Exchange Com­mis­sion (SEC) pro­posed cli­mate-relat­ed finan­cial risk dis­clo­sures as part of an effort to ensure investors were oper­at­ing with reli­able infor­ma­tion on cli­mate change. Many of the AGs join­ing today’s let­ter on ESG invest­ment fac­tors have made sim­i­lar points in com­ments to the SEC, as well as stressed the need for trans­paren­cy in mak­ing these types of finan­cial decisions. 

The attor­neys gen­er­al of Cal­i­for­nia, Con­necti­cut, Delaware, Illi­nois, Maine, Mary­land, Mass­a­chu­setts, Min­neso­ta, Neva­da, New Jer­sey, New Mex­i­co, New York, Ore­gon, Rhode Island, Wash­ing­ton, and Wis­con­sin joined AG Racine in today’s letter.

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ABOUT THE STATE ENER­GY & ENVI­RON­MEN­TAL IMPACT CEN­TER
The State Ener­gy & Envi­ron­men­tal Impact Cen­ter at the NYU School of Law is a non-par­ti­san aca­d­e­m­ic cen­ter ded­i­cat­ed to the study and sup­port of state attor­neys gen­er­al in their work defend­ing and pro­mot­ing clean ener­gy, cli­mate and envi­ron­men­tal laws and policies.