One of the more hotly debated issues this year is the increased pressure around the globe regarding ESG (Environmental, Social and Governance). As the discussion continues on its effects and consequences, the Utah Taxpayers Association has formalized the following:

Utah Taxpayers Association Position Statement on ESG

Since its founding in 1922, one of the objectives of the Utah Taxpayers Association has been to promote efficient and economical government and fair and equitable taxation. A key tenet of that objective is the promotion of free market principles, which lower costs for government and taxpayers. While ESG efforts are clearly anti-free market, ESG is a national issue and any proposed state policies should not increase costs for taxpayers.

There is no doubt that ESG has become pervasive in policy decisions in the United States and globally. The United States SEC (Securities and Exchange Commission), with a vote of 3-1, has moved forward with a controversial Rule Proposal that would not only affect public companies, but also private ones. Perhaps the most compelling statement about the path of the SEC came from SEC Commissioner Hester M. Pierce:

The proposal turns the disclosure regime on its head.  Current SEC disclosure mandates are intended to provide investors with an accurate picture of the company’s present and prospective performance through managers’ own eyes.  How are they thinking about the company?  What opportunities and risks do the board and managers see?  What are the material determinants of the company’s financial value?  The proposal, by contrast, tells corporate managers how regulators, doing the bidding of an array of non-investor stakeholders, expect them to run their companies. It identifies a set of risks and opportunities—some perhaps real, others clearly theoretical—that managers should be considering and even suggests specific ways to mitigate those risks.  It forces investors to view companies through the eyes of a vocal set of stakeholders, for whom a company’s climate reputation is of equal or greater importance than a company’s financial performance.

(Cont.) We are here laying the cornerstone of a new disclosure framework that will eventually rival our existing securities disclosure framework in magnitude and cost and probably outpace it in complexity.  The building project upon which we are embarking will consume our attention and enrich many, as any massive building project does.  The placard at the door of this hulking green structure will trumpet our revised mission: “protection of stakeholders, facilitating the growth of the climate-industrial complex, and fostering unfair, disorderly, and inefficient markets.”  This new edifice will cast a long shadow on investors, the economy, and this agency.  Accordingly, I will vote no on laying the cornerstone.

On the global scale related to ESG, another issue worth mentioning is the events that have unfolded in Sri Lanka in 2022. Residents of Sri Lanka experienced an annual inflation rate of almost 50%, food prices rising 80% and transportation costs skyrocketing 128% higher. Faced with protests, the government declared a state of emergency and deployed troops around the country to maintain order. President of Sri Lanka, Gotabaya Rajapaksa, had suddenly banned synthetic fertilizers and pesticides in April 2021, despite the fact that the country spent hundreds of millions of dollars a year importing synthetic fertilizer and 70% of the country involved directly or indirectly in the agriculture industry. Global proponents of ESG praised the country’s “almost perfect ESG score of 98.1 on a scale of 100”.  

However, as David Blackmon wrote for Forbes on July 10, 2022: 

“The nation of Sri Lanka has an almost perfect ESG rating of 98.1 on a scale of 100, according to But the government which had forced the nation to achieve that virtue-signaling target in recent years collapsed over the weekend because it led the country into self-declared bankruptcy, leaving it unable to purchase adequate supplies of fuel and feed its population. Thousands of angry Sri Lankans stormed the presidential residence on Saturday, forcing President Gotabaya Rajapaksa to step down and reportedly flee the country.”

While the efforts on forcing ESG onto corporations and governments will likely lead to terrible consequences for any free market economy, this issue is generally a federal issue and needs to be addressed at that level to be effective. State policymakers should carefully consider any remedies to ensure that any action or legislation does not increase costs for taxpayers or have unintended consequences that eventually lead to that path.