States’ Legislative Pushback Against ESG Has Been Slow
There has been some progress in this year's legislative sessions, though only three full victories thus far. Call your state legislators and make your opinion known.
State legislators across the nation are pushing back against the widespread use of environment, social, and governance (ESG) scores by government agencies and private sector businesses to punish politically or socially disfavored activities. My Heartland Institute colleague Cameron Sholty reports the following good news:
Several of the most important anti-ESG proxy and related financial-governance bills in the country this cycle either became law or made substantial progress. That record reinforces The Heartland Institute's standing as a serious contributor to one of the most dynamic state policy fights in the country:
Arizona SB 1503 (ESG-Proxy): passed the Senate.
Indiana HB 1273 (ESG-Proxy): enacted.
Kansas SB 375 (ESG-Proxy): enacted by the Legislature over the governor’s veto.
Kentucky SB 183 (ESG-Proxy): enacted by the Legislature over the governor’s veto.
Oklahoma HB 1170 (ESG-Proxy): passed the House.
Oklahoma HB 3172 (ESG-De-Banking): passed the House.
Oklahoma HB 4428 (ESG-Proxy): passed the House and one Senate committee.
Oklahoma HB 4429 (ESG-Proxy): passed the House and one Senate committee.
Standout signal: two veto overrides—Kansas SB 375 and Kentucky SB 183—underscore not just support but sustained legislative resolve.
As the situations in Arizona and Oklahoma indicate, even conservative-state legislatures are having trouble getting protection against ESG across the line. Lawmakers are still trying, however. The West Virginia Legislature, for example, is considering a bill that would require stockholder proxy advisors to disclose whether their recommendations to investors use environment, social, and governance scores instead of solely being “based on financial analysis of what actions would enhance investment value,” as the bill text states.
It’s an excellent bill. Unfortunately, it has been sitting in the state Senate’s Banking and Insurance Committee for three months. Similar bills in Iowa, Minnesota, Missouri, and several other states are also awaiting action. In many cases, such legislation has been filed for multiple years without receiving a full legislative vote.
These bills would prohibit the state governments from entering into contracts with businesses that boycott companies in the fossil fuel, agriculture, or other such industries based on ESG criteria, and they would ban the use of ESG scores in awarding public contracts. Some of the bills also tackle ESG in the private sector. Legislation in Missouri, for example, would provide a sanction against financial institutions that use such systems, without banning them entirely from mutual private-sector agreements.
West Virginia’s Senate Bill 417 emphasizes transparency in ESG use. The bill would require proxy advisors to inform shareholders, corporate boards, and the public about whether they have used ESG in their recommendations, and to make their written financial analyses available to clients and to the companies affected. Violations would be classified as deceptive trade practices under state law. The legislation would allow for private lawsuits by proxy advice service clients, companies, and shareholders.
A growing number of investment decisions and corporate governance actions in recent years have been determined not by the financial interests of the shareholders but by ideological ESG goals of asset managers and proxy advisors promoting “stakeholder capitalism.” The “Big Three” asset managers—BlackRock, Vanguard, and State Street—were at the center of this movement, collectively managing approximately $24.5 trillion in assets as of the end of 2025.
ESG-driven financial discrimination against industries, companies, and individuals has been prolific. In 2018, for example, large U.S. banks such as Citibank and Bank of America implemented restrictions on gun manufacturers and retailers. Banks were “restricting their credit card and banking services to gun retailers and halting lending to gun makers that do not comply with age limits and background check rules determined by the banks,” in addition to other companies, The New York Times reported at the time (approvingly, of course).
By 2021, more than 450 banks, investors, and insurance companies, whose members controlled $130 trillion in assets, were in the United Nations-led Glasgow Financial Alliance for NetZero (GFANZ). GFANZ imposed emission targets through the Net-Zero Asset Managers Initiative and the Net-Zero Banking Alliance, which controlled 41 percent of global banking assets in 2021.
These powerful investment firms and financial institutions have increasingly used ESG scores as a risk assessment mechanism to force companies, entire industries such as agriculture, and society at large to advance the companies’ politically motivated, subjective goals. These requirements often directly contravene the interests of companies, shareholders, and customers while degrading overall prosperity, markets, social institutions, and individual liberty.
Most major banks screen their lending portfolios in line with ESG plans such as the Due Diligence guidelines of the international Organisation for Economic Co-operation and Development, weeding out many potential corporate-lending or project-finance transactions. These financial institutions use the predetermined ESG criteria to rule companies in or out of eligibility for financing.
Dozens of the world’s most powerful banks have weaponized ESG to varying degrees to screen out businesses and even some individuals who refuse to comply with those companies’ preferred social justice or environmental policies. Virtually every large bank in the United States has committed to forcing the businesses they work with to phase out their use of fossil fuels, for example, even if it causes economic harm to customers and businesses. Financial institutions such as JP Morgan Chase, Bank of America, Wells Fargo, and U.S. Bank and credit card processors such as PayPal have also discriminated against faith-based organizations.
Discrimination has also been endemic among major insurance companies. Many across the globe refuse to underwrite fossil fuel projects, including Allianz, AXA, Swiss RE, Munich RE, Zurich Insurance Group, The Hartford, Chubb, and AIG. A recent example: Zurich announced in 2024 it would cease underwriting new oil and gas exploration and development projects, as well as metallurgical coal mining. Zurich requires its highest-emitting corporate clients to adopt measures to reach net-zero emissions by 2050, stating it may terminate relationships with those that fail to show sufficient progress.
Chubb updated its policies in 2025, announcing it may “decline coverage if a potential
policyholder cannot meet our methane performance expectations” of progress toward near-zero emissions. That August, Chubb withdrew its insurance coverage for the Rio Grande liquefied natural gas project in Brownville, Texas, one of the largest proposed fossil fuel infrastructure investments in the state.
Anti-ESG bills are popping up in states with a large farming sector, such as Iowa and Missouri. Activists and financial institutions have been increasingly pushing ESG on agriculture and food production, to deny loans and financing for farmers who choose the most efficient production methods.
Examples from the “Global Sector Strategies: Recommended Investor Expectations for Food and Beverage” distributed by the globalist NGO Climate 100+ include “Paris-aligned GHG emissions targets,” “Impact of GHG [greenhouse gas] emissions,” “Land use and ecological sensitivity,” “Impact of air pollution,” “Impact of freshwater consumption and withdrawal,” “Impact of solid waste disposal,” and “Nutrients,” which monitors the “metric tonnes of nitrogen, phosphorous, and potassium in fertilizer consumed.”
ESG mandates can directly harm the economy and the public. The world has already experienced adverse food supply shocks caused directly or indirectly by ESG mandates. The most shocking instance occurred in Sri Lanka, where a regulatory ban on chemical fertilizers in 2019 cut crop production nearly in half and resulted in societal upheaval that toppled the nation’s government. Other ESG-related disruptions in food supply have occurred throughout Europe—especially in the Netherlands—and in Canada and the United States.
Perversely hoping to spread the policies that have consistently caused disaster in Sri Lanka and elsewhere, activists are targeting nitrogen-based fertilizer use in the United States, trying to force farmers to curtail meat and dairy production and use only electric equipment, all to lower their carbon-dioxide footprints. The plan is to force farmers to undertake these “voluntary” changes or risk being frozen out of bank financing.
A 2024 report by the Buckeye Institute found an ESG reporting system would increase farmers’ operating expenses by 34 percent, raising the price of groceries. Consumer prices of items such as American cheese (79 percent), beef (70 percent), strawberries (47 percent), and chicken (39 percent), to name just a few examples, would increase significantly. The report estimates household grocery bills will increase by 15 percent under ESG scoring.
ESG advocates have consistently ignored such chilling forecasts. By 2021, more than 450 banks, investors, and insurance companies, whose members controlled $130 trillion in assets, were in the United Nations-led Glasgow Financial Alliance for NetZero (GFANZ). GFANZ imposed emission targets through the Net-Zero Asset Managers Initiative and the Net-Zero Banking Alliance, which controlled 41 percent of global banking assets in 2021.
The latter two initiatives have folded since then. The NetZero Banking Alliance folded in 2025 “after many big banks left” in a “mass exodus,” Reuters reported. In addition, some U.S. firms, such as Bank of America, Citi, Goldman Sachs, JP Morgan, and Wells Fargo, are reducing their ESG commitments, having read the tea leaves from the last presidential election: President Donald Trump has gone on record as a firm opponent of the practice. Preventing future administrations from pushing these financial giants back into ESG schemes, however, will require legislation from the federal and state governments.
ESG-driven financial discrimination imposes political goals on private-sector businesses at the expense of sound risk assessment, consumer choice, and economic vitality. The commonsense provisions in West Virginia’s SB 417 would protect residents and businesses from this global scheme of discrimination and denial of basic financial services through which radical activists, many from outside the state and even outside this country, try to control the means of production and curtail the freedoms of each and every West Virginian.
The more-limited bills in other states would at least disassociate these states and their residents from complicity in these schemes. Those who believe in freedom should monitor their states’ policies on this important issue.