In this week’s edition of Economy and Society:
- SEC ends defense of climate reporting rules
- Rep. Barr re-introduces anti-ESG legislation
- BlackRock CEO leaves ESG out of annual letter
- Companies maintain climate targets
- Pensions maintain ESG focus
In Washington, D.C.
SEC ends defense of climate reporting rules
What’s the story?
The Securities and Exchange Commission (SEC) announced last week that it voted to end its defense of the Biden-era corporate emissions reporting rules.
Why does it matter?
The decision indicates the majority of current SEC commissioners do not support the implementation of the rules. Acting SEC Chair Mark Uyeda said the commission wanted to end its “defense of the costly and unnecessarily intrusive climate change disclosure rules.”
The commission previously prioritized the emissions disclosure requirements under President Biden and former Chairman Gary Gensler.
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According to ESG Dive:
The move, which further differentiates the agency from its Biden-era approach, comes as little surprise. Experts previously told ESG Dive that the SEC did not appear inclined to defend the rule, after Acting SEC Chair Mark Uyeda asked the Eighth Circuit to delay arguments last month.
In his Feb. 11 statement, Uyeda said he “continue[s] to question the statutory authority of the Commission to adopt the Rule, the need for the Rule, and the evaluation of costs and benefits.” …
The agency’s acting chair said Thursday’s actions represent the SEC looking to cease its involvement “in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”
Rep. Barr re-introduces anti-ESG legislation
What’s the story?
Rep. Andy Barr (R-Ky.) introduced the Ensuring Sound Guidance Act last week, which would require investment advisors to prioritize factors he says directly affect financial returns over ESG considerations.
Why does it matter?
This marks the first time Congress has taken up such anti-ESG legislation with unified Republican control of both chambers and the presidency.
What’s the background?
Rep. Barr introduced similar legislation under the same title in 2023, while Sen. Tom Cotton (R-Ark.) introduced the bill in the Senate.
For more on the 2023 bill, click here.
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According to The New York Post:
“The Ensuring Sound Guidance Act protects retail investors and retirement savers by reaffirming that financial advisors must prioritize financial returns, not ESG trends.
“This legislation is about keeping politics out of your portfolio and restoring the fiduciary responsibility that is essential to investor trust and long-term economic growth.”
Barr’s bid to move against ESG was blocked during the previous administration after former commander-in-chief Joe Biden vetoed a draft law that had been passed in both the House and the Senate.
On Wall Street and in the private sector
BlackRock CEO leaves ESG out of annual letter
What’s the story?
Larry Fink—the CEO of BlackRock (the world’s largest asset management company)—published his annual letter to shareholders, which contained no mention of ESG or sustainable investing.
Why does it matter?
Fink’s annual letters historically featured discussions of ESG and sustainability starting in the late 2010s. His 2020 letter said sustainability was a primary investment consideration for the firm.
This year’s elimination of ESG-related mentions continues the recent trend of BlackRock moving away from publicly supporting the approach.
Read more
According to Barron’s:
This year there is no mention of “climate,” “net zero,” “sustainability,” or “sustainable investing.” There’s certainly no “ESG,” which Fink has sworn off as a term he uses but is still embedded in different BlackRock products. He doesn’t talk of an energy “transition” but of electricity demand and what he refers to as “energy pragmatism”—balancing a mix of renewable energies and oil and gas.
That’s a departure from years past, when the market was somewhat more hospitable to these issues. In 2021, Fink wrote that he had watched “how purposeful companies, with better ESG profiles, have outperformed their peers,” and in 2022 he wrote that the next 1,000 unicorns would be “startups that help the world decarbonize and make the energy transition affordable for all consumers.”
It’s not surprising that Fink also made no mention of diversity, equity, and inclusion, or DEI, in his letter, but it is worth noting because of his earlier comments. “We are at a moment of tremendous economic pain,” he wrote during the pandemic in his 2021 letter. “We are also at a historic crossroads on the path to racial justice—one that cannot be solved without leadership from companies.”
Companies maintain climate targets
What’s the story?
PwC (formerly PricewaterhouseCoopers), one of the Big Four accounting firms, released a report showing most publicly traded companies either maintained their previous climate pledges or increased their commitments in 2024.
Why does it matter?
PwC says almost half (47%) of public companies in their 2024 disclosures said they were keeping their climate commitments, while 37% said they were raising their targets. 16% of companies said they were scaling back their pledges.
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According to ESG Today:
For the report, PwC’s 2025 State of Decarbonization, PwC examined data from 4,163 public companies that submitted the full CDP questionnaire in the 2024 disclosure cycle, using GenAI to analyze more than 1 million entries of long form free text and quantitative responses, in addition to drawing on information from S&P Capital IQ, the Science-Based Targets initiative, and various public sources of information. …
Even among those scaling back, PwC found that more than half are recalibrating their expectations lower from overly ambitious goals set in the absence of a detailed plan, as companies gain a better view of what it achievable.
According to the report, the number of companies setting new Scope 1 and 2 emissions reduction targets has grown for each of the past seven years, including growing by 14% in 2024 to 1,293 companies from 1,132 in 2023, and up from less than 500 companies in 2020. Notably, however, the total emissions covered by the new targets declined in 2024 to around 1.1 billion metric tons of CO2e from more than 2 billion tons in the prior year. PwC attributed the change to a major shift in smaller companies setting climate goals, with the average revenue for a company introducing new goals in 2024 declining to $1.3 billion from $3.8 billion in 2020.
In the spotlight
Pensions maintain ESG focus
What’s the story?
A New York Times report last week argued pension plans in Democratic states, blue cities, and Europe are opposing anti-ESG trends and using their size to promote a focus on climate change and sustainability at corporations.
Why does it matter?
The emphasis on sustainability-based investment and corporate climate engagement runs opposite the trend in Republican states, which have driven efforts to oppose ESG and focus pension investment decisions exclusively on returns.
Read more
According to The New York Times:
At a time of growing backlash to environmental, social and governance goals and investment strategies, pension funds, particularly in blue states and Europe, have emerged as a bulwark against efforts to sideline climate-related risks.
The funds, which sit at the top of the investment chain, have stepped up engagement with asset managers and companies on climate goals and have kept public commitments to use their fiscal might to reduce carbon emissions. In some cases, that has meant shifting to European asset managers, which have not backed off on climate commitments as much as their American counterparts have.
[NYC Comptroller Brad] Lander’s office oversees investments for five public pension funds for 700,000 of the city’s current and former employees. The funds are pushing ahead with engagement, bringing more shareholder resolutions to banks to disclose the ratio of their fossil fuel investments versus clean energy and to utilities companies on their climate targets.