Four States setting Public Policy on ESG (Environmental, Social, and Governance) Reporting

State of Florida

Under the direction of Gov. Ron DeSantis, Florida is leading the movement against ESG initiatives, looking to punish asset management firms who consider environmental, social and governance principles or have ESG funds.?

BlackRock is one of the DeSantis administration’s favorite targets. The governor directed the state to divest $2 billion in assets from the Larry Fink-led firm for its ESG policies last December. Florida, however, still invests an estimated $12.9 billion with the company, according to research credit rating agency KBRA released last month.

State of Texas

Though not an official member of DeSantis’ coalition, Texas is on a similar crusade against the use of ESG in investing. While Florida may be making the most noise, the Lone Star State was quicker to exercise its legislative power.

In January, Texas Attorney General Ken Paxton used legislative groundwork laid two years prior to prove the state’s pushback against ESG came with enforcement. Paxton — who was impeached and acquitted of corruption in the state legislature this year, but awaits criminal trial next April for securities fraud — accused CitiGroup of violating a 2021 state law prohibiting businesses from being government contractors if they have policies “that discriminate against or boycott firearm or ammunition companies.” The state agency overseeing the Texas-record $3.4 billion municipal bond dropped Citi and reconfigured the deal as a result.

State of California and The State of New York gov set blueprint for pro-ESG regulation

California and New York are on the opposite end of the spectrum as Florida and Texas, introducing several pieces of legislation over the past decade that promote ESG-aligned investments and taking regulatory action on related environmental and social issues.

California Gov. Gavin Newsom signed two major climate-related legislative measures — Senate Bill 253 and Senate Bill 261 — into law in October, which push for more transparency from large companies. SB 253 would require businesses operating in California with annual revenues exceeding $1 billion to report their greenhouse emissions each year, whereas SB 261 would require business entities with revenues exceeding $500 million to publicly disclose their climate-related financial risks and countermeasures.

Source - https://www.esgdive.com/news/4-key-states-shaping-us-esg-regulatory-discourse-analysis-FL-TX-CA-NY/700047/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-11-16%20ESG%20Dive%20%5Bissue:56524%5D&utm_term=ESG%20Dive

I can add a bit more colour:

1. There are challenges with how best to pull ESG data together for the regulatory, operational, and management reporting cycles.
2. Green washing is a big concern for all ESG filers
3. There needs to be audit standards as part of validating ESG data
4. There needs to be ESG blueprint as part of external and internal audit cycles
5. All levels of government, private sector, and various regulatory bodies need to continue to work on uniformity when it comes to ESG reporting standards.

Blog - JP Morgan ESG head Umunna calls for new green tech funding model - https://www.dhirubhai.net/posts/paul-young-055632b_jp-morgan-esg-head-umunna-calls-for-new-green-activity-7130247318288650241-Q6pV?utm_source=share&utm_medium=member_desktop

Paul Young CPA CGA

Senior Data and AI Thought Leader - ESG Policy Development and Reporting

[email protected]

#ESG #scope1 #scope2 #scope3 #emissions #biodiversity #watermanagement #energymanagement #recycling #socialgovernance #corporategovernance #ESGmetrics

CPA Ontario

Chartered Professional Accountants of Canada (CPA Canada)

Chartered Accountants Australia and New Zealand

International Accounting Standards Board (IASB)

Public Company Accounting Oversight Board (PCAOB)

U.S. Securities and Exchange Commission

Steven Guilbeault