Hot-button ESG issue takes a back seat in GOP presidential campaigns

ESG investing has turned out to be a sleeper issue for Republican White House hopefuls.

The investment practice has stoked outrage among conservatives who say ESG or environment, social and corporate governance investing is synonymous with "woke capitalism." And yet, it gets scant attention from the growing field of 2024 GOP presidential candidates.

There's a good reason for that, Republican operatives say.

"Anytime you're talking about acronyms, you're losing," said longtime GOP strategist John Feehery, a former spokesman for House Speaker Dennis Hastert. "Don't talk about DEI [diversity, equity and inclusion]. Don't talk about ESG. Those acronyms are meaningless to most Americans. You have to boil it down so that they understand what's at stake."

That's why the candidates stick to broader everyday issues Americans better relate to such as the rising cost of energy, prices at the grocery store or President Biden's green energy agenda. 

Some Republican hopefuls, including Florida Gov. Ron DeSantis and biopharmaceutical entrepreneur Vivek Ramaswamy, have leaned into anti-ESG rhetoric more than their competitors. But when the topic is mentioned — if at all — it often gets just one or two sentences.

"We have enacted legislation to kneecap ESG in the state of Florida," Mr. DeSantis said last month at a campaign event in Iowa. "No ESG in the pension, no social credit scores, and no woke banking to discriminate against conservatives, not in the state of Florida."

Meanwhile, Republicans in Congress and at the state level are waging war against ESG.

GOP-controlled states have divested billions of dollars in state pension funds from pro-ESG financial institutions like BlackRock, State Street, Wells Fargo and JPMorgan amid criticism that ESG contributes to rising energy prices due to an emphasis on backing renewables over fossil fuels.

Congress passed a measure this year — with the help of Democratic Sens. Joe Manchin III of West Virginia and Jon Tester of Montana — to roll back a Labor Department rule allowing 401(k) fiduciaries to engage in ESG investing without their clients' knowledge. However, Mr. Biden used his first veto against the legislation. Congress was unable to muster the required two-thirds majority to override his veto.

House Republicans have also established an anti-ESG task force and plan to continue holding committee hearings about the investment strategy.

Under Mr. DeSantis, who trails GOP primary front-runner Donald Trump, Florida was among the slate of red states to divest from pro-ESG firms. 

The governor in May signed a law that bars state pension funds from engaging in ESG, a measure he frequently touts on the campaign trail.

The DeSantis-aligned Never Back Down PAC told The Washington Times that voters "know Gov. Ron DeSantis isn't afraid to stand up to any corporation when it tries to force woke ideologies on our communities."

Mr. Ramaswamy, who polls around 2% among GOP primary voters, is an anti-ESG crusader who runs an anti-ESG firm called Strive Asset Management. He's made tackling what he calls "wokeism" a pillar of his candidacy.

"I've been one of the biggest opponents of the ESG agenda and the stakeholder capitalism agenda in this country for the past three-plus years," Mr. Ramaswamy said in a recent campaign video. "Guys who wield the money — firms like BlackRock, large companies — they're the ones who get to settle political questions that we ought to settle through the political process itself. … We in the GOP need to lead the way to say we're going to be the party that keeps money out of politics."

Mr. Trump has been far less vocal on the issue, despite Mr. Biden altering the Trump administration's anti-ESG 401(k) rule. In a campaign video in February, he took credit for the "first ESG ban anywhere in the world" and suggested other Republicans were simply following his lead.

"The entire ESG scheme is designed to funnel your retirement money to the maniacs on the radical left," Mr. Trump said. "The rule we issued under my leadership was the first ESG ban anywhere in the world, and I'm delighted that Republicans in Congress and across the country have been waking up to this threat and following my lead."

Since then, he has given the subject less attention on the campaign trail.

Republican candidate and former Vice President Mike Pence at various times has also derided ESG. He made a brief mention of it during his campaign launch in Iowa last month.

"We'll break the unholy alliance between Wall Street and big government that's forcing radical ESG policies on the private sector," Mr. Pence told supporters.

Democrats, major Wall Street firms and other ESG proponents counter that the financial strategy is centered on measuring investment risk outside normal monetary factors. They say it is about aligning clients' money with their moral values.

Still, the conservative opponents of ESG have scored several victories, including financial companies around the world ditching net-zero climate initiatives and forcing major banks and investment firms to rethink their ESG strategies.

BlackRock CEO Larry Fink, a leader in ESG, recently said that he's retiring the term — but not the investment strategy — because it's become too politically weaponized. 

"I'm ashamed of being part of this conversation," Mr. Fink said at the Aspen Ideas Festival in Colorado, according to Axios. "I'm not going to use the word ESG because it's been misused by the far left and the far right."