State ESG Update and Analysis for Asset Managers and Financial Institutions

Since 2021, Ropes & Gray has been actively tracking actions that states have taken on how or whether environmental, social and governance (“ESG”) factors should be applied to the investment decisions for public sector retirement systems. Against a background of increasing political tensions, states have used legislative, administrative and enforcement mechanisms to address this area. 

Compared to last year, 2024 has seen a significant drop-off in state ESG-related legislation, with half the number of bills proposed and a quarter of the number of bills enacted. This decline might come as a surprise, given that the initiatives motivating last year’s wave of activity have not abated—but a closer look reveals that the battleground has arguably shifted from the statehouse to the courtroom as more of these laws have been challenged for their enforceability.  We also note that even as states defend their laws in the courts, we have seen an increased focus on implementation, impacting the way that state plans select investment managers and the terms they are willing to invest under.

This white paper includes selected commentary on some of the state developments we have tracked this year and addresses what has happened in each of the states in 2024. In the first part of this paper, we include a roundup of thought leadership covering a variety of state ESG-related topics published in 2024. In the second part, we examine in more granular detail, recaps of what has transpired in each state, along with an assessment of the state’s policymaking regarding ESG and public pension investments. 

Download the white paper.