In this week’s edition of Economy and Society:
- Fannie Mae closes ESG department
- Canadian regulators pause climate reporting rules
- ISSB eases reporting standards
- State ESG legislation update
- ESG outflows grow in Q1
- World Economic Forum chairman and founder retires
In Washington, D.C., and around the world
Fannie Mae closes ESG department
What’s the story?
Fannie Mae—the Federal National Mortgage Association, a government-sponsored enterprise (GSE)—shut down its ESG department, firing over 30 employees, including Laurel Davis, head of the company’s mission and impact program.
Why does it matter?
The closure follows similar moves at Freddie Mac and reflects a broader shift away from ESG and DEI initiatives promoted during the Biden administration. Leadership changes at the Federal Housing Finance Agency (FHFA), including President Trump’s appointment of Bill Pulte as director, have contributed to the shift.
What’s the background?
Fannie Mae and Freddie Mac are private companies operating under congressional charters and the FHFA’s conservatorship.
Read more
According to Housingwire:
Sources estimated that there were more than 30 members of the ESG team — which is part of the broader Mission Team, along side Duty to Serve and Goals. They were let go on Friday, per sources. The ESG program is not a requirement by charter. …
The cuts follow the Trump administration’s dismantling of initiatives that include diversity, equity and inclusion (DEI) provisions as well as climate-related mandates. FHFA Director Bill Pulte has spearheaded the administration’s mission to remove any DEI-based initiatives from his agency and the GSEs themselves, though it’s not clear if he had any direct role in the dismissal of the ESG team….
Pulte, who chairs the boards of both Fannie Mae and Freddie Mac, has also rolled back various climate initiatives that were launched during the Biden presidency. He has also mandated a return to the office for both companies.
Canadian regulators pause climate reporting rules
What’s the story?
The Canadian Securities Administrators (CSA) announced it is pausing the development and rollout of new regulations requiring corporate reporting on emissions and diversity.
Why does it matter?
Canada joins other major economies rolling back emissions and diversity reporting requirements. After the U.S. Securities and Exchange Commission paused corporate disclosure enforcement last year, the European Union and India followed.
What’s the background?
For more on the global move away from reporting regulations, including India’s recent actions, click here.
Read more
According to ESG Today:
According to the Canadian Securities Administrators (CSA), the umbrella organization of Canada’s provincial and territorial securities regulators, the move to pause the development of new sustainability reporting requirements is being made “to support Canadian markets and issuers as they adapt to the recent developments in the U.S. and globally.”
The announcement follows a series significant changes in the sustainability reporting landscape in major markets, with the EU in the midst of its “Omnibus” process to delay, reduce the scope and simplify disclosure requirements under its CSRD legislation, and the U.S. Securities Exchange Commission in the process of entirely abandoning its climate-related reporting rules. …
The CSA move marks a significant and rapid change in direction for the Canadian regulators. As recently as December, the Canadian Sustainability Standards Board (CSSB) published finalized ISSB-based Canadian Sustainability Disclosure Standards. Following the CSSB release, the CSA stated that it was continuing its work towards a mandatory revised climate-related disclosure rule that would consider the new standards.
ISSB eases reporting standards
What’s the story?
The International Sustainability Standards Board (ISSB)—formed in 2021 to develop voluntary reporting standards to guide regulators—announced it will ease Scope 3 emissions guidance for several sectors, including financial services.
Why does it matter?
ISSB standards are not binding, but they influence regulatory requirements in over 30 jurisdictions around the world, representing more than half of global GDP. Changes to the Scope 3 guidance could shape disclosure rules worldwide.
What’s the background?
Scope 3 emissions include indirect emissions from a company’s value chain, such as supplier activities, business travel, and product use. They are often the largest and hardest-to-measure emissions category.
Read more
According to ESG Today:
While the changes would affect a wide range of companies reporting on climate-related issues under the standard, the amendments would most significantly impact requirements for financial sector companies, with new reliefs introduced allowing entities to exclude Scope 3 emissions reporting associated with derivatives, facilitated emissions or insurance-associated emissions….
According to the ISSB, the new proposed changes to IFRS S2 are being made in response to market feedback, addressing specific application challenges, and with a focus on making it easier for companies to apply the standards while retaining the decision-usefulness of information for investors, rather than to reduce GHG emissions disclosures. …
One of the key proposed changes to the climate-related disclosure standard is an amendment to Scope 3 category 15 emissions, which is focused on value chain emissions relating to investments, such as financial services companies’ investment, financing and capital markets activities. Under the proposed amendment, entities would be permitted to limit disclosure to financed emissions, and exclude emissions associated with derivatives, facilitated emissions or insurance-associated emissions. In order to enable users of the reporting to understand the magnitude of emissions being excluded, the ISSB also proposed adding a requirement for companies to disclose the amount of derivatives or other financial activity being excluded from the Scope 3 disclosure.
In the states
ESG legislation update
Ten state legislatures took action on 19 ESG-related bills last week (since April 22). One bill in Arkansas was enacted into law, and five bills crossed over from one chamber to another.
States with legislative activity on ESG last week are highlighted in the map below. Click here to see the details of each bill in the legislation tracker.
On Wall Street and in the private sector
ESG outflows grow in Q1
What’s the story?
Global outflows from ESG funds hit a record high in Q1 2025, with withdrawals continuing in the U.S. and recorded for the first time in Europe.
Why does it matter?
U.S. ESG funds have posted net outflows for 10 straight quarters. Europe has now recorded its first quarterly outflows, while Asia posted a new withdrawal record, marking a broader retreat from the strategy.
Read more
According to The Financial Times:
While US investors cut their exposure to sustainable mutual and exchange traded funds for a 10th straight quarter, Europeans were net sellers for the first time on record in data going back to 2018, pulling out $1.2bn, according to data from Morningstar.
With Asian investors also cutting exposure, the $8.6bn of net outflows is by far the highest withdrawal figure ever seen.
The outflows indicate that the pushback against funds that invest on the basis of ESG factors may be spreading to Europe, the region where the concept first took hold and which accounts for 84 per cent of the $3.2tn held in ESG funds globally.
BP oil shift prompts ESG strategy debate
What’s the story?
Elliott Management disclosed it has acquired more than a 5% stake in BP and is pushing the company to prioritize oil and gas production over green energy investments.
Why does it matter?
BP’s renewed focus on fossil fuels has prompted debate among ESG investors over whether to stay engaged with traditional energy companies or divest entirely. In February, BP announced it would increase annual oil and gas investment to about $10 billion.
Read more
According to Bloomberg:
Elliott has now built up a stake in BP to just over 5%, making it one of the oil major’s biggest investors along with BlackRock Inc. and Vanguard Group Inc. Elliott has made clear it wants BP to return to its core oil and gas business as part of a strategy to generate $20 billion of annual free cash flow by 2027.
Against that backdrop, BP has embarked on a major pivot within its energy strategy. The company said on Feb. 26 it was abandoning earlier transition plans, and will instead seek to increase investment in oil and gas to about $10 billion a year. It also plans to reduce annual investment in low-carbon energy to $1.5 billion to $2 billion, which is roughly $5 billion less than BP’s previous guidance.
Since BP’s announcement, more than 60 funds that commit to a sustainability objective in their prospectus have added to their existing stakes in the company, according to data compiled by Bloomberg. A further six such environmental, social and governance funds invested in BP’s stock for the first time.