“ESG is just a hate factory, it’s a factory for naming enemies,” Thiel said. “We should not be allowing them to do that.”
Days later, Masters, who along with his wife owned at least $1.5 million worth of cryptocurrency as of his latest personal financial disclosure last fall, began raising ESG scores on the campaign trail. He promised Fox News in April that he would “ban ESG scores” as well as “wokeness in the Fortune 500.” He made similar comments to Fox News again in May and when he appeared on the podcasts of conservative radio hosts Steve Bannon, Jesse Kelly, Mike Russell, and Rob Hunter.
Legislative Avenues
Republicans have turned back a Labor Department nominee in protest of the Biden administration’s advocacy for prioritizing ESG in retirement investing. Sen. Bill Hagerty (R-Tenn.), a member of the Banking Committee, recently asked the SEC to bar its recent former employees from helping companies comply with new ESG regulations.
Lawmakers have also used legislation that funds the SEC to discourage ESG rulemaking. The agency for years has been subject to appropriations bills that have barred it from creating rules that would force companies to disclose their political spending.
Other lawmakers have sought standalone measures, such as Rep. Troy Nehls’ (R-Texas) bill that would bar requirements that publicly traded companies disclose or provide greenhouse gas emissions (H.R. 8507).
At a primary debate hosted by FreedomWorks, Masters used his opposition to ESG scoring to set himself apart from his opponents, calling himself “the only candidate that understands and is addressing the new and modern threats we face.”
“Pretty soon, you watch, we’re going to have a young and dynamic America First caucus in the US Senate,” Masters said. “We’re going to change the way that place works.”
Masters told the City of Maricopa Republican Club that he’s already made inroads with one of Congress’ most strident ESG opponents, discussing with Sen. Tom Cotton (R-Ark.) ways to hamper ESG scores. Cotton last week declined to comment on his conversations with Masters, and a spokesperson didn’t respond to a request for comment.
ESG raters operate in a gray regulatory area. The US doesn’t have specific rules for ESG scores.
Firms that provide credit rating services are required to register with the SEC and make disclosures about their activities in an effort to root out fraud. These firms include Moody’s Corp. and S&P Global Inc., which offer traditional credit ratings along with ESG scores. But ESG score providers such as MSCI Inc. aren’t required to register with the SEC under credit rating agency rules.
SEC examiners earlier this year reported they’ve seen potential conflicts of interest and other risks at credit rating agencies that provide ESG products. The agency also has warned investors to be cautious about considering ESG scores when investing.
(Bloomberg LP, the parent company of Bloomberg Government, offers sustainability ratings and data. Additionally, Bloomberg has a partnership with MSCI to create ESG and other indexes for fixed-income investment.)
--With assistance from Andrew Ramonas and David Earl Jolly.
This article was provided by Bloomberg News.