Sen. Sheldon Whitehouse, D-R.I., sits on the Environment and Public Works and Finance Committees; Sen. Brian Schatz, D-Hawaii, sits on the Appropriations and Commerce Committees; and Sen. Martin Heinrich, D-N.M., sits on the Energy and Natural Resources Committee and Appropriations Committee.
There is a cohort of elected officials in the United States presently engaged in an anti-capitalist crusade against free-market principles. No, they are not socialists. They are congressional Republicans, and they are attempting to prevent financial institutions from allocating capital in accordance with investor preferences and risk management principles. This attempted crackdown is purely ideological in nature — it is an exercise in political pressure to force a gross government overreach into U.S. capital markets.
This campaign, which should offend anyone with even a modicum of pro-market sensibilities, is being championed from within the Republican Party. Republican state lawmakers and members of Congress are attempting to stifle the growth of sustainable investing and to punish corporate efforts at climate-related financial risk management.
The underlying problem is that the fossil fuel industry is running up against a “risk wall,” where long-established economic risks associated with climate change are now sufficiently clear and present to trigger ordinary risk-reporting requirements in financial markets. Rather than reduce their emissions, or face up to the risks that they cause, the fossil fuel industry is trying to break and remake traditional risk reporting to selectively remove reporting of climate-related risks.
If it seems that elected Republicans have very suddenly awakened to the momentum toward climate risk reporting and the popularity of so-called environmental, social, and governance (ESG) investing, and dramatically stepped up their counteroffensive accordingly, that is no coincidence. This is a closely coordinated political effort driven by a network of dark money organizations fronting for climate denial groups and fossil fuel interests.
The recent election showed the extent of the Republican Party’s dependence on “outside spending.” This is usually anonymous dark money, and it is often traceable back to the fossil fuel industry. Those millions in political dark money likely came with strings attached, and those strings are likely pulling this political effort.
As of this year, there are $8.4 trillion in U.S. assets under management that employ sustainable investing strategies. The boom in sustainable and responsible investing has occurred for a very simple reason: there is enormous market demand for it. Warnings abound of significant economic risks that are plainly foreseeable if we don’t transition to a low-carbon economy.
Investors see that danger ahead. Asset owners, accordingly, are clamoring for responsible investment options. They may have determined that sustainable investments better suit their risk tolerance and objectives over…
Read More: Republican efforts to limit ESG investing are anti-capitalist