On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of climate change and ESG factors in state policymaking.
While law H.1645 does not impose additional restrictions on how state pension assets are invested, it does make major changes to state energy policy in a move that US law firm Ropes & Grey describes as showing a lack of “regard or consideration for energy conservation or the reduction of greenhouse gas emissions”.
The latest move from DeSantis is part of a much wider anti-ESG movement from certain states in the US, which appears to be having a notable effect on the how the nation’s institutional investors approach to sustainable investment.
Robeco’s fourth annual survey of 300 investors reveals the US lags considerably its global counterparts when it comes to attitudes towards climate investing.
According to the research only 35 per cent of North American respondents say they prioritise climate investing versus 62 per cent of all those surveyed who say climate change is at the centre of, or is a significant factor in, their investment policy.
The US statistics are even more stark compared to those from Asia-Pacific; a region Robeco describes as world leading in climate investing where 79 per cent of investors say climate change is central to, or a significant part of, their investment policy.
Lucian Peppelenbos, Climate and Biodiversity Strategist at Robeco, says: “The relevance of climate change has dipped in North America, where many investors are, for reasons such as geopolitical uncertainty and US political backlash, shying away from sustainable investing.”
He adds: “This dip in North America explains much of the overall decline in the significance of climate change to investment policies in the last 12 months, as its importance is holding steady in Europe and clearly rising in Asia-Pacific.”
North American investors also lagged their APAC and European peers when setting targets for investing in climate solutions. Overall, 40 per cent of investors surveyed have a general aim to invest more, but for North America the figure fell to 36 per cent. This compares with 42 per cent for Europe and 41 per cent for Asia-Pacific.
Peppelenbos also sees the US anti-ESG agenda as acting as a disincentive to investors in actively engaging with investee companies.
The research shows far more European and Asia-Pacific investors undertaking actions to engage with investee companies than in North America. Indeed, over half of North American investors (55 per cent) are not taking any engagement actions, compared to 22 per cent in Europe and 26 per cent in Asia-Pacific.
Peppelenbos says: “A prime reason for this discrepancy is the backlash to ESG investing in USA, where the topic has become controversial and divisive, leading investors to become more guarded and cautious on it.”
Several US states have established oversight committee to monitor financial services firms that they believe are discriminating against companies based on ESG considerations.
These include Arkansas, Louisiana, Georgia, Missouri and Texas.
