110 Iowa L. Rev. 2045 (2025)

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Abstract

This Essay argues that state laws aimed at preventing consideration of environmental, social, and governance (“ESG”) issues, so-called anti-ESG regulations, are deeply problematic not only because they are riddled with troubling contradictions, but also because they are harmful to both economic and business concerns. First, state anti-ESG regulations reflect states’ vigorous efforts to deny the financial repercussions of weather-related events at the very same time that states are experiencing devastating financial fallout from floods, hurricanes, droughts, and other weather-related events. This contradiction is harmful because it undermines states’ ability to secure sufficient economic resources to tackle the significant financial harms associated with their own weather-related disasters. Second, anti-ESG regulations embody prohibitions against the use of state financial resources even as states rely upon federal resources because states always respond to weather-related disasters by declaring emergences enabling them to draw upon federal dollars. In so doing, this contrarian behavior inappropriately shifts the economic fallout of weather-related disasters onto citizens of other states. Third, while anti-ESG regulation proponents tout the importance of the free market, anti-ESG regulations second guess the business judgment of financial actors in a manner that is fundamentally inconsistent with traditional norms of a free market economy. As a result, state anti-ESG regulations reflect state actors’ effort to substitute their own judgment around complex andconsequential business matters—in this case business matters that intersect with critical weather-related issues—in a manner that is harmful to the long-term best interests of the financial sector and the environment in which that sector must operate.