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How ESG Will Destroy Your Company

On Feb. 26, 2026, Texas Attorney General Ken Paxton secured a “first of its kind” settlement with the Vanguard Group, which, together with BlackRock and State Street, makes up the “Big three” asset managers representing “the largest shareholders in 88 percent of S&P 500 companies.”

Among other things, the press release announcing the settlement noted that “Vanguard has committed to avoid imposing ESG (environmental, social, and governance) goals over its customers’ profitability.”

This should be viewed as a win for free-market capitalism. However, two relatively recent posts on the corporate governance blogs of Columbia and Harvard can be read as warning corporate directors and executives who have rushed to embrace ESG that more is at stake than just a haircut for shareholders.   

The first, by professor Karen E. Woody, argues the following about ESG and materiality.

ESG satisfies all three categories of materiality. First, many ESG factors are substantively material because they affect risk, cost of capital, and long-term value. Second, ESG disclosure requirements are increasingly mandated by jurisdictions around the world, creating regulatory........

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