ESG Tactics for the Anti-ESG Age

What’s In this Week’s Newsletter:

• Climate activists change tactics, and ESG investors remain confident as we enter the anti-ESG age.
• Companies are also changing their strategies and staying quiet on sustainability. 
• A new BCG report reveals the Cost of Climate Inaction.
• CARB revealed they will not penalize companies in the first year of implementing California’s new climate disclosure law in 2026.
• Countries are increasing tariffs and subsidies to remain competitive in clean tech.
• The Swiss government will mandate companies to set net zero by 2050 goals.
• APAC is leading in the adoption of ISSB-aligned regulations.

Climate activists and ESG investors are rethinking their strategies for the anti-ESG age.

The anti-ESG movement has been building for around three years now, but with the imminent arrival of the Trump Adminstration and possible rollbacks in Europe, the anti-ESG movement is likely to go into hyperdrive. Case in point, last week, ten Republican state attorneys general sued asset managers BlackRock, State Street, and Vanguard, accusing them of manipulating the market to speed up the decline of the coal industry to meet climate targets. 

Brenna Bird, Attorney General of Iowa, said that Donald Trump’s electoral win inspired the lawsuit, adding, "As part of that election, Americans rejected woke extremism, and they sent President Trump a strong mandate to restore our country.”

In the face of an energized opposition, climate activists are changing tactics. OG climate activist Bill Mckibben and his new non-profit, Third Act, are turning their focus to local, community-based activism and attending important meetings at the state and local level in areas critical to the energy transition. 

Mckibben also believes activists must adopt a more hopeful tone. “My sense is there’s a great hunger for some very positive things to be working on in what is a very dark moment in both our nation’s and our planet’s history.” Youth climate activists who worked under the first Trump administration and are now organizing to elect a more climate-friendly US Administration in 2028 share this sentiment. 

ESG funds had record levels of liquidations and name changes in the EU last quarter. In the US, for the 5th straight quarter, the number of ESG funds being liquidated outpaced new ones being created. With this backdrop, it is remarkable that sustainable investors are expressing confidence. 

However, Global sustainable funds attracted $10.4bn in new investments in Q3, an increase from the previous quarter. Plus, larger asset owners, whose planning goes far beyond election cycles, recognize the material impacts of ESG. Even if more anti-ESG investing rules do come in, Hortense Bioy of Morningstar Sustainalytics said, “This will lead to more ‘greenhushing’ as companies will continue to consider ESG factors they think are material to their business.”

Greenhushing: The New Norm

Companies are joining activists in changing their tactics in the anti-ESG era. This week, Goldman Sachs exited the Net Zero Bankers Alliance (NZBA), thier largest defection to date. Not only are Republicans alleging that such groups could breach antitrust laws, but membership applies new burdens on top of mandated climate disclosure rules.  

In announcing this move, the bank reaffirmed its existing climate goals. Jonathan Gleklen, a partner at Arnold & Porter, said that Goldman Sachs must have thought that “to stay in this group if I think there’s a reasonable risk that I’m going to get sued, is this really worth $10 million to me, when I can drop out of the group, do all the same things.”

This comes on the heels of a whole host of companies pulling back on their Diversity, Equity, and Inclusion (DEI) policies and others recalibrating their environmental goals. However, all told, just a handful of companies have reversed their DEI and sustainability goals. Actually, only 10% of companies say they will change DEI policies over the next 3 years. Going forward, companies are likely to maintain their ESG programs but be less vocal about it.

The political backlash is not the only reason for this change. Companies need a compelling business case for these actions, which can be elusive. An ERM survey released this week highlighted this, finding that almost half of executives see the lack of financial incentives as the biggest challenge to sustainability policies. Another study from The Conference Board, which found that 41% of executives believe the return on investment from sustainability policies is underperforming, supported this finding. 

The Cost of Climate Inaction

A new report from my company, BCG, and the World Economic Forum Alliance of CEO Climate Leaders revealed the startling cost of climate inaction. The report outlines statistics that make the business case for climate action, including:

• The physical risks of climate change could cost companies up to 25% of EBITDA by 2050. 
• Transitional risks of climate change could cost certain high-emitting sectors up to 50% of EBITDA by 2030.
• Companies that invest in reducing their climate risks stand to recuperate as much as $19 for every dollar they invest today.

The report also gives clear steps CEOs can take to ensure they mitigate climate risks and exploit opportunities.

Compliance Relief in California

A California Air and Resource Board (CARB) memo from last week revealed that the agency, which is setting the rules for California’s emissions reporting mandate under SB 219, will not penalize companies for incomplete reports in 2026.

The agency already plans to waive penalties from Scope 3 reporting through to 2030 for companies that make “good faith” efforts to report their entire emissions. This relief has now been extended to reports of Scope 1 and 2 emissions in 2026. The architect of SB 219, Scott Weiner, claimed that CARB has no authority to change a law already passed by the legislature, saying, "Government agencies do not get to decide whether or not they follow the law." CARB has until July 31st, 2025, to finalize its rules.

Green Trade War?

Chinese carmakers have overtaken the global automotive market in just a few years with low-cost, high-quality electric vehicles. This and the threat of Chinese dominance in other clean tech is driving a global green subsidy race. 

Also, this week, the Biden administration is set to announce sweeping new tariffs on Chinese solar wafers and polysilicon, doubling them to 50%. With Trump set to introduce more tariffs, the US will likely rely on domestic production for carbon transition.

Swiss Will Require Companies to Reach Net-Zero

Earlier in the year, the Swiss government was told by the European Court of Human Rights that their existing efforts to fight climate change were insufficient to protect the human rights of their citizens. 

This week, they took action by releasing proposals requiring companies to provide plans to reach net zero by 2050. Also, a new UBS report found that Switzerland reduced emissions by 24% from 1990-2022 while doubling its economy.

Asia Pacific Leading ISSB Adoption

A new study found that Asia Pacific is rapidly adopting the International Sustainability Standards Board (ISSB) standards for climate disclosure. 13 APAC countries have adopted or have drafted proposals that require the use of ISSB standards for climate disclosure, some of which will start in 2025.

The ISSB announcement comes just as Hong Kong announced they would require companies to report on ISSB-aligned reporting in 2025. Hong Kong’s roadmap on sustainability disclosure aims to have its largest listed companies report climate emissions in 2025, and all large-cap companies must report in 2026.

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer. 

Other Notable News:

Global Weirding

• For the second year running, the world experienced the hottest year ever recorded. 2024 was also the first year to be, on average, 1.5°C above pre-industrial levels (the goal of the Paris Agreement).
• The Arctic Ocean may have its first ice-free day before 2030 if warming trends continue much sooner than previously predicted. 
• The Arctic Tundra used to be a carbon sink. However, new research finds that it should now be considered a carbon source as it emits more than it absorbs.
• A Malibu wildfire came out of nowhere this week and caused 20,000 residents, including Hollywood A-listers, to evacuate.

Sustainability Research

• New research found that 85% of investors believe greenwashing is a growing problem, and 88% now use ESG data in their decision-making. 
• As UN talks on desertification are ending in Saudi Arabia, the UN released a report that found that two-thirds of the globe has gotten dryer in recent decades.

Sustainability Tech

• Scientists claim governments should slow progress on geoengineering projects, like solar mirrors, until more research is done. 

Climate Activism

• Dozens of climate activists took over an office near New York Governor Kathy Hochul’s office, demanding that she sign a New York “super fund” bill that would force high emitters to pay for climate adaptation.

Energy Transition

• A new report predicts that US power consumption will reach an all-time high in 2025, renewable power output will increase by 2%, and coal output will decrease by 2%.
• Renewable energy is set to overtake fossil fuels for the first time in the UK. Wind, solar, and hydropower will account for 37% of the energy, whereas fossil fuels will account for 35%. The remainder will come from biomass and nuclear.

Notable Podcasts: 

• In this week’s episode of the Outrage and Optimism podcast, the hosts are joined by circular economy activist and pioneer Ellen MacArthur. Together, they discuss the recent disappointing talks for a UN global plastics treaty, the potential of finding a deal next year, and the important work Ellen does on circularity with the Ellen MacArthur Foundation.
• This week’s episode of the BBC’s The Climate Question features a report from one of the front lines of climate change, the Pakistani Himalayas. Rapidly melting glaciers in the world’s highest mountain range have brought unprecedented flooding and threatened ways of life centuries old. The podcast team asks locals how they are coping and why they plan to stay despite the challenges.Notable Jobs:

Notable Jobs:

• Principal, Decarbonization, American Airlines, Dallas, Texas
• Principal, Sustainability Reporting, American Airlines, Dallas, Texas
• Sustainability demo analyst, Watershed, New York
• Reporting Fellow, Climate, Crooked Media, Los Angeles, California
• Research Associate (Science), Carbon Direct, Remote, US
• IBM Corporate Social Responsibility, ESG Strategy & Programs Team 2025, IBM, Raleigh, North Carolina
• Climate Analyst, Loomis, Sayles & Company, Boston, Mass, Hybrid
• Associate, Sustainability Risk Management, BCG, New York, Hybrid
• ESG Coordinator, Neuberger Berman, New York, Hybrid