Big news in the world of environmental, social and governance (ESG): JP Morgan Chase, BlackRock and State Street Global Investors are backing away from a multinational alliance intended to fight climate change.
As House Judiciary Committee Chairman Jim Jordan (R-OH) noted on X, “Today’s decisions by JPMorgan and State Street are big wins for freedom and the American economy.”
Indeed, this is welcome news for taxpayers, as many of these multinational initiatives advocate for bad policies like higher taxes and more regulatory red tape. Further, Americans have increasingly become skeptical of businesses and politicians that place excessive emphasis on environmental and social governance (ESG) aims over their core functions. And angering large swathes of your customers and potential customers, is a lousy business strategy.
The announcement comes as many politicians in red states have enacted or are considering anti-ESG laws to punish companies that engage in behavior that they disapprove of. Some of these politicians are even celebrating this event as justification of their efforts.
This is unfortunate. State governments should not enact ideological litmus tests on enterprise or inject culture-war fights into economic policy because when they do so, taxpayers often end up footing the bill – whether these laws are pro-ESG or anti-ESG.
For example, California pension funds have lost billions because they were forced to divest of tobacco securities. And Texas taxpayers have been saddled with hundreds of millions of added costs because of anti-ESG laws that blocked certain companies from participating in municipal bond markets.
As I noted in a recent piece for Fox News, “politicians should stop using taxpayers as their pawns as they duke it out in the culture war.” Rather, companies should be more responsive to their consumers. Sometimes, that means staying out of divisive issues.