How’s this for irony: the lion’s share of funded projects under the Inflation Reduction Act (IRA) have gone to states whose Republican senators and representatives voted against it? A POLITICO analysis concluded that of the first 33 projects that received IRA funding, "21 were in Republican-held congressional districts, while 12 were in Democratic districts”.

Is this a good thing? Overall, I would say yes. But, like most things in the world, it’s what you make of it.

The IRA, for those unfamiliar with it, is the $1.7 trillion omnibus appropriations bill that included $369 billion to fight climate change. The IRA is important for two reasons

First, it’s the most integrated federal approach to combatting climate change in US history. Second, the IRA is an appropriations bill. An appropriations bill means the money is there. All that’s left is how to spend it, and that’s the work of an authorizing bill.

The IRA’s appropriation is vital because it provides a lot of protection from any future efforts to claw the money back by a future Congress and White House opposed to climate and clean energy policies. Appropriations, in general, are difficult to undo.

In the case of the IRA, much of the money goes to the states to implement and administer. No state — red or blue — is going to refuse the receipt of federal funds. Moreover, states are already benefitting from the “tens of billions of dollars in renewable energy, battery and electric vehicle projects that will benefit from incentives.”

Expanding the domestic clean energy industry is excellent, no matter where new battery factories, the needed electric vehicle charging infrastructure, and solar and wind farms are being built. The transition to a low-carbon economy means hundreds of thousands of new jobs and billions of dollars of investments in the domestic economy, which is another excellent thing.

So, what’s the problem? The downside is that in many red states, the partisan divide between Republicans and Democrats continues to exist. Caught up in the battle is US climate policy. Consequently, red state leaders often fail to attribute a project to the Democratic-only IRA.

Granted, this is nothing so horrible that it can’t be fixed with a bit of activism on the part of the climate and clean energy communities. It’s something I highly recommend.

Many red states are willing to take the benefits of the largely Democratic climate agenda with one hand while bashing it with the other. A case in point is the attack by red state attorneys general over socially responsible investing, often referred to as ESG.

The acronym ESG stands for environmental, social, and corporate governance. The force behind socially responsible investments is the willingness of investors to put their money where their beliefs are.

ESG investing has gained popularity in recent years due to increasing awareness of the importance of sustainability and the impact of business practices on the environment and society. Some investors believe that companies with strong ESG practices may be better equipped to adapt to changing market conditions and may have long-term advantages over companies that do not prioritize ESG issues.

We’re talking big bucks here. It’s estimated that there are currently $8.4 trillion of investments being made, and the number is rising. ESG investing addresses issues other than climate, i.e., abortion LGBTQIA, and voting rights. Consumerism has long been a form of ESG investing. I doubt many Democrats have lately bought pillows from Mike Lindell.

Many investment firms offer products and services that incorporate environmental, social, and governance (ESG) criteria. Some of the leading ESG investment firms are Blackrock, Vanguard, State Street Global Advisors, and UBS Management. These firms and others offer a variety of investment vehicles, including mutual funds, exchange-traded funds (ETFs), and individual securities.

The sum and substance of the Republican-only legal and regulatory challenges seem to be the belief that the investments are frivolous attempts by Democrats to transition to a socialist economy.

As reported by Bloomberg Law:

More than a dozen Republican state attorneys general have blasted ESG financial practices, while Republicans in Congress plan to increase their scrutiny of what they call “woke capitalism.” One of their main complaints is that environmental, social, and governance investing is part of a broader Democratic effort to prioritize climate change and other societal issues to the detriment of the fossil-fuel industry.

The political assault by the right is backed by some of the party’s biggest names, including former Vice President Mike Pence and the governors of Florida and Texas, Ron DeSantis and Greg Abbott.

There’s a clear partisan divide. (See Figure 1) The Republican-only assault on social investing includes the attorneys general from states like Texas, Wyoming, Oklahoma, South Carolina, Ohio, and West Virginia. Their oppo-sition to ESG investments can be somewhat confusing — one might say hypocritical.

Texas Attorney General Ken Paxton is as big a foe of ESG investing as Governor Abbott. Both agree that ESG funds are being used to “promote certain social or political causes, such as climate change, at the expense of financial returns for investors.”

Paxton has issued an AG opinion that state government entities should not invest in companies that promote socially or politically controversial is-sues. In 2020, he also issued a subpoena to the world’s largest asset man-ager, BlackRock, and other investment firms for information about their ESG investment strategies.

And yet, Texas has the largest installed wind power capacity in the United States and is the leading state in terms of installed solar capacity. The state has implemented policies, e.g., a Renewable Portfolio Standard (RPS) and the Competitive Renewable Energy Zone (CREZ) transmission line pro-gram, that have led to a significant increase in wind and solar power generated in the state.

Opposition to ESG investments has capital and reputational consequences that could slow the nation’s transition to a low-carbon economy. Governor DeSantis announced in December “that Florida was yanking $2 billion worth of state assetsmanaged by BlackRock, escalating the GOP standoff with the world’s largest money manager over its ESG investment policies.

Kentucky is also among the states planning to pull its deposits from comp-anies “found to be in an active boycott of fossil fuel companies.” The move is endorsed by Kentucky’s Democratic governor, Andy Beshear — showing the potential for the ESG issue to jump across the aisle — at least in fossil fuel states.

According to Kentucky State Treasurer Allison Ball,

“Arizona, Arkansas, Florida, Louisiana, Missouri, South Carolina, Utah, and West Virginia have already announced they will divest hundreds of millions of dollars from banks engaging in energy boycotts. Texas and Oklahoma have taken legislative steps akin to Kentucky’s that will likely soon lead to divestment.”

Republican state treasurers have a website, Our Money Our Values. Breitbart reports that the Republican treasurers are just getting started when it comes to moving state assets, e.g., retirement fund monies, away from companies and investment firms that pay heed to ESG investing.

Nebraska State Treasurer John Murante has said of the effort by Republican treasurers:

“We’re committed to our fiduciary responsibilities to our constituents. We’re not seeking a political agenda. We’re not seeking to politicize or weaponize the assets that we have under management. We are seeking to get the best financial returns.”

Most recently, Republican attorneys general have begun asking proxy advisory firms Institutional Shareholder Services and Glass Lewis if their voting recommendations on climate-related and diversity issues violated their fiduciary duties.

Ron O’Hanley, president and CEO of State Street Investors, has said:

The arguments against ESG have left facts aside and lost sight of the needs of long-term shareholders who might be exposed to stranded assets in oil or outmoded technologies.

Climate investing is a ‘matter of value investing.

According to Climate Nexus, at least 34 anti-ESG bills have already been introduced in January alone.

Unquestionably, some ESG investments are not competitive with other short- or long-term opportunities. However, the corporate world is moving away from fossil fuels. All major old car companies are going electric. New EV-exclusive auto companies and those having to do with supply chains are cropping up everywhere — in red and blue states alike.

Most new electric generation in the country is being supplied by wind and solar — whether grid-connected or stand-alone. They all need the batteries that new manufacturing facilities in multiple states will be manufacturing because of the incentives in the IRA.

Manufacturers and power producers are not the only ones who have concluded that the transition to a low-carbon economy makes good business sense. Sense enough that the Federal Reserve (Fed), the Securities Exchange Commission (SEC), and financial institutions worldwide understand the critical importance of climate change to Earth’s environment and economies.

While even Arab oil-producing nations are looking to clean energy sources like solar and wind, Republican state administrations and House members are threatening what Fox Business headlines as “Republican states are planning an all-out assault on woke banks.”

No one is mandating that individuals or the states make ESG investments. Given the scientific and anecdotal evidence that Earth’s warming and because of the ever-increasing amounts of harmful fossil fuel emissions, it’s probably prudent for financial institutions to gain insights into how companies plan to contend with such externalities.

The attack on ESG investing is eerily like the Trump administration’s efforts to write out the phrases climate change, Earth’s warming, and harmful fossil fuel emissions from every federal government website and report. I take as much issue with this as I do with far-left activists forcing the cancellation of speeches by anti-abortionists or nearly everyone who disagrees with their positions.

I understand that words matters. However, it’s my experience that it’s what you don’t know that’s most likely to bite you in the a*s.

State treasurer Murante is right to want to get the best return on the dollar he can. But whose weaponizing and politicizing ESG investments to the point that even information about fuels other than fossil should be flowing out for investors to consider?

If Nebraska doesn’t want to invest in alternative energy — including corn-based alcohol — then instruct your investment companies — why all the drama? A silly question, I know.

The moral of my story is simply this. It’s critically important for activists to steal back the narrative from any policymaker who says a transition to a low-carbon economy is the nose of socialism or the hand of communism under the tent.

IRA projects and those climate-related provisions attributable to the Infrastructure Investment and Jobs and the CHIPS and Science Acts are evidence of the economic and environmental benefits of a transition to a low-carbon economy. What better proof is there that capitalism still rings true in America?

This article is also published on the author's blog. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.