On Wednesday, the US Securities and Exchange Commission proposed a regulation to establish standardized requirements for funds marketed as featuring environmental, social, and governance (ESG) characteristics.

The fact that Texas, a state famous for its oil industry, felt it necessary to pass a law of this sort signals the industry’s growing consternation with an increasingly climate-conscious and oil un-friendly investing environment.

Not only should ESG standardization be by law, but governments are starting to show that ESG standardization will be by law.

In its recent report One Year On: BlackRock still addicted to fossil fuels, French sustainable finance organization Reclaim Finance details how American financial giant BlackRock’s public declaration to make sustainability its new investing standard has, one year later, yielded only “half-hearted” and “superficial” results.

As part of the settlement, the fund will “ensure that investment managers take active steps to consider, measure and manage financial risks posed by climate change and other relevant ESG risks…[and disclose] to members...those risks, as well as the systems, policies and procedures...to address those risks.” The fund will also commit to achieving a net zero carbon footprint by 2050.

On June 23, 2020, the US Department of Labor proposed regulations to prohibit private industry pension plans, governed under the Employee Retirement Income Security Act (ERISA), from investing in ESG investment vehicles if doing so would prioritize non-financial objectives over purely financial ones (i.e., increasing returns for plan beneficiaries).