Policies

Over the last several years, more than 450 bills have been introduced at the state level that would restrict investors and companies from considering all material financial risks in decision-making. The proposals range from policies banning state pension funds from considering climate financial risk in investment decisions to prohibiting state contracts with companies that have so-called “boycotted” fossil fuel companies. Only a small percentage of bills have made it into law -- roughly 30 bills and resolutions have passed since 2022. In 2024 and 2025, of 268 bills introduced or carried over from 2023, only 13 were signed into law.  

In 2025, we worked to defeat several legislative efforts that would have negatively impacted the ability of investors to engage with the companies they own through the shareholder proposal process. This critical process, which has been in place for almost a century, allows investors to address material risk factors faced by companies.  

Legislative efforts continue to fall flat in part due to the private and public sector pushback amid concerns over the economic impacts such policies would result in and the growing wariness over the government interfering with businesses’ freedom to invest and operate responsibly.  

The economic impacts could include:  

• Forced divestment and decreased returns for retirement beneficiaries  

• Higher interest rates on state and municipal debt offerings   

• Increased government borrowing costs due to financial industry restrictions  

• Increased costs to manage state assets  

• Increased costs in reporting and tracking requirements on proxy voting for public pensions leading to increased administrative costs 

• Increased reporting burdens for investors that are engaging with companies.

On the flip side, some legislatures, Illinois and Oregon, have passed policies to protect businesses' right to consider climate risks and other material factors. California passed a first-in-the-nation state disclosure law that gives investors, consumers, employees, and other stakeholders more insight into companies’ efforts to manage climate-related financial risks. The U.S. Securities and Exchange Commission adopted a landmark federal disclosure rule, responding to investors and consumers alike who have been making the case for improved transparency for decades.  

At the federal level, congressional lawmakers have introduced bills that prohibit the consideration of climate financial risks, including several House proposals that would impact the longstanding shareholder proposal process that investors have used to engage companies. Other bills would change how asset managers assess financial risk in pension plans. None of these bills have yet to become law due to the work of Freedom to Invest and our many allies.

Freedom to Invest expects state and federal legislative efforts to undermine investment and business freedom to continue over the next few years – including legislation to restrict specific sectors, including insurance, utilities, and banking, from factoring climate financial risk. 

WHAT TO WATCH:  

• Restrictions on fiduciaries of state funds to consider material financial risk in their portfolios.

• Bans on fiduciaries of state funds and private sector pension funds and their subdivisions from considering climate financial risk.  

• Prohibiting states from contracting with certain companies that allegedly boycott energy, mining, and agriculture production. 

• Reforms to the shareholder proposal process on how investors engage companies they own. 

Join Freedom to Invest in pushing back against these harmful bills. Learn how you can get involved here.