In this week’s edition of Economy and Society:
- EU member states ask for cuts to deforestation rules
- European ESG investors seek alternatives to regulation
- Arkansas leads in anti-ESG laws
- Ohio legislature passes, North Carolina governor vetoes ESG-related bills
- American banks discuss continued support for environmental initiatives
- AI energy needs complicate climate goals
Around the world
EU member states ask for cuts to deforestation rules
What’s the story?
Eighteen of the European Union’s 27 member states sent a letter July 7 asking the EU to scale back its upcoming deforestation rules, set to take effect in December. The countries argued the rules risked putting EU businesses at a competitive disadvantage.
Why does it matter?
The letter shows EU member states are divided over ESG rules and concerned that some policies may burden their economies.
What’s the background?
For more on the ongoing regulatory debate in the EU, click here.
Read more
According to Reuters:
Most European Union countries have demanded further changes to the bloc’s anti-deforestation law, saying some of its producers cannot be expected to meet its terms and face a competitive disadvantage, a letter seen by Reuters showed. …
Brussels has already delayed its launch by a year and cut back reporting rules following criticism from trading partners, including the United States, as well as from EU countries.
Of the EU’s 27 member countries, agriculture ministers from 18 wrote to the Commission on Monday, demanding the EU rules are not applied to countries deemed to have a low risk of deforestation. They should stick to national measures instead, they said.
European ESG investors seek alternatives to regulation
What’s the story?
Some European institutional investors—including Norwegian pension fund KLP—are promoting ESG through their asset allocations and potential legal action as the EU reduces regulations.
Why does it matter?
Investors are taking a larger role in promoting ESG standards, shifting influence from government oversight to the private sector.
Read more
According to Bloomberg:
Asset managers and asset owners based in northern Europe say they’re ready to cut allocations to companies they think are using a lack of regulations as an excuse to be less transparent about their ESG risks. In interviews with Bloomberg, they also say they’re ready to consider legal steps to protect their portfolios from climate change and human rights risks.
The development follows a major about-face in Europe, which has long been the biggest market for ESG, with more than 80% of the world’s sustainable fund assets. After taking an early lead on ESG, policymakers in the European Union are now significantly winding back earlier ambitions so that only a fraction of the companies once in scope still face sustainable reporting and due diligence requirements. …
Against that backdrop, European investors are now taking matters into their own hands. “We have engaged with several law firms to better understand how the changing political situation in the US will impact our rights as a minority shareholder and what potential risks we may face in exercising our active ownership efforts,” said Kiran Aziz, head of responsible investments at Norwegian pension fund KLP, which oversees about $114 billion.
In the states
Arkansas leads in anti-ESG laws
What’s the story?
Pleiades Strategy, a pro-ESG consultancy, published an annual report showing Arkansas led the nation in the number of anti-ESG bills passed since 2021.
Ballotpedia identified 12 anti-ESG bills enacted in Arkansas since 2021. Idaho, Louisiana, and Utah were tied for second with eight anti-ESG bills each.
On the other side, California had the most pro-ESG bills with nine, followed by Illinois with eight.
Why does it matter?
The 12 passed bills put Arkansas’ anti-ESG passage rate at about 71% (five bills have failed). Other states, including Missouri with 55 introduced bills and one enacted, have much lower passage rates.
The success rates indicate different levels of support for and different approaches to anti-ESG policies between states with Republican trifectas.
What’s the background?
To learn more and explore Ballotpedia’s ESG legislation tracker, click here.
Read more
According to Arkansas Advocate:
The state has enacted seven anti-ESG measures, not including resolutions, since 2021. Connor Gibson, one of the report’s authors, said the ESG label is nebulous, but often takes aim at climate goals, social justice initiatives and culture war targets.
Much of the legislation that has moved through statehouses in the U.S. is based on model bills propagated by right-leaning think tanks like the Heritage Foundation, he said. The bills often prohibit state entities from giving contracts to or investing in businesses proponents believe discriminate against firearm manufacturers or fossil fuel companies, for example. …
The climate advisory group’s 2025 Statehouse Report highlighted the anti-ESG trends in legislatures across the country. Arkansas was one of the most effective states in passing such laws, said Gibson. While some states, like Missouri and Arizona, have proposed dozens of anti-ESG bills only to pass one or none, most of the legislation that’s gone before Arkansas lawmakers ended up becoming law.
Ohio legislature passes, North Carolina governor vetoes ESG-related bills
Two states took action on two ESG-related bills last week (since July 1).
- An Ohio bill proposing to block the state board of deposit from directing the state treasurer to sell investments for the primary purpose of advancing ESG policy passed both chambers.
- A North Carolina bill proposing to bar state and local governments from entering into contracts with private businesses that promote diversity, equity, and inclusion (DEI) initiatives was vetoed.
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
American banks discuss continued support for environmental initiatives
What’s the story?
Executives from major U.S. banks told European investors at recent climate summits in London that while domestic opposition to ESG has changed their daily operations and investments, it hasn’t affected their overall commitment to sustainability and broader environmental goals.
Why does it matter?
U.S. political pressure on ESG is prompting banks to reassure European investors about their environmental priorities, showing how domestic debates are influencing global finance.
Read more
According to Bloomberg:
At recent climate summits in London, representatives from JPMorgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp. and Citigroup Inc. were mingling with their European counterparts to discuss investment themes that have been vilified by the Trump administration. …
“We are an American bank, but especially being a highly regulated industry, we have to assess and evaluate what’s coming at us from all parts of the world,” Taylor Wright, head of operational sustainability at JPMorgan, said in an interview. “We see pressures on both sides.” …
Speaking at the City Week Net Zero Finance Innovation Summit, Cathy Shepherd, Citigroup’s global head of clean energy transition and the UK head of natural resources, said the current atmosphere in the US means clients concerned with transition finance are “really taking a pause on those investments.” That means that “money that’s sitting on the sidelines is starting to look elsewhere,” with Europe a “natural home” for those flows, she said.
AI energy needs complicate climate goals
What’s the story?
Google’s latest annual environmental report showed its overall emissions were up 51% since 2019 with rising AI and data center energy demands.
Why does it matter?
Google joins other big tech companies struggling to reach 2030 net zero emissions goals. Microsoft recently announced carbon capture investments as part of their effort to reach their end-of-decade environmental targets. The reports both highlight how AI energy demands are complicating corporate sustainability goals.
Read more
According to ESG Dive:
Google’s overall emissions are up 51% compared to a 2019 baseline, according to its latest annual environmental report. This jump in its overall carbon footprint comes despite the company’s progress in reducing its data center emissions and working towards its goal of powering operations on 24/7 clean energy last year.
The global tech and search engine conglomerate reduced its data center emissions 12% in 2024, despite rising energy demands due to artificial intelligence. Additionally, the company said it signed power agreements for 8 gigawatts of new clean energy generation and brought 2.5 GW of new clean energy online last year.
Google, which has a 2030 net-zero target date, called its climate targets “moonshots” and “ambition-based” in the latest report, both changes from its prior framing of the targets. The report documented an 11% decrease in year-over-year operational emissions — counting its scope 1 and 2 emissions — but when accompanied by a 22% increase in scope 3 emissions, the end result was an 11% increase in overall company emissions.