KBRA releases research that highlights the environmental, social, and governance (ESG) regulatory initiatives of the four largest states: California, Texas, Florida, and New York as the political debate over ESG continues across the U.S. Almost every state in the country has introduced policies related to ESG investing—some supporting the use of ESG factors and others limiting their application in investment decisions as well as in state contracts. As of August 2023, 37 U.S. states were pursuing regulation to restrict ESG investing, while 19 states were enacting laws encouraging the use of ESG.

The use of ESG factors in investment decisions remains a deeply divided issue across the country. California and New York (including New York City) have been active in promoting the use of ESG in state investment while also pursuing action on ESG topics like climate change and diversity, equity, and inclusion in state regulations. In mid-September 2023, California became the first state in the country to require public companies to disclose their greenhouse gas (GHG) emissions. In contrast, Texas and Florida have been at the forefront of the anti-ESG debate through pursuing policies to restrict the use of ESG issues based on what the states call non-pecuniary factors in investments.

This report is part of KBRA regulatory updates, and as ESG-related regulation continues to evolve and expand, KBRA will continue to monitor developments and analyze the effect of such regulation on credit across KBRA-rated sectors.

Click here to view the report.

Related Publications

• Carbon Series: Cap-and-Trade Primer (North America and Europe)
• Carbon Series: The Voluntary Carbon Market
• Texas Senate Bill 19–A Clash of Stakeholder Interests

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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