ESG Investing Laws Diverge in Red and Blue States: Explained

More than a dozen states across the country are implementing new ESG laws that in most cases curb use of the factors in investments, contracts, and other areas.

Most of the action is in Republican-led states, where lawmakers have restricted environmental, social, and governance considerations—such as addressing climate change—in a range of state and corporate actions. Meanwhile, Democrat-led states including Illinois and Colorado enacted laws requiring additional disclosures on investment risks and sustainability.

The laws create a range of new requirements for asset managers and other businesses in addition to public pension administrators and state agencies. Other state ...