Jul 28, 2022 - Economy

The consequences of corporate activism

Illustration of a briefcase covered in peace, racial justice, pride and earth stickers. 

Illustration: Shoshana Gordon/Axios

The state of West Virginia will no longer work with major banks that have pledged to combat climate change — cutting ties with BlackRock, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.

Why it matters: Environmental, Social, and Governance (ESG) initiatives have been attacked by both sides of the aisle, but America’s top corporations are showing “no signs of retreat,” according to Fortune.

Zoom out: West Virginia isn't alone. 16 states have introduced legislation that could penalize companies for moving away from fossil fuels toward more clean energy.

  • And it’s not just environmental initiatives that could land a company on the chopping block. Just ask Disney.
  • Florida’s controversial Parental Rights in Education Bill — dubbed by critics the "Don't Say Gay" bill — has been introduced in some form across 20 states and is another example of legislation that makes it harder for companies to live up to their ESG goals.

What we're watching: Following the end of Roe v. Wade, many companies created stipends for employees located in restricted states, and legislators could come for those companies next.

  • It's already starting to happen in Texas, where 14 Republican House members have pledged to introduce legislation that would bar corporations from doing business in Texas if they offer any sort of abortion benefits to employees, per the Texas Tribune.

The bottom line: Executives must consider the very real legislative consequences that now come with ESG programs.

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