Over the past few years, environmental, social, and governance (ESG) scores have become a thorn in the side of the U.S. economy and a viable threat to individual liberty. Under the Biden-Harris administration, special interest groups, multinational corporations, and an army of government bureaucrats have made inroads as they have sought to implement the ESG agenda across the governmental, business, and societal landscape.
While these leftist-aligned groups have been somewhat successful in forcing their ESG agenda upon U.S. businesses and society at large with the help of President Biden, they now face an insurmountable hurdle: President-elect Donald Trump.
In 2017, during Trump’s first term, ESG entered the American lexicon. Initially, it was portrayed as a panacea for all of the ills that have plagued modern society. Magically, at least we were told, ESG would erase racism and sexism while saving the planet and eliminating wealth inequality. According to the experts, who are never wrong, ESG scores could single-handedly solve nearly every social justice issue that the left has been complaining about since the beginning of the Progressive era.
Of course, for those who have studied history, grand pronouncements such as those surrounding the rollout of ESG prompted a bit of skepticism. They also called into question whether the ESG agenda was really about addressing these specific issues or if there were ulterior motives at hand.
Now that Trump is heading back to the White House, we can rest easy knowing that the ESG agenda faces severe headwinds.
First, lets recount that Trump is adamantly opposed to ESG based on principle. On numerous occasions, Trump has made it clear that the ESG agenda is a dangerous threat that must be stopped.
“The entire ESG scheme is designed to funnel your retirement money to the maniacs on the radical left,” declared President Trump in a 2023 campaign video.
In a 2023 post on Truth Social, Trump wrote, “We MUST protect Americans from Radical Leftist ESG investments—I did it once, and it’s time to do it again as I set the example for Republicans across the Country to follow my lead in fighting ESG!”
Make no mistake, it is plainly obvious that Trump is not a fan of ESG. So, what can he do to stop the ESG train in its tracks?
In his first term, Trump addressed the ESG matter in two main ways. Specifically, during the final days of his presidency, he issued two rules that were designed to prevent the imposition of ESG.
The first rule, issued through the Department of Labor, sought to protect American retirees from having their savings used to further ESG objectives.
According to the U.S. Department of Labor, “The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan’s investments in order to minimize the risk of large losses.”
In plain language, this means that fiduciaries—whether that be a small-time investment manager or a behemoth asset management company—must, according to the letter of the law, oversee the investments they handle with one guiding principle: maximizing shareholder returns.
In fact, this is a well-established principle that has been upheld repeatedly by the courts. As the University of Chicago Business Law Review notes, “The concept of shareholder supremacy was addressed by Delaware Supreme Court Justice Leo Strine when he stated: ‘a clear-eyed look at the law of corporations in Delaware reveals that, within the limits of their discretion, directors must make stockholder welfare their sole end, and that other interests may be taken into consideration only as a means of promoting stockholder welfare.’”
Moreover, this issue has been heard before the Supreme Court on multiple occasions, with the Court ruling in favor of shareholder supremacy repeatedly.
The second rule, issued by the Office of the Comptroller, was meant to codify fair access to financial services, preventing individuals from being discriminated against based upon their political orientation and speech.
Both of these rules were immediately overturned by Biden. However, the good news is that Trump can reinstate them on day one. Moreover, because the GOP will control both houses of Congress come 2025, the odds of a nationwide anti-ESG law, similar to that passed by Florida, is now on the table.
ESG is an anti-American system meant to empower large corporations, financial companies, and government busybodies to the detriment of we the people. Now that Trump is back, the ESG agenda is on borrowed time.
Chris Talgo (ctalgo@heartland.org) is editorial director at The Heartland Institute.