In this week’s edition of Economy and Society:
- Democrats request environmental policies from asset managers
- Anti-ESG bill dies in Texas House
- ESG legislation update
- New ESG criteria focus on nutrition
- Discussions about proxy advisors continue in media
- New research supports the case for corporate political neutrality
In Washington, D.C.
Democrats request environmental policies from asset managers
What’s the story?
Rep. Maxine Waters (D-Calif.) and 40 other House Democrats sent letters last week to major U.S. banks and asset managers requesting details about their current climate and ESG strategies. The lawmakers also asked whether the firms had communicated with the Trump administration about their climate policies.
Why does it matter?
The letters targeted firms that recently withdrew from global climate alliances, which the lawmakers argued was a reversal of prior environmental commitments. The outreach shows political pressure on U.S. banks over ESG from both major parties.
Read more
According to Banking Dive:
The Thursday letters were addressed to top executives at JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs, Morgan Stanley, State Street, BlackRock, Northern Trust, Franklin Templeton, Invesco and Pimco. …
All 12 banks and asset managers have left United Nations-backed groups such as the Net-Zero Banking Alliance and Net-Zero Asset Managers initiative, or departed other sustainability-focused groups like Climate Action 100+ since January 2024. Wall Street has broadly stepped away from climate alliances as the political environment has shifted. …
The lawmakers made clear that the institutions are being queried because of their climate alliance exits, and the letters indicated the representatives wanted to “express disappointment over [the] company’s decision to backtrack on its climate goals in response to political pressure and the influence of fossil fuel special interests.”
In the states
Anti-ESG bill dies in Texas House
What’s the story?
A Texas bill that sought to shift the legal burden in shareholder lawsuits involving ESG policies failed in committee last week. The House Judiciary and Civil Jurisprudence Committee voted it down 9–1.
Why does it matter?
If enacted, the bill would have been the first to make it easier for shareholders to challenge ESG-related decisions by requiring companies to prove those actions were financially—rather than politically—motivated.
What’s the background?
Texas was one of the first states to enact anti-ESG legislation in 2021.
Read more
According to Texas Scorecard:
A measure aimed at further cracking down on the use of environmental, social, and governance (ESG) standards in corporate decision-making was defeated in the Texas House Judiciary and Civil Jurisprudence Committee, effectively ending the bill’s chances this session.
House Bill 872 by State Rep. Brian Harrison (R–Midlothian) would have shifted the legal burden of proof in certain shareholder lawsuits, requiring corporations accused of improperly considering ESG factors to prove their actions were in the company’s best interest. …
The vote on HB 872 came late enough in the legislative session that the committee could have simply declined to take action. Instead, the committee formally voted down the bill by a 9–1 margin, with State Rep. Mike Schofield (R–Katy) the only vote in favor.
ESG legislation update
Twelve state legislatures took action on 16 ESG-related bills last week (since May 13). One bill in Arizona was vetoed and six 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
New ESG criteria focus on nutrition
What’s the story?
A May 2025 Reason article highlighted recent discussion about incorporating nutrition standards into ESG frameworks, pointing to a 2022 academic study proposing nutrition metrics for evaluating food and beverage companies.
Why does it matter?
As shareholder support for ESG proposals has slowed, some investors are focusing on public health. Recent efforts aim to incorporate nutrition into ESG frameworks, encouraging food and beverage companies to consider product transparency and health impacts. Companies that once embraced ESG principles could now face scrutiny over how their offerings align with evolving definitions of corporate responsibility.
Read more
According to Reason magazine:
After years of climate and racial equity-focused proposals, ESG activists are now shifting their attention to nutrition. The latest campaign appears to be against “unhealthful products.” Academics are branding this movement “ESG + Nutrition,” arguing that investors should aim to “align financial returns with benefits for society and the planet.”
In 2023, Nestlé found itself at the forefront of this new effort when a group of institutional investors demanded the company “rebalance its sales towards healthier products.” Similar campaigns have been pushed at Kellogg’s, Kraft Heinz, Unilever, and soda giants Pepsi and Coca-Cola. …
Unlike calls for emissions disclosure at a tech firm, demands for Coca-Cola to replace its entire product line with green smoothies or for Mars to ditch the Snickers bar in exchange for ancient grain granola bars are antithetical to these companies’ entire business models. If taken seriously, these efforts would effectively require America’s most iconic companies to abandon their core products—and, by extension, their customer bases.
Discussions about proxy advisors continue in media
What’s the story?
Major media outlets in the U.S. and Canada recently reported on the influence of proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS). Coverage focused on their role in shaping ESG-related shareholder votes and broader corporate governance decisions.
Why does it matter?
Glass Lewis and ISS help guide institutional investors’ votes on shareholder resolutions, giving them significant influence over ESG and corporate policy outcomes. Political and industry leaders have opposed the proxy advisors through federal hearings, state-level investigations, and statements.
The recent media coverage indicates scrutiny of proxy advisors is expanding beyond government circles into the broader public and financial discourse.
What’s the background?
For more on Florida’s recent investigation into the proxy advisory services, click here. For commentary from JPMorgan Chase CEO Jamie Dimon criticizing their influence, click here.
Read more
According to Canada’s Financial Post:
As Canadian companies prepare for their annual meetings, a shadow governance regime run by a duopoly of proxy advisers has quietly usurped their boards’ authority. Institutional Shareholder Services (ISS) and Glass Lewis’s stated purpose is to guide investor votes so as to improve governance and increase shareholder value. In practice, these two private firms wield outsized power over corporate policy — but without either the fiduciary duty directors have to act in shareholders’ best interests or any real consequence even if they undermine value creation.
Stanford researchers have found ISS recommendations are “… not predictive of future operating performance, stock-price performance, or governance failure.” Ontario’s Capital Markets Modernization Taskforce has warned of “errors in reports,” while Tao Li of the University of Florida concludes “proxy advisory firms that also engage in consulting arrangements with corporate issuers exhibit favouritism.”
According to RealClear Markets:
[R]egardless of who the state hires or fires, ESG blacklists regulating what fund manager controls state portfolios aren’t solving the perceived issue. This is because they’re only going after one perpetrator: asset managers. Though asset managers are big targets, the proxy advisory firms that often consult with companies and investors are much bigger supporters of ESG mandates. And unlike asset managers, they’re not following market trends and distancing themselves from ESG; they’re doubling down.
According to a recent Competitive Enterprise Institute (CEI) report, proxy advisory companies supported climate disclosures the most. Two biggest proxy firms, both foreign owned and controlled, Glass Lewis and Institutional Shareholder Services (ISS), account for 94% of the market and both firms consistently issue recommendations in favor of ESG shareholder proposals. ISS, in particular, has been the leader in cajoling public companies to voluntarily disclose their so-called sustainability reports. This is especially problematic when these proxy advisory companies are both rating companies based on their ESG criteria and then also selling consulting services on how to optimize their ESG scores – a clear conflict of interest. And clearly illustrates who the true ESG culprits are.
In the spotlight
New research finds corporate political neutrality on divided issues boosts approval
What’s the story?
Researchers from Harvard, Columbia, and Cornell released a paper analyzing how public approval of businesses shifts when executives speak on political issues. They found neutrality generally leads to higher approval, but reactions depend on how evenly public opinion is split.
Why does it matter?
The study found that when executives weigh in on divisive issues with no public consensus, their companies often see reputational and sales declines. In contrast, when they align with broad public opinion, companies are more likely to see reputational benefits.
Read more
According to Thomas Bondi, Vanessa Burbano, and Fabrizio Dell’Acqua:
We find that, for an issue about which individuals’ opinion is split (Study 1), perceptions of the firm are negatively affected by partisan communication in either direction on average. Though individuals who agree with the stance respond positively and individuals who disagree with the stance respond negatively, the negative effects are greater and thus outweigh the positive on average. The negative average effect is even stronger for firms which were expected to be neutral ex-ante. Communicating an apolitical stance, by contrast, increases individuals’ perceptions of the firm on average (especially amongst Republicans and Independents). Our results suggest that this positive average effect is driven by firms expected ex-ante to lean in one ideological direction; firms expected to be politically neutral do not receive additional benefit from communicating an apolitical stance. Taken together, these results suggest that individuals do not want firms to talk polarizing politics in business; either staying silent when expected to be politically neutral or communicating an apolitical stance when expected to lean in one ideological direction results in the most positive perceptions of the firm.
For a less polarizing political issue about which opinion is largely homogeneous (Study 2), communication of a political stance aligned with prevailing opinion on the issue increases positive opinion of the firm on average compared to either silence or communicating an apolitical stance.