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Economy and Society: September 24, 2025
In this week’s edition of Economy and Society:
- European Commission delays interim climate goals
- Report describes U.S. as leader in global anti-ESG efforts
- Texas AG launches investigation of proxy advisors
- Asset owners increase ESG commitments in 2025
- ExxonMobil CEO pessimistic on U.S.–EU talks on ESG rules
In Washington, D.C., and around the world
European Commission delays interim climate goals
What’s the story?
The European Commission said it will miss the September deadline to submit its 2035 emissions reduction target under the Paris Climate Agreement. Member states are split on how much to cut:
- Western European nations, including Denmark, the Netherlands, and Spain, prefer larger emission cuts.
- Eastern European countries, including the Czech Republic, Hungary, and Poland, support smaller reductions.
The Commission said it aims to release targets before the 30th United Nations Climate Change Conference (COP30) in Brazil this November.
Why does it matter?
The split among member states reflects disagreements over the scale of emissions cuts and the associated economic costs, illustrating how internal politics can shape international climate policy discussions.
What’s the background?
Representatives from 196 countries reached the Paris Agreement in 2015 at a United Nations climate summit in France. It requires parties to submit updated climate targets, known as nationally determined contributions, every five years.
The European Union has set some of the strictest climate goals worldwide, including a legally binding target to reach net-zero greenhouse gas emissions by 2050. Disagreements among member states have delayed interim target setting.
Report describes U.S. as leader in global anti-ESG efforts
What’s the story?
A report from research firm GlobalData says the United States has become the leader in global anti-ESG efforts. The study traces opposition in the states back to 2021, when Texas passed a law prohibiting state investment funds from contracting with financial institutions seen as discriminating against fossil fuel companies. The study also says ESG opposition has increased since President Donald Trump (R) took office in January.
Why does it matter?
The report points to differences between the U.S. and other regions in how ESG is treated. While the Trump administration and many Republican-led states have enacted laws limiting the use of ESG factors in financial decisions, companies and governments elsewhere have continued or expanded ESG-related commitments. The contrast in the report shows how U.S. policy shapes international financial discussions.
What’s the background?
State-level opposition to ESG in the U.S. has focused on laws directing state pension fund managers to avoid considering ESG factors and limiting contracts with financial institutions viewed as hostile to fossil fuel, firearms, and other industries. To see a full list of reform proposals opposing and supporting ESG, click here.
Ballotpedia’s ESG legislation tracker documents such measures across the country, including Texas Senate Bill 13, one of the first bills requiring businesses contracting with the state to certify that they would not boycott fossil fuel companies for the duration of the contract.
To see a list of enacted bills opposing ESG since 2020, click here.
For a list of enacted laws supporting ESG since 2020, click here.
In the states
Texas AG launches investigation of proxy advisory services
What’s the story?
Texas Attorney General Ken Paxton (R) announced his office is investigating Institutional Shareholder Services (ISS) and Glass Lewis, the two largest proxy advisory firms, for “potentially misleading institutional investors and public companies by issuing voting recommendations that advance radical political agendas.” The announcement followed a U.S. district court injunction pausing the state’s new law regulating proxy advisors.
Why does it matter?
Proxy advisory firms advise institutional investors on how to vote on corporate proposals and board elections. The Texas probe is part of a wider Republican focus on ESG, extending attention beyond asset managers and banks to proxy advisory firms.
What’s the background?
Together, ISS and Glass Lewis control more than 95% of the proxy advisory market. In recent years, Republican officials in Texas and other states have taken steps to limit the influence of ESG considerations in financial decision-making, including proxy voting.
Texas Senate Bill 2337, signed into law in June 2025, requires proxy advisory firms to disclose when their recommendations are based on nonfinancial factors, such as ESG or diversity policies, and to provide additional justification when recommendations diverge from company management. Supporters say the law will protect shareholders from politicized advice, while opponents say it restricts proxy advisors’ independence and imposes new compliance burdens.
On July 24, ISS and Glass Lewis filed separate lawsuits in the U.S. District Court for the Western District of Texas. They allege the new Texas law is unconstitutionally vague, compels speech—violating the First Amendment, and also conflicts with federal pension law. On Aug. 29, Judge Alan Albright issued preliminary injunctions pausing enforcement of SB 2337 while the cases proceed.
On Wall Street and in the private sector
Asset owners increase ESG commitments in 2025
What’s the story?
Morningstar’s 2025 Voice of the Asset Owner Survey found that 61% of global asset owners said ESG considerations go hand in hand with fulfilling fiduciary duty, up from 53% in 2024. Support was highest among respondents in Europe (64%) and Asia-Pacific (63%), while fewer than half in North America (49%) said ESG aligns with fiduciary duty. The survey also reported that 40% of asset owners globally have decreased or plan to decrease allocations to U.S. investments.
Why does it matter?
The findings highlight a regional divide. The United States was the only country where more respondents said ESG had become less material over the past five years (34%) than more material (30%). Some investors also cited U.S. political and regulatory uncertainty as factors in shifting capital away from American assets.
What’s the background?
Asset owners are typically large institutions such as pension funds, endowments, and insurance companies that oversee large pools of capital and often play a central role in shaping investment trends.
In financial law, fiduciary duty is the obligation of investment managers to act in the best financial interest of their clients or beneficiaries. Asset owners debate whether considering ESG factors is consistent with that duty.
Materiality is a financial term that describes whether an issue is significant enough to influence investment decisions.
In the spotlight
ExxonMobil CEO pessimistic on U.S.–EU talks on ESG rules
What’s the story?
ExxonMobil CEO Darren Woods said in an interview he was pessimistic that the Trump administration would reach an agreement with the European Union (EU) on ESG regulations. Woods said the EU rules harm European energy and business and could disadvantage American companies.
Why does it matter?
Woods’ comments reflect concerns that European ESG rules could raise costs and discourage investment in both Europe and the United States. His remarks also show his company is appealing directly to U.S. officials as negotiations with the EU continue.
What’s the background?
The European Union has advanced mandatory ESG disclosure and due diligence rules in recent years, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These measures require large companies and many foreign firms operating in the EU to report on sustainability risks and, in some cases, to monitor and address human rights and environmental impacts in their supply chains.
U.S. officials have also raised concerns. In September, SEC Chair Paul Atkins told an OECD audience in Paris that the EU’s rules impose undue costs on American companies. The same week, U.S. Ambassador to the EU Andy Puzder said the Trump administration would defend American businesses from EU regulations it considers unfair. To read more about Atkins’ and Puzder’s comments, click here.
