Anti-ESG Policy Is, Actually, One More Way To Fund Fossil Fuels

Last Updated on: 2nd July 2025, 12:28 pm

The news this morning is filled with stories about how US Senate Republicans have passed a huge budget bill that will blow up the US deficit by providing massive tax cuts to billionaires and corporations. It will also cut policies that would have supported the US economy and created jobs through the EV industry and solar industry tax credits. If this all wasn’t enough, a revealing new report outlines how the mounting anti-ESG movement is not really about diversity or equity — it’s one more mechanism to slow the transition to clean energy.

At a time in which electrification of transport, industry reshoring, and surging data center growth are driving up both energy use and peak demand across North America and Europe, clean energy is now the least costly form of new generation to build. Technology like battery storage is helping to make solar and wind more practical. These are facts. Supporting Big Oil flies in the face of all evidence about how essential clean energy is to ensuring energy security, safeguarding communities, and protecting our planet’s health.

These imperatives demand that we must not tap new fossil fuel supplies, and we must not build new fossil fuel infrastructure.

Fossil fuel interests, including think tanks, trade associations, and dark money groups, have fought the market from shifting to the lowest cost and healthiest energy mix, however. With an existential threat to their vast profitability, their tactics have included lobbying and manufactured “grass-roots” campaigns to spread misinformation in order to protect their profits. They’ve recruited political allies to establish roadblocks to climate progress.

They’re propping up what would be stranded assets — that is, unless they continue with a constant barrage of lies to the public and threats to office holders.

Elisa Morgera, the UN special rapporteur on human rights and climate change, set out a compelling argument in May that the US, UK, Canada, Australia, and other wealthy fossil fuel nations are legally obliged under international law to fully phase out oil, gas, and coal by 2030. Moreover, they should be required to compensate communities for harms caused.

Morgera argued in her report, titled, “The Imperative of Defossilizing our Economies,” that nations should ban fossil fuel ads and lobbying, criminalize greenwashing, and enforce harsh penalties for attacks on climate advocates, who are often the object of malicious lawsuits, online harassment, and physical violence.

“The overwhelming evidence of the interlinked, intergenerational, severe, and widespread human rights impacts of the fossil fuel life cycle, coupled with six decades of obstruction against effective climate action, compels urgent defossilization of our whole economies, as part of a just, effective, and transformative transition.”

The Connections Among Anti-ESG Movements & The Fossil Fuel Industry

The 2025 Statehouse Report from Pleiades Strategy chronicles how 106 anti-ESG bills have made their way through state legislatures in 2025, slowing climate action and the clean energy transition. Only 10 bills passed nationwide, but the sheer volume of attempts and how they helped intimidate companies into scaling back responsible investing at a moment when the risks and costs of delay is striking.

Right-wing politicians, lobbyists, and fossil fuel influence groups behind anti-ESG bills are continuing to block companies from responding to climate risk, even as climate impacts accelerate and the costs become unavoidable for investors, pension holders, municipalities, and taxpayers. In response to right-wing pressure, companies are engaging in “greenhushing,” pulling back on their commitments and clean energy investments. (“Greenhushing” is a way for companies to stay muted about their climate strategies, whether due to caution, restraint, anxiety, or defiance.)

Anti-ESG policies have been advanced almost exclusively by Republican elected officials, yet there have been stark differences of opinion among the party’s policymakers. Republican state treasurers, who serve as legal fiduciaries for their states and are attuned to the objective interests of investors, have debated with other state executive politicians who are committed to promoting a culture war that hides their actual motivations.

It’s a paradox without logic.

Global Banking Is To Blame For Anti-ESG Policies, Too

Another dimension of the anti-ESG movement often flies under the media radar. For several years, global banks had been advocates for net zero policies and other climate commitments. Then 2024 numbers started pouring in, and the bottom lines told a stark truth: many global banks had not only embraced anti-ESG policies but had also increased their fossil fuel financing. To advocate for net zero policies while financing fossil fuel expansion is to create energy security chaos.

“Debanking” bills weaponize civil rights language to compel banks to do business with risky industries, like gun manufacturers, fossil fuel corporations, and Christian nationalist groups. (Texas officials enforced a pro-gun anti-ESG law, 2021’s SB 13, for the first time yesterday, forcing the City of Austin to amend its contract with WEX Bank after claiming that it discriminates against firearm industry businesses. This model of pitting red states against blue cities and squandering public funds originates in Texas and has spread to 13 other states, including Texas, Oklahoma, and Arkansas.) The Federalist Society counters that debanking can lead to unfair discrimination and economic exclusion, particularly for unpopular religious or marginalized groups, and may even be used as a tool for censorship.

This revisionism comes at a time in which President Donald Trump’s tariff war and weaker consumer spending translated to a contraction of 0.5% in the US economy in the first quarter, even more of a drop than the 0.2% economists expected. The economy Trump inherited from President Joe Biden led the world in productivity.

The Pleiades Strategy report adds that, as a part of the Heritage Foundation’s Project 2025, these actions are part of the “extreme right’s commitment to maximizing short-term profits to those currently in economic power, while sticking everyone else with the bill and all of the long-term externalities.”

Anti-ESG proponents have mounted their financial counteroffensive, targeting the big pools of capital that states manage — like public employee pension funds and contracts funded by public borrowing — to essentially require that capital to finance fossil fuels. At the same time, they have have worked to prevent the private sector, through financial levers, legal threats, and intimidation, from making investment decisions in accordance with their own rational risk analyses, which incorporate ever-clearer market signals indicating that clean energy is the future and fossil fuel energy is an increasingly bad bet.

Alongside their manipulation of financial markets, ESG opponents have undertaken to create delay, confusion, and uncertainty. They press to preempt municipal permitting authority, cancel critical climate-science studies, and discontinue the publication of key climate-related statistics.

And all of this is on top of blatant giveaways to polluters: killing emissions control rules, cutting regulations that limit pollutants, mandating that fossil fuel plants remain open even when uneconomical, and clawing back federal funding. Look at the Inflation Reduction Act subsidies and tax credits — poof! — and funding for pollution cleanup, impact mitigation, and environmental justice.

Yes, some progress is being made. A number of state legislatures are debating climate superfund laws, which would force the biggest privately owned climate polluters to help pay for the growing costs to protect public infrastructure from climate-fueled damages. For several years financial regulations were increasingly codified to standardize climate disclosures. As a result, investors had more tools to evaluate and manage systemic climate risks.

Meanwhile, private sector funding is still operative, though the chaos instigated by the Trump administration upon US energy policy has had a definite impact.