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Recent developments suggest that states will play a critical role in protecting responsible investing nationally. Following the Securities and Exchange Commission’s (SEC) announcement last week of its final climate risk disclosure rule, more than a dozen state attorneys general mobilized to sue the SEC. In parallel, self-serving politicians who have taken millions in campaign contributions from greedy billionaires and well-funded special interest groups are introducing anti-ESG legislation in Arizona, Georgia, and Alabama that would limit or prevent state entities from engaging in responsible investing. 

Recent polling indicates there is widespread, bipartisan support for responsible investing and research consistently shows these attacks endanger the financial well-being of everyday Americans. The following news stories reveal the latest wave of attacks and how states will play a key role in protecting responsible investing and climate disclosures.

Arizona Republicans want to ban public spending on climate action under a sweeping proposal that targets mass transit and pollution data collection — as well as any attempts to replace meat with bugs, limit clothing ownership or promote “Marxist ideologies.” The state’s Republican-controlled House and Senate have passed various forms of the legislation, including a version that would bypass Democratic Gov. Katie Hobbs and go directly on the November ballot. All versions of the bill would bar any public entity — from the state to cities to universities — from advocating, planning or joining an association that promotes a sprawling list of policies. Any registered voter in the state would be able to sue a public entity to enforce it.

California took a big step last fall when lawmakers passed a pair of laws requiring big companies doing business in the state to disclose their greenhouse gas emissions and climate-related risks, shining a light on their role in fueling the climate crisis. But now that it’s time for the experts at the California Air Resources Board to craft the disclosure rules, there are some troubling obstacles that could allow polluters to keep their climate impacts hidden for years longer. The U.S. Chamber of Commerce and other business groups have sued to block the laws, arguing they go too far and violate 1st Amendment free speech rights by forcing companies to release information on the “politically fraught” topic of climate change.

The Georgia Senate Committee on Retirement is slated to review a bill that will impact the fiduciary duties related to investing state retirement plan assets. HB481 was introduced Feb. 16 by Republican state Rep. John Carson to the Georgia House of Representatives, which passed it Feb. 26. HB481 seeks to amend the Public Retirement Systems Investment Authority Law to, among other things, “provide for a fiduciary duty to invest retirement assets solely in the financial interests of participants and their beneficiaries.”

The Alabama Legislature is taking another swing at the consideration of emotional [SP], social and governance factors by companies contracting with the state. SB151 by Sen. Arthur Orr, R-Decatur, passed the Senate Finance and Taxation Committee Thursday and can now advance to the full Senate. The bill would prevent Alabama’s pension funds from investing with any asset manager that actually considers relevant Environmental, Social, and Governance risks, and would prevent government entities from considering relevant environmental and social factors when awarding contracts.

West Virginia Attorney General Patrick Morrisey on Wednesday announced that a coalition of Republican leaders in 10 states is suing to block the SEC’s just-released rules requiring companies to disclose their carbon emissions. Morrisey (R) said he and the Georgia attorney general filed a petition for review in the US Court of Appeals for the Eleventh Circuit with support from Alabama, Alaska, New Hampshire, Indiana, Oklahoma, South Carolina, Wyoming and Virginia. Morrisey called the SEC’s rules “a back door move to undermine the energy industry.” The move comes even though the Securities and Exchange Commission’s regulations do not contain what had been one of the more controversial provisions: a requirement to disclose so-called Scope 3 emissions from indirect sources such as consumers or supply chain providers. 

A coalition of 16 Republican attorneys general penned a letter to BlackRock fund directors last week, questioning statements made by the asset manager over its ESG policies, decisions made by mutual fund managers and the firm’s “participation in programs that push the political goals of environmental activist groups.” The Feb. 27 letter was spearheaded by Montana Attorney General Austin Knudsen and followed BlackRock’s decision to scale back its membership from Climate Action 100+ — a $68 trillion climate action investor group — after members JPMorgan Asset Management and State Street Global Advisors announced their departure.

Manufacturers and 24 states sued the Environmental Protection Agency on Wednesday over the Biden administration’s decision to tighten limits on fine industrial particles, one of the most common and deadliest forms of air pollution. The state lawsuits are led by Republican attorneys general and argue that the E.P.A. overstepped its authority last month when it lowered the annual limits for fine particulate matter to nine micrograms per cubic meter of air, down from the current standard of 12 micrograms.