As President Trump re-enters the White House, one investment bank advises ESG fund managers to “keep their lawyers close,” because the full-scale death of ESG may well be at the door, according to Yahoo Finance.

Aniket Shah wrote in a note this week: “We would encourage all ESG fund managers to have a lawyer on the team, or on speed dial.”

He continued: “Antitrust risk remains high for ESG asset managers; there have been no cases yet, so there is no legal precedent. Additionally, fiduciary legal risks will remain relevant as states enforce anti-ESG laws.”

Yahoo reports that Trump’s victory has already hit green sector stocks, with wind energy companies among the hardest hit. In addition to potential bans and obstructive policies, the ESG sector faces increasing legal risks.

Key GOP figures argue that ESG-focused companies are neglecting fiduciary duties, while Republican attorneys general accuse financial firms that use ESG metrics of colluding against fossil fuels and fueling inflation.

In response, “greenhushing” — keeping ESG efforts quiet — is likely, Jefferies analysts note. Corporate CEOs are also expected to seek legal guidance to adapt to this changing landscape.

Jeffries said: “General counsels are in CEOs’ ear, fearing legal reprisals against ESG initiatives. The backlash could lead to more focused and pragmatic companies engaging in strategic discussions closely linked to their business model.”

Analysts argue that a public backlash, similar to 2016, could pressure companies to address issues such as abortion and diversity. Conflicting government policies on ESG could create a “nightmare” of fragmented requirements, they warn.

Shareholders can still push for ESG risk disclosures in line with the International Sustainability Standards Board, although the US Chamber of Commerce claims it is not opposed to ESG or climate disclosures. These observations focus specifically on the ESG label itself, not on the broader clean energy transition.

By Zerohedge.com

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