What if ESG risks transcend politics?

^*For company statistics by state, the firms included were constituents of the MSCI USA Investable Market Index as of Feb. 10, 2020. Renewable-portfolio standards are state-level mandates or goals that specify a percentage of renewable electricity (wind, solar, hydropower and biomass) that utilities must supply to consumers. In the box that appears when clicking on each state, ESG leaders were those companies rated “AA” or “AAA” and laggards were those rated “B” or “CCC” on our AAA-CCC scale. Sources: National Conference of State Legislatures, U.S. Energy Information Administration, MSCI ESG Research LLC.

With the 2020 U.S. presidential election drawing nearer and the political polarization in America remaining pronounced, we wanted to know whether political divisions between states would be reflected in the ESG records of companies headquartered in each. While we observed some differences in metrics like CEO pay and average taxes paid by companies headquartered in the state, those differences were the exception — suggesting how U.S. companies manage ESG risks largely transcends politics.

Yet the ambition to introduce more renewable energy into a state’s utilities largely fell along states’ party-voting patterns in the 2016 U.S. presidential election. On average, utilities in blue states provided much more renewable energy to their citizens than did those in red states. Blue states also all had goals for green energy generation spelled out in their Renewable Portfolio Standard, while a majority of red states did not. Click on each state above to see how current clean energy generation compares to state mandates for the future.