Environmental, social, and governance, or ESG, is a hot topic in the investment world, with more than $8.4 trillion invested in ESG-related equities and funds as of the end of 2022.
And it will be a hot topic for investors, Congress, and the federal government, as well as several southern statesnotably Florida and Texas, who are at war with ESG because it represents, in the words of Florida's Speaker of the House, Paul Renner: "'woke financial titans who seek to dictate policy to Floridians regardless of our choices at the ballot box."
Florida's Governor, for example, has called ESG a "tax on consumers" that will hurt the state's economy.
And Texas Gov. Greg Abbott has called ESG a "tax on Texans" that will hurt the state's economy.
ESG reports look at the risk of business disruption caused by climate change, but they can also be used to gauge companies' financial risk.
Anne Popkin, president and COO of Newday Impact Investing, a firm that advises investors on ESG, tells MarketWatch that companies need to be prepared for at least twice the climate-related losses they experienced just a few years ago.
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