Action–Reaction: US Financial Regulation Meets ESG Considerations

Journal of Financial Compliance, Volume 6 Number 3
33 minute read | April.17.2023

In this paper recent legislative trends in the United States in response to environmental, social and governance (ESG) measures adopted by financial institutions are discussed. The paper explores new sources of potential compliance risk associated with states enacting and enforcing so-called anti-ESG laws, which are designed to protect firms such as fossil fuel companies and gun manufacturers from the expected detrimental impact of socially responsible banking and investment policies. It refers to existing anti-discrimination compliance paradigms to provide insights regarding how financial institutions may minimise the compliance risk associated with these anti-ESG measures.