Central PA News

The use of environmental, social, and governance (ESG) scores by major financial firms is raising concerns among some Pennsylvania lawmakers. Representative Perry Stambaugh, along with Reps. Russ Diamond, Dave Zimmerman, and Greg Rothman, is advocating for legislation to limit the influence of these scores on business financing and services.

According to Stambaugh, ESG scores are being used by banks and investment firms to determine which businesses qualify for loans and insurance. He argues that this practice allows financial institutions to "pick winners and losers" based on subjective criteria rather than traditional financial metrics.

Stambaugh expressed his concerns about the potential impact on consumers: “I am concerned our nation is reaching a point where very soon consumers with ‘good’ ESG scores may receive lucrative offers, easier loan terms, and even targeted packages designed to reward certain behaviors tied to ever-changing values and whims.” He added that using ESG scores in this manner could infringe on personal liberty and contradict capitalist principles.

The proposed legislation, titled the Virtue, Liberty, and Independence Act—named after Pennsylvania’s state motto—aims to prohibit businesses in the Commonwealth from using ESG scores as the sole condition for financing or service provision. It also seeks to prevent these scores from being primarily used in consumer transactions or by state Treasury and retirement plans when making investment decisions.