Project 2025’s Threats to ESG Mount in Campaign’s Home Stretch

Project 2025, the broad conservative roadmap for reshaping the US government and civic life under a possible Trump administration, offers detailed suggestions to suppress environmental, social, and governance initiatives, including diversity programs.

The book that houses all the ideas of Project 2025, named “Mandate for Leadership: The Conservative Promise,” mentions the term “ESG” 32 times while diversity, equity, and inclusion—or DEI—gets 35 direct mentions.

Unraveling ESG would cap off a yearslong effort by conservatives to curtail corporate sustainability practices and diversity programs. ESG revolves around socially conscious business policies—like mitigating environmental damage, having a diverse workforce, and taking steps to prevent fraud.

Investors use these nonfinancial metrics to gauge businesses’ sustainability to make decisions on which companies have exposure to nontraditional or emerging risks like climate change. But anti-ESG advocates decry it as a ploy by liberals to use business and government to drive progressive policies on environmentalism, racial equity, and executive management.

If Donald Trump becomes president again and turns to Project 2025 for guidance, he could seek to bar certain companies from managing government retirement funds, curtail shareholder involvement in the proxy-voting process, and prevent the government from requiring companies to report greenhouse gas emissions from their activities.

“ESG investing is a relatively recent strategy promoted by large asset managers that focuses not only on a company’s bottom line, but also on the company’s compliance with liberal political views on climate change, racial quotas, abortion, and other issues,” an excerpt from the document says.

ESG References

Project 2025 is more than a book of policy ideas—it’s an incubator-like organization directed by the right-wing think tank Heritage Foundation. In addition to the 922-page book, Project 2025 provides training for prospective government officials and employees and a portal to apply for jobs in a possible Trump administration.

Photo Illustration: Jonathan Hurtarte / Bloomberg Law

Though Trump has tried to distance himself from the conservative roadmap, former officials and trusted advisors from his presidential administration spearheaded the effort. This includes Russell Vought, who directed the Office of Management and Budget under Trump and is now the Republican National Committee’s policy director. The website for Project 2025 says the first Trump administration “relied heavily” on Heritage’s past work, adopting almost two-thirds of a similar platform in Trump’s first year in office.

Trump said toward the beginning of his Sept. 10 debate against Democratic presidential nominee Kamala Harris that he has “nothing to do with Project 2025. That’s out there. I haven’t read it. I don’t want to read it, purposely.”

But Democrats are unconvinced that Trump is completely divorced from the document and its goals. Harris has coordinated a nationwide effort to campaign on the book.

The vice president’s allies in the Senate took two weeks to spotlight the “worst 10" ideas in the document, led by Senate Majority Leader Chuck Schumer (D-N.Y.).

“They spent months together figuring out what to do,” Schumer told reporters at a Sept. 12 press conference. “Everyone knows this is his plan—not what he’s trying to run on right now because he knows what he wants to do is so unpopular.”

Efforts in Congress to hamper business and regulators from ESG issues haven’t been successful thus far, and Republican lawmakers are relying on another Trump administration and action in the states to advance their anti-ESG agenda.

The Project 2025 anti-ESG strategy flouts the historical GOP norms of deregulating business activity, one observer said. The book widely calls for deregulating businesses in almost every aspect except ESG, Georgetown Law and business professor Hillary Sale said.

“In the area of ESG, they actually want more regulation to prohibit companies who are considering governance and profit issues related to any of a broad category of issues that might relate to the environment, human capital, or governance,” she said. “They seem to be confused about what ESG actually means, including to profit-focused enterprises. Good governance is vital and that is the ‘G’ in ESG.”

Three Buckets

ESG and DEI mentions in the roadmap fall into three broad categories: legislative proposals, administrative actions, and agency enforcement or rulemaking. Among the ideas for Congress are existing initiatives that haven’t gained momentum, like the House Judiciary Committee’s investigation into state pension funds, asset managers, and shareholder groups that use ESG factors to invest.

The book suggests Congress “should investigate ESG practices as a cover for anticompetitive activity and possible unfair trade practices.” Managers at publicly traded companies that “use their power to advance sets of fashionable moral beliefs, such as ESG/DEI, introduce agency problems into the shareholder relationship and appropriate corporate wealth for their own benefit,” the book states.

In conjunction, Project 2025 recommends that the Federal Trade Commission should set up a “ESG/DEI collusion task force” to investigate firms, targeting private equity specifically, to “see if they are using the practice as a means to meet targets, fix prices, or reduce output.”

Photo Illustration: Jonathan Hurtarte / Bloomberg Law

It also says Congress should “prohibit” the Securities and Exchange Commission from requiring companies to disclose social, ideological, political, or “human capital” information that is “not material to investors’ financial, economic, or pecuniary risks or returns,” referring to the SEC’s pending human capital rules that are expected to require companies to disclose more information about their workforces ranging from diversity to number of part-time employees.

The SEC-related recommendations are “fairly conventional conservative” policies, said David Burton, a senior fellow at the Heritage Foundation and lead author of the SEC section of the book, in an interview.

It also targets the SEC ‘s March climate rules that require companies disclose the greenhouse gas emissions from their activities. The book was published before the commission approved the final watered down version of the regulation—now paused amid litigation—but calls the rules “particularly problematic” and says they would “quadruple the costs of being a public company.”

“The SEC is being complicit, they wanted to do environmental regulation,” Burton said.

For the Department of Treasury, the book states that the next conservative administration should “take affirmative steps to expose and eradicate the practice of critical race theory and diversity, equity, and inclusion” throughout the agency.

To do that, it suggests a four-part plan that includes identifying and questioning every Treasury official who participated in DEI initiatives, and treating participation in any such program as “grounds for termination of employment.”

Photo Illustration: Jonathan Hurtarte / Bloomberg Law

Vulnerable Policies

Although Project 2025’s document is a starting point, and it’s unclear how much—if at all—Trump has bought into its recommendations, the threats to climate-change policy and shareholder democracy it poses are significant, advocacy groups say.

Burton wrote that Congress should “oppose efforts to redefine the purpose of business in the name of social justice; corporate social responsibility (CSR); stakeholder theory; environmental, social, and governance (ESG) criteria; socially responsible investing (SRI); sustainability; diversity; business ethics; or commongood capitalism.”

That’s a clear threat to investor groups that want the freedom to influence companies to act more responsibly, ESG proponents say. The document outlines policies that interfere with free-market principles that are concerning, said Steve Rothstein, managing director of the Accelerator for Sustainable Capital Markets for shareholder group Ceres.

“We are very worried about any administration that would limit shareholder rights, would limit the rights of investors to introduce resolutions that can be very helpful for companies,” Rothstein said.

The plan also endangers the work of financial agencies like the Federal Reserve to monitor and mitigate financial disaster as a result of climate change, said Jordan Haedtler, a climate financial policy consultant who works with advocacy organizations Climate Cabinet and Sunrise Project.

All of the voluntary and unilateral actions of the agencies that make up the Financial Stability Oversight Council, which stemmed from President Joe Biden’s executive order on climate related financial risk from his first year in office, would “immediately come to an end,” Haedtler added.

“The idea of crisis management and financial stability management is a really disastrous thought that you can see explicitly in Project 2025,” he said. “And it’s not really hypothetical. We saw them run this playbook, and if you imagine they would be even more unfettered another time around, it’s a pretty scary idea.”