Ropes & Gray Issues State ESG Update and Analysis for Asset Managers and Financial Institutions

Ropes & Gray issued a white paper titled State ESG Update and Analysis for Asset Managers and Financial Institutions. This white paper includes selected commentary on some of the state developments tracked this year and addresses what has happened in each of the states in 2024.

The first part of this paper includes a roundup of Ropes & Gray thought leadership covering a variety of state ESG-related topics published in 2024. The second part examines 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.

Compared to last year, 2024 has seen a significant drop-off in state environmental, social and governance (ESG) related legislation, with half the number of bills proposed and a quarter of the number of bills enacted. While the initiatives motivating last year’s wave of anti-ESG activity have not abated, a closer look reveals that the battleground has shifted from the statehouse to the courtroom as more of these laws have been challenged for their enforceability.

At the same time, the fate of the U.S. Department of Labor’s ESG rule hangs in the balance in the Northern District of Texas, where attorneys general from 26 states have sued the DOL seeking to invalidate the regulation. The ultimate resolution of that case could play a role in predicting the future of ESG litigation.

Since 2021, Ropes & Gray has tracked various approaches states have taken on how and whether ESG factors should be applied to the investment decisions of public retirement systems. States have used legislative, administrative and enforcement mechanisms to address this area.

The 2024 white paper was authored by ERISA and benefits partner Joshua Lichtenstein, partner Michael Littenberg, global head of the firm’s ESG, CSR and Business & Human Rights practice, ERISA and benefits associates Reagan Haas, Jonathan Reinstein and Alexa Voskerichian and tax, employment and benefits associates La’Dericka Hall, Christine Rosenblatt and Devon Smith.