{"id":6307,"date":"2025-02-06T03:59:56","date_gmt":"2025-02-06T03:59:56","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=6307"},"modified":"2025-02-06T16:44:10","modified_gmt":"2025-02-06T16:44:10","slug":"trumps-new-administration-puts-esg-on-the-chopping-block","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=6307","title":{"rendered":"Trump\u2019s New Administration Puts ESG on the Chopping Block"},"content":{"rendered":"

Kate Rice\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/em><\/p>\n

Associate Editor\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0 <\/em><\/p>\n

Loyola University Chicago School of Law, JD 2026<\/em><\/p>\n

Over the past decade, Environmental, Social, and Governance (ESG) considerations have become an integral part of the corporate compliance landscape. The term<\/a> captures a wide range of issues, including sustainable investing, equitable board composition, climate change efforts, shareholder rights, executive compensation, and diversity, equity, and inclusion (DEI) programming. Amidst its growth in prominence, ESG has been hotly debated in recent years, with an energetic anti-ESG movement<\/a> taking hold in conservative circles. The politicization of ESG made it a major issue in the 2024 presidential race, and as a candidate, President Trump promised<\/a> to dismantle its regulatory framework if elected. Now in the early days of his administration, he has begun to act on those promises, laying the groundwork for his administration\u2019s regulatory agenda and signaling his priorities for the next four years.<\/p>\n

Environmental rollbacks<\/strong><\/p>\n

One of the hallmarks of the Biden administration was its ambitious climate-related regulatory agenda<\/a>. In addition to establishing rules targeting air climate change and air pollution, the Biden administration furthered climate-friendly legislation like the Inflation Reduction Act<\/a> (IRA) and Infrastructure Investment and Jobs Act<\/a> (IIJA), set targets for net-zero greenhouse gas emissions by 2050, and rejoined the Paris Climate Agreement. Within the first hours of his second term, President Trump had undone much of this through a slew of executive orders<\/a>; though the orders covered a range of issues, a significant number pertained to climate-related actions.<\/p>\n

To touch on a few, President Trump swiftly pulled<\/a> the United States from the Paris Agreement, paused<\/a> IRA and IIJA spending relating to energy-related programs, and declared<\/a> a national energy emergency (prioritizing fossil fuels, hydropower, biofuels, and nuclear energy). He also ordered<\/a> a review of electric vehicle policies and subsidies, halted<\/a> wind and solar projects on federal lands and waters, lifted<\/a> the ban on liquefied natural gas export licenses, dropped<\/a> environmental justice as a consideration in actions of federal agencies, and dissolved<\/a> the American Climate Corps.<\/p>\n

Beyond executive orders, the administration has made its stance on climate issues clear<\/a>, deleting numerous White House climate-related webpages, pausing climate-related seminars, and pledging to eliminate the Federal Emergency Management Agency. All of these actions will impact<\/a> the enforcement and implementation of climate and sustainability aspects of ESG programming.<\/p>\n

Attacks on DEI<\/strong><\/p>\n

Aside from attacking environmental components of ESG, the Trump Administration has also begun dismantling the framework for DEI. Ending Radical and Wasteful Government DEI Programs and Preferencing<\/a> terminates all \u201cdiscriminatory programs,\u201d including DEI and diversity, equity, inclusion, and accessibility (DEIA) federal mandates, policies, programs, preferences, and activity. This is a major departure<\/a> from equal opportunity-focused policies of previous presidential administrations from both parties since the 1960s. In Reforming the Federal Hiring Process and Restoring Merit to Government Service<\/a>, the administration again characterizes such programs as discriminatory and stresses a commitment to merit-based hiring practices. The executive order goes on to repeal Executive Order 11246,<\/a> a Johnson-era action that established requirements for non-discriminatory practices in hiring and employing government contractors.<\/p>\n

Yet another order<\/a> directed agency heads and the attorney general to submit recommendations to \u201cencourage the private sector to end illegal discrimination and preferences, including DEI.\u201d In response to these executive orders, the American Civil Liberties Union (ACLU) contends<\/a> that \u201cThe strategy is clear: Bully everyone into dropping programs that ensure equitable workplaces by falsely equating diversity efforts with discrimination.\u201d<\/p>\n

The legality of DEI programs has been the subject of debate<\/a> in recent years, with courts generally accepting these programs as compliant with civil rights law, contrary to the President\u2019s executive orders. Cara Crotty, Partner at Constangy Brooks, Smith & Prophete said<\/a> that DEI initiatives don\u2019t involve employment decisions, encourage a wide range of applicants to apply, and don\u2019t create much potential for legal action. The Trump administration has evidently adopted a far narrower interpretation of the legitimacy of DEI practices. Notably, Stephen Miller, founder of the conservative nonprofit America First Legal<\/a> who has aggressively attacked corporate DEI for years, is predicted<\/a> to be particularly influential as the President\u2019s policy advisor and deputy chief of staff. His presence may signal more DEI-focused investigative activity and legal action to come.<\/p>\n

An anti-ESG trifecta<\/strong><\/p>\n

President Trump will likely continue to lean on executive orders to further his policy agenda, as they allow the executive to completely bypass congressional negotiations and legislation. However, President Trump won\u2019t have to worry about major congressional pushback on ESG issues, as the 119th<\/sup> Congress is also expected to advance anti-ESG legislation<\/a> in both the House and Senate. There were several sweeping anti-ESG bills introduced in the 118th<\/sup> Congress; with both chambers now Republican-controlled, these bills will likely be reintroduced and could gain more traction this time around with wider Republican margins. If they can pass Congress and make it to President Trump\u2019s desk, he will likely enact them.<\/p>\n

New problems for corporate compliance<\/strong><\/p>\n

Despite the dismantling of the federal ESG regulatory agenda, there will likely be a bifurcated approach<\/a> to ESG regulation at the state level, with several regulatory bodies in place that will continue to push for ESG advancement. Certain jurisdictions, like California<\/a>, have enacted robust ESG legislation that ensures it will continue to be a priority in those areas. Attorneys general in more progressive states are expected<\/a> to bring actions to hold companies accountable for rigorous ESG disclosures, and left-leaning state legislatures are uniquely positioned to push ESG-friendly policies. Further, ESG will maintain its significance on a global<\/a> scale, particularly in the EU, creating new hurdles for multinational corporations and international partnerships. It will be crucial for asset managers and compliance professionals to carefully track fragmented ESG regulatory initiatives alongside their own regulatory frameworks, as ensuring compliance will become increasingly complex.<\/p>\n","protected":false},"excerpt":{"rendered":"

Over the past decade, Environmental, Social, and Governance (ESG) considerations have become an integral part of the corporate compliance landscape. The term captures a wide range of issues, including sustainable investing, equitable board composition, climate change efforts, shareholder rights, executive compensation, and diversity, equity and inclusion (DEI) programming. Amidst its growth in prominence, ESG has been hotly debated in recent years, with an energetic anti-ESG movement taking hold in conservative circles. The politicization of ESG made it a major issue in the 2024 presidential race, and as a candidate, President Trump promised to dismantle its regulatory framework if elected. Now in the early days of his administration, he has begun to act on those promises, laying the groundwork for his administration\u2019s regulatory agenda and signaling his priorities for the next four years.<\/p>\n","protected":false},"author":166,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[],"class_list":["post-6307","post","type-post","status-publish","format-standard","hentry","category-regulation"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6307","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/166"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6307"}],"version-history":[{"count":8,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6307\/revisions"}],"predecessor-version":[{"id":6315,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/6307\/revisions\/6315"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6307"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6307"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6307"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}