Aug 16, 2023

ESG Takes Another Hit In Corporate America

Republicans have turned ESG investing into a public relations problem.
ESG Takes Another Hit In Corporate America

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Written by David Zimmermann

What’s happening: Last week, S&P Global retired its environmental, social, and governance (ESG) numerical scores, which evaluate companies based on progressive factors. The S&P will still note which companies adhere to ESG without giving an explicit score.

  • Catch up: ESG assesses a corporation’s credit quality based on its adherence to political agendas like policies regarding climate; diversity, equity, and inclusion; and LGBT initiatives. The company’s score impacts its ability to receive loans and investments.

Why it matters: S&P’s removal of the ESG score is another setback for corporate America’s progressive public relations. Corporations are reconsidering loud endorsements of leftist political causes amid Republican probes and successful conservative boycotts.

Republican probes: Since 2021, over 20 conservative state attorneys general, along with Republican members of Congress, have been investigating corporate ESG practices to crack down on the politicization of the private sector. BlackRock is a prime example, with a motion against its ESG policy still ongoing.

  • Zoom in: Ron DeSantis has been a key opponent of the Biden administration’s ESG policies. In March, the Florida governor formed an alliance with 18 other states to push back against President Joe Biden’s backing of ESG investing.

Backtracking: The CEO of BlackRock—the largest asset management firm—recently said that he will no longer use the term ESG because critics have “weaponized” it. Corporations have been cutting diversity officer positions at top entertainment companies like Disney.

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