In January 2020, Larry Fink, the CEO of BlackRock—the world’s largest asset-management firm—released his annual letter to corporate executives. The letters had become something of a tradition: part investor missive, part State of the Union, dispatched each year from the top of the financial world. This one struck a tone of alarm that would reverberate far beyond Wall Street. “Climate change has become a defining factor in companies’ long-term prospects,” Fink warned. “We are on the edge of a fundamental reshaping of finance.” He said that BlackRock would be “increasingly disposed to vote against management and board directors when companies are not making sufficient progress” on sustainability. The message signaled the degree to which a once-obscure investing philosophy known as ESG—short for “environmental, social, and governance”—had become a boardroom priority. For a moment, it looked like corporate America would weigh carbon emissions alongside profits. More major companies soon announced climate goals and promised new standards of accountability. BlackRock helped lead an effort to elect sustainability advocates to the board of ExxonMobil. A consensus seemed to be forming: Business could be a force for good, and markets might even help save the planet. Now, just five years later, that consensus is crumbling. BP is pulling back on a commitment to invest in renewables—and is reportedly expanding plans for drilling. PepsiCo and Coca-Cola have scaled back their plastic-reduction pledges. Major banks, such as JPMorgan Chase and Wells Fargo, are hedging their climate bets and investing heavily in fossil-fuel companies. Asset-management firms that joined BlackRock in embracing ESG—including Vanguard and State Street—have also backed off. And Fink’s 2025 letter to investors does not even mention the word climate. [James Surowiecki: The hottest trend in investing is mostly a sham] “This further exacerbates the problem of slow-walking climate action at a time when the temperature records are being broken and devastating weather events are accelerating,” Richard Brooks, the climate finance director for Stand.earth, an international environmental-advocacy organization that focuses in part on corporate contributions to climate change, told us. This global retreat has been particularly acute in the United States, where political resistance to ESG has grown into an organized countermovement. The issue is now a fixture in partisan attack ads, Republican statehouse legislation, and right-wing media. The forces arrayed against ESG say they are just getting started. In January, a group of present and former Republican state officials gathered at a posh resort in Sea Island, Georgia, together with conservative leaders, for a two-day lesson in how to dismantle corporate America’s most ambitious response to climate change. At the Cloister, with its golf courses, tennis courts, and beaches, ESG was denounced as a sinister force undermining free markets and democracy. “I would hope everyone here is pretty much committed to destroying ESG,” said Will Hild, the executive director of Consumers’ Research, the organization that has led the fight. His group, he said, had spent $5 million running ads “educating consumers” about the dangers of ESG. Hild spread a similar message at other events this spring, according to transcripts of his remarks that we obtained. “ESG is when they use their market share to push a far-left agenda, without ever having to go to voters, without any electoral accountability,” said Hild at a March meeting of state activists. “This is not the free market operating. This is a cartel. This is a mafia.” At its core, ESG investing means integrating nonfinancial factors—such as climate risk, carbon emissions, pollution, and corporate governance—into investment decisions, with the idea that these issues could materially affect long-term performance. Firms that offer ESG funds screen out companies that don’t meet a set of criteria for climate protection, and pitch their products to investors as climate-friendly alternatives to conventional funds. But in the eyes of its critics, ESG investing undermines democratic governance, imposes political priorities through the financial system, and breaches the independence of state financial officers to seek maximum return on investments. “By applying arbitrary ESG financial metrics that serve no one except the companies that created them, elites are circumventing the ballot box to implement a radical ideological agenda,” Florida Governor Ron DeSantis said in 2023 when he introduced legislation prohibiting the use of ESG investment by Florida pension and other state funds. That narrative has taken hold with a wide swath of Republican leaders. Donald Trump attacked ESG on the campaign trail last year, and in an April 8 executive order, the president said that state-level climate-emissions and ESG laws “are fundamentally irreconcilable with my Administration’s objective to unleash American energy. They should not stand.” The roots of ESG can be traced to faith-based investing of the 18th century, when some religious denominations sought to avoid investment in corporations that promoted trading enslaved people. In the 20th century, the movement called “socially responsible investing” gained momentum during the civil-rights era and, later, in connection with opposition to apartheid in South Africa. The term ESG was formally coined in a 2004 report by the United Nations Global Compact titled “Who Cares Wins,” which argued that better corporate integration of environmental, social, and governance factors could lead to more-sustainable markets and better outcomes around the globe. ESG investing grew in the 2010s as the public grew more concerned about diversity, the environment, and executive pay. Major asset managers such as BlackRock, Vanguard, and State Street began offering ESG products, and companies competed to establish metrics to track compliance. As the world’s largest asset manager, BlackRock played an especially influential role. Because there was no single established metric for meeting climate goals, critics on the left complained that ESG encouraged greenwashing, in which companies claim to be making environmental progress without making an actual commitment. But even critics were forced to concede that ESG brought about increased transparency. In 2018, 34 percent of publicly traded global companies disclosed greenhouse-gas-emission details. By 2023, that share had risen to 63 percent, an increase generally attributable to ESG efforts, according to R. Paul Herman, the founder and CEO of HIP Investor Inc.