Judge strikes down anti-ESG rule in Missouri

A federal judge has struck down rules in Missouri that aimed to limit the impact environmental, social and governance (ESG) policies have in investment advice.

U.S. District Judge Stephen Bough sided Wednesday with the Securities Industry and Financial Markets Association in an order on all four counts, saying that the rules violated the First Amendment, were unconstitutionally vague and were preempted by multiple federal laws.

The lawsuit was first filed last year by the trade group, which said in a statement Wednesday that it was a “major victory” for the country.

The rule was imposed by Missouri Secretary of State John Ashcroft last year, which required investment advisers who consider ESG objectives to disclose them to customers and get their consent, according to Reuters. The judge ruled that the rule conflicted with federal securities and pension laws, according to the order.

The president of the trade group, Kenneth Bentsen, praised the decision in a statement posted to the website.

“This decision marks a major victory not only for our national securities market system, but also for our nation,” he said.

“Under today’s federal securities laws, financial professionals are already required to provide investment advice and recommendations that are in their customers’ best interest. That means they cannot put their interests ahead of their customers’ interests when recommending securities. The Missouri rules were thus unnecessary and created confusion,” he continued.

This is just one of the GOP-led initiatives taken against ESG polices in recent years. Florida Gov. Ron DeSantis (R) announced an alliance last year with 18 other states, including Missouri, to push back against President Biden’s support for ESG investing.

Earlier this year, Ashcroft urged the state Legislature to approve a law pushing pack on ESG policies that was similar to the rule he implemented last year.

“Missourians work hard for their money. And when they invest, it makes sense to have standards in place requiring financial advisors who propagate strategies that are not profit focused to fully disclose this to their clients. We want to make sure investors are aware of agendas which they might not agree with and could affect their bottom line,” he said in a statement in March.

The Hill has reached out to Ashcroft’s office for comment.