Groups Behind State Anti-ESG Legislation Received $85 Million From Corporate Billionaires and Dark Money Funds

For the past four years, a handful of think tanks and advocacy groups have supported dozens of new state laws punishing financial institutions that limit their investments in risky industries like fossil fuels and firearms. These policy influence groups have combined forces with lobbyists from oil, gas, coal mining, gun manufacturing and agribusiness and coordinated a legislative assault on environmental, social, and governance (ESG) investing principles. Using ESG as a rhetorical target, the ultimate goal of this campaign is to obstruct private sector efforts to solve the climate crisis.

A review of IRS tax filings reveals that six of the groups leading this legislative attack have received more than $85 million in recent years from several large foundations. These foundations are affiliated with billionaire executives and old money heirs (alive and dead), as well as giant donor advised funds acting on behalf of anonymous funders.

According to a recent Pleiades Strategy report —which I co-authored—a total of 373 anti-ESG policies have been introduced in state legislatures in the past four years. These policies are designed to dissuade or ban public and private entities from considering certain types of investment risks. Forty-three of these bills have become law and 10 nonbinding resolutions have been approved by legislatures. 

Lobbying and legislative hearing records related to these state bills indicate which organizations were most active in supporting anti-ESG legislation:

• The Opportunity Solutions Project (OSP), the lobbying arm of the Foundation for Government Accountability (FGA) 
• The State Financial Officers Foundation (SFOF)
• Heritage Action, the lobbying arm of The Heritage Foundation
• The Texas Public Policy Foundation (TPPF)
• The Heartland Institute and its lobbying affiliate, Heartland Impact. 

Due to its unique role in producing and circulating model anti-ESG legislation in the states, the American Legislative Exchange Council (ALEC) is included in this list. 

A handful of industry trade associations representing firearms, oil and gas, coal mining, and agribusiness have also actively lobbied for anti-ESG bills, but as their funding sources are generally understood to come from the industries they represent, they are not included in this review.

The Anti-ESG Donors

Foundations linked to specific corporations or family fortunes provided $48 million of the $85 million in support to these state anti-ESG policy advocates, according to the last three years of IRS disclosures. The rest of the top funders are obscured by donor advised funds, which routed $37 million anonymously from unknown donors.

The largest identifiable sources of funds are foundations linked to Leonard Leo and Barre Seid, Charles Koch, the Sarah Scaife Foundation, and Ed Uihlein Family Foundation, which gave more than $7 million each. Donors providing over $5 million each are the Diana Davis Spencer Foundation, the Searle Freedom Trust, and the Lynde and Harry Bradley Foundation in conjunction with its affiliated Bradley Impact Fund. Finally, William A. Dunn contributed over $1.5 million through the Dunn Foundation.

As noted above, donor advised funds provided a combined $37 million in anonymous grants to anti-ESG policy advocates, with DonorsTrust and Donors Capital Fund topping the list at $11.7 million. This double-headed fund is known as the “dark-money ATM of the conservative movement”—its intended purpose since its founding. The Bradley Impact Fund, a donor advised fund that is closely affiliated with the Bradley Foundation, is also managed by, and for, conservative activists. Similarly, the National Christian Foundation prioritizes its grantmaking to Christian charities and activist groups. 

These ideological funds are distinct from large, mainstream donor advised funds, such as the Vanguard Charitable Endowment, the Fidelity Charitable Gift Fund, the Schwab Charitable Gift Fund, and the National Philanthropic Trust, which route billions of dollars annually to a wide range of charitable and ideological causes. Anti-ESG policy advocate organizations depend on all of these funds for a substantial portion of their revenue.

The seven identifiable donors we examined gave a staggering $720 million to these specific donor advised funds in the past three years, roughly correlating with the timing of the anti-ESG campaign in the states. Most of this money—$564 million—flowed from organizations affiliated with Leonard Leo to four donor advised funds: Schwab Charitable ($331.5 million), DonorsTrust ($223 million), Fidelity Charitable ($9 million) and Vanguard Charitable ($650,000). A handful of organizations closely affiliated with Koch Industries routed $115.2 million to four of the donor advised funds on this map, more than $99 million of which went to the National Philanthropic Trust, and $16 million to the Fidelity Charitable Gift Fund.

This mysterious money flow illustrates the importance that donor advised funds play in modern political grantmaking. To make matters more perplexing, the donor advised funds included in this data also exchanged a gross sum of $3.47 billion amongst themselves, according to their three most recent tax filings.

The Anti-ESG Policy Advocates

Most of the organizations that lobbied or testified in favor of state anti-ESG legislation are affiliated with the State Policy Network (SPN), a consortium of think tanks and other nonprofits pushing deregulatory policies designed to benefit their wealthy industrialist donors. The SFOF Exposed website published by the Center for Media and Democracy (CMD) offers detailed summaries of all of these organizations and their roles in the anti-ESG campaign. 

While ALEC is not generally involved in legislative advocacy or lobbying for these bills, the pay-to-play group connects state legislators and lobbyists directly, including those that initiated the anti-ESG push. ALEC also played a key role in activating the SFOF, cultivating activist state treasurers — who believe they are more trusted by the public than other politicians — to help propel legislative action and engage in complementary tactics using executive powers.

An ALEC sponsorship packet for the 2022 annual meeting obtained by CMD details the pay-for-access scheme. Attacks on “woke capitalism” and ESG were central to that meeting, CMD revealed. The push for ALEC legislative members to adopt anti-ESG model bills continued at ALEC’s December 2022 summit, its 2023 annual meeting, and its 2023 policy summit.

For simplicity, this review includes the 501(c)(4) sister organizations of the groups listed above, such as the FGA-affiliated Opportunity Solutions Project, Heritage Action, and Heartland Impact. These affiliate organizations share significant overlaps in staff, office space, and funding.

While these six entities are among the most active organizations in terms of advocating for anti-ESG policies in the states, they are not alone. This list excludes a few other organizations that have been involved in legislative advocacy, such as the Alliance Defending Freedom, Americans for Prosperity, and the Reason Foundation. Americans for Prosperity and its affiliated foundation receive hundreds of millions of dollars from Koch-controlled organizations. The Alliance Defending Freedom has received tens of millions of dollars from the Servant Foundation, most recognized for running Christian advertisements during the Super Bowl.

Several industry trade associations representing firearms, oil and gas, agribusiness, and coal mining are also active on the issue. Less is known about specific donors to these groups even though their business interest is obvious. The companies affiliated with executives serving in leadership positions for these trade associations are generally presumed to be paying membership dues.

Together, this coalition of controversial industries and the proxies for wealthy industrialists established and implemented the anti-ESG strategy. The rhetoric produced by this coalition has informed the priorities of prominent politicians — with varying degrees of success — despite the general public’s lack of familiarity with ESG investing. This year’s presidential election could test the efficacy of this strategy, but due to the strong and steady financial commitment of the wealthy people behind this campaign, it is likely to continue in 2025 no matter who wins the election.

The Staged War on ESG

Despite the nebulous definitions of ESG, the acronym has been weaponized by a longtime cohort of climate change denial organizations as the latest means to resist climate mitigation efforts. In this case, the campaign is meant to counter pressure on the financial industry to account for the risks of investing in the companies most responsible for the climate crisis — namely those in the fossil fuel companies, and the Wall Street firms that are most heavily invested in fossil fuels. 

The effort is in part a retaliation against widespread fossil fuel divestment campaigns, as well as state and national policies designed to adopt clean energy sources that do not present the same climate and pollution risks as fossil fuels. The strategy dovetails with similar efforts to undermine alleged “boycotts” of firearms companies and oppose longtime Boycotts, Divestment and Sanctions (BDS) campaigns designed to pressure Israel to comply with international law and withdraw from occupied Palestinian lands. 

Although the vast majority of anti-ESG bills have failed, advocates have won passage of 42 new laws in 20 states. Most of the laws passed include substantial escape clauses allowing state investment officials to bypass restrictions placed on government contracts and pension funds. A few have been infamously costly, wasting hundreds of millions of dollars in Texas and Oklahoma in the name of protecting the fossil fuels, firearms, and agribusiness industries — all of which are major sources of funding for Republican politicians. Still, the campaign has succeeded in producing a chilling effect on the private sector.