Growing political pressure in the US is changing how some ESG metrics are framed, reported, and used, and that has real consequences for investors who rely on this data. Several large institutions are already softening or stepping back from climate and social commitments, while European regulation is moving in the opposite direction, increasing the need for independent, European-aligned ESG data.
ESG backlash in the US is no longer abstract
In the past few years, ESG has moved from technical jargon into the centre of US political debate. State attorneys general in several Republican-led states have sued large asset managers over climate-related investment commitments, alleging antitrust violations and breaches of fiduciary duty. At the same time, more than 100 state-level “anti‑ESG” bills have been introduced to restrict the use of ESG criteria in public funds or to punish perceived “boycotts” of fossil fuel companies.
This pressure has visible effects. Large US asset managers have withdrawn or scaled back participation in global climate coalitions such as the Net Zero Asset Managers initiative, and a leading coalition has removed explicit portfolio‑wide net‑zero targets after US political backlash. Support from US investors for climate and social shareholder resolutions has fallen sharply, with average backing for environmental and social proposals dropping to about 16% in 2025, roughly half the level three years earlier.
Read more: How Europe is Shaping the Future of ESG
How politics can reshape ESG data
Most ESG data and rating providers do not operate in a vacuum. They sit in the same legal and political environment as as asset managers, service the same clients, and face similar scrutiny over climate, DEI and human rights‑related work. When climate coalitions face lawsuits framed as “climate cartels”, or boardrooms fear becoming political targets, there is a strong incentive to lower the temperature of public ESG commitments and the metrics that underpin them.
In practice, that can mean several things for US‑based ESG data:
- Emphasizing narrow “financial materiality” and downplaying broader societal and environmental impacts that are central to European regulation.
- Softening or de‑prioritizing metrics that are politically sensitive in parts of the US, such as Scope 3 emissions, biodiversity impacts, or detailed DEI indicators.
- Reframing climate or human rights indicators as general “risk factors” rather than explicit impact measures, even when clients in Europe need impact‑aligned data for Sustainable Finance Disclosure Regulation (SFDR), CSRD or EU Taxonomy reporting.
None of this happens through public announcements. It can appear gradually, through changes in templates, methodology notes, or the prominence given to certain dimensions of ESG in tools and marketing.
Read more: ESG Data vs ESG Ratings: Understanding How They Work Together
The hidden risks for users of politically constrained ESG data
For investors and banks, the risk is not simply that “less ESG” is available. The deeper problem is that data may stop reflecting the issues that matter most for long‑term value and for beneficiaries in different jurisdictions. Several risks stand out:
- Underestimated transition and physical risk: If metrics tied to high‑emitting activities or long‑dated climate risks are watered down, portfolios can appear safer on paper than they truly are. Morganellis
- Weaker coverage of DEI and human rights: Political backlash against DEI and social topics can lead to thinner datasets on labour rights, supply‑chain abuses, or governance of human rights, even as European regulations and clients demand more detail.
- Lower comparability across regions: US‑centered materiality and disclosure standards already differ from Europe’s double‑materiality approach; political pressure widens this gap and makes integrated global reporting harder.
- Higher greenwashing and reputational risk: If ESG scores are shaped by what is politically acceptable rather than by science‑based impact, products labelled “sustainable” may be challenged by regulators, NGOs or beneficiaries.
For asset owners and managers with European clients, or global mandates referencing European rules, relying solely on politically constrained US data can therefore be a structural risk, not just a philosophical disagreement.
Read more: The Future of DEI Programs: A Cross-Atlantic Perspective
Europe’s more stable ESG baseline
Across the Atlantic, the direction of travel looks different. The EU has built a dense framework of sustainable finance regulation, including SFDR, the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD) and the new Corporate Sustainability Due Diligence Directive (CS3D). These regimes foreground double materiality, asking not only how ESG issues affect company value, but also how companies affect society and the environment.
This architecture keeps climate change, biodiversity, human rights, and social issues at the center of sustainable finance, backed by binding disclosure rules rather than voluntary standards. As a result, European investors and regulators expect ESG data that can support detailed reporting on emissions (including Scope 3), supply‑chain risks, DEI, and adverse impacts—not a pared‑back subset selected for political convenience.
Why independent European ESG provider's matter
In such a split landscape, independence and geographic anchoring start to matter more for users of ESG ratings and data. An ESG provider based in Europe, operating under European regulatory expectations and social norms, is less exposed to US state‑level political campaigns against ESG and is more likely to keep impact‑oriented metrics at the core of its products.
Inrate is one example of such a provider. It is an independent sustainability rating agency based in Switzerland, active since the early 1990s, and not owned by an index provider or large asset manager. Its methodology is built around assessing the real environmental and social impact of more than 400 business activities over their life cycle, combined with corporate behavior and controversies, rather than focusing primarily on self‑reported policies. This approach is used by partners such as SIX for Swiss ESG equity and bond indices, which rely on Inrate’s ESG Impact Ratings as an external data source.
Because of this independence, there is no direct commercial incentive to dilute controversial topics like climate, nature, human rights or labour issues to protect large domestic distribution channels. Instead, the methodology is designed to align with European frameworks such as the EU Taxonomy, SFDR and CSRD, and to make impact visible in a way that holds up under regulatory and civil‑society scrutiny.
Read more: EU Taxonomy Reporting: How Investors Can Bridge Data Gaps
A more resilient foundation for sustainable finance
The current ESG backlash in parts of the US will not last forever, but it is already reshaping coalitions, lawsuits, and the language used around climate and social issues by major financial institutions. For investors who need consistent, impact‑aware data across cycles and across regions, anchoring at least part of their ESG toolkit in independent European providers can reduce exposure to these swings.
Choosing data and ratings built on a clear impact lens, free from the ownership ties of index providers and grounded in European regulation, offers a way to keep climate, DEI, human rights, and biodiversity where they belong: at the heart of sustainable finance, not at the margins of a culture war.
