Industry News

What’s the Buzz on ESG?

Broadly speaking, Environmental, Social and Governance (ESG) investing is a financial strategy that seeks to evaluate how companies perform, using ESG metrics, and direct funds to entities that sufficiently focus on these issues. The “E” in ESG stands for environmental and these criteria include things such as sustainability and greenhouse gas emission reductions. This practice can lead to capital being diverted away from some firms, depending on methodologies and metrics utilized by investors, engaged in the exploration, production and delivery of conventional energy resources, including those derived from oil and natural gas. Many of the strongest proponents of ESG want to financially squeeze certain firms and pressure them to operate in a way more harmonious with their world views.

In response to these efforts, numerous states, including Texas, Tennessee and West Virginia, have recently enacted “anti-ESG” laws. These measures require state investment boards to make decisions based solely on the financial interests of beneficiaries – as opposed to ESG-specific criteria – and divest state funds from financial firms that boycott investments in conventional energy companies, among other things. Similar anti-ESG legislation is pending statehouses from coast to coast.

NPGA will continue to monitor ESG action and determine its potential impact on the propane industry.

For more information, contact NPGA’s Director of State Affairs, Jacob Peterson.