To Blake Masters, the newly minted Republican Senate nominee in Arizona, ESG scores are an existential threat to the US economy along with inflation -- an issue worth campaigning on as ardently as securing the border, preventing voter fraud and challenging Big Tech.
“They represent a further merger of government and corporation,” Masters said, comparing ESG scores to the tactics of the Chinese Communist Party in a statement to Bloomberg Government on Wednesday. “These scores have absolutely no place in our country.”
Masters’ advocacy is part of a growing movement among Republicans to make ESG scores -- the grading of companies’ performance based on their environmental and societal effects, as well as their governance structure -- a cultural issue alongside Democrats’ social justice and environmental advocacy. Those Republicans could seek legislative avenues to limit use of the scores if they take control of the next Congress.
Masters, who’s challenging Sen. Mark Kelly (D) in one of the most competitive Senate races in the country, has blasted ESG scores at least 10 times on the campaign trail in recent months, according to audio and video recordings of Masters’ speeches reviewed by Bloomberg Government.
“I think we need to ban ESG scores,” Masters told the City of Maricopa Republican Club last month. “And that’s my pledge to you. We’ll try to figure out how to do it.”
Addressing the Mohave County Republican Committee Picnic last month, Masters called ESG scores one of the country’s “new and modern threats.” In May, he warned the SaddleBrooke Republican Club of ESG scores as “new stuff coming across the transom” worthy of conservatives’ attention.
“We have to not just defend against this stuff, because we’ll lose,” Masters told a July meeting of Sedona-based conservatives called Citizens for America. “We have to affirmatively take back from the left.”
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If elected, Masters could seek to limit the incentives for companies to value factors other than their bottom line.
The Securities and Exchange Commission, which has oversight of some firms that offer ESG scores and a Democratic chairperson, is unlikely to ban the scores or severely restrict firms that offer them. But a Republican-controlled Congress could pressure the agency to ramp up its scrutiny of the ratings or stop it from taking actions to encourage ESG scores, which socially conscious investors use to compare companies.
ESG scores have been around for about two decades but only attracted negative political attention more recently. One of ESG’s most prominent critics is Republican megadonor Peter Thiel, who is backing Masters’ campaign. Masters’ refrain on the campaign trail may be replicated by other like-minded candidates.
Masters started speaking against ESG on the campaign trail after Thiel railed against the scores at a Bitcoin conference in April.
At the conference, Thiel, for whom Masters worked as COO and who funds a pro-Masters super PAC, called ESG “the real enemy” of the biggest cryptocurrency in a market that’s largely escaped government regulation. Cryptocurrencies, which largely escape government regulation, tend to receive low scores because of their electricity demands for production.