Federal Judge Overturns Missouri ESG Investment Rule

A federal judge in Missouri struck down a state rule that limited financial professionals' ability to consider environmental, social, and corporate governance (ESG) factors when offering investment advice. The judge ruled the 2023 regulation conflicted with federal law and violated free-speech rights. Missouri’s Secretary of State Jay Ashcroft's rule required advisers to disclose ESG considerations to clients and obtain consent, but it was deemed too vague for enforcement.

A Missouri federal judge has invalidated the state’s rule restricting financial professionals from considering ESG factors in investment advice, citing conflicts with federal law and constitutional vagueness.

District Judge Stephen Bough ruled that the 2023 mandate violated free-speech rights of advisers and imposed unauthorized requirements on investment banks and brokers.

Issued by Secretary of State Jay Ashcroft, the rule aimed at ESG transparency faced opposition from the Securities Industry and Financial Markets Association. Critics argued it hindered nationwide securities regulation.