Legal challenges are emerging in response to the actions of states like Missouri and Kentucky, where attempts are being made to restrict companies from rooting their investment decisions in environmental, social, or governance (ESG) considerations. Both states have found themselves in the midst of lawsuits that argue these actions not only contravene federal law, but may also infringe upon the Constitution, accusations that have been rebuffed by the respective state leaders. These specific cases can be reviewed in more detail at the National Law Journal’s report.
These disputes over ESG-influenced investing are witnessing an increased focus from Attorney Generals. Jerry Kilgore, a member of Cozen O’Connor, recognizes this amplified attention, and notes that due to the AGs’ public challenges, many companies and rating agencies have begun to re-evaluate their usage of ESG metrics.
It remains to be seen how these legal battles will impact the larger sphere of ESG investing, not just within these specific states, but potentially setting precedents for the rest of the nation to follow.