For now, Republicans continue to introduce legislation — both on the federal and state levels — that takes aim at ESG investing.
"These bills didn't surprise me," Hershman said, and he expects to see more anti-ESG legislation introduced soon.
Similarly, Reps. Sean Casten, D-Ill., and Juan Vargas, D-Calif., who co-chair the Congressional Sustainable Investment Caucus, said in a Sept. 14 news release, "We are once again disappointed, but not surprised, by House Republicans' ongoing attacks on investor freedom and the free market."
"Republicans seek to make harmful and unnecessary changes to ERISA that completely undermines worker's retirement security by forcing fiduciaries to ignore financial risks and limiting their ability to act in the best interests of those who have entrusted them with their money," the lawmakers said. "We urge our Republican colleagues to come to their senses and end this assault on Americans' retirement savings and pensions."
In a Sept. 14 news release, US SIF's McGannon specifically called out the use of the "pecuniary/non-pecuniary" framework in the package of bills.
"Our members find the pecuniary vs. non-pecuniary rules to be vague and not well-suited to the realities of the investment industry," he said in the news release. "ESG data can be material to the risk and/or return of an investment."
The pecuniary vs. non-pecuniary language dates back to a Labor Department rule, promulgated under the Trump administration, that said fiduciaries could not invest in "non-pecuniary" vehicles that sacrifice investment returns or take on additional risk.
That has since been reversed by a new DOL rule issued in November, allowing fiduciaries to consider climate change and ESG factors when selecting investments and exercising shareholder rights. Labor Department officials have said the Trump-era rule created a "chilling effect" on considering ESG factors, and their aim with the new rule was to restore neutrality.
Republicans have attacked the Biden administration's rule via bills, lawsuits, and a joint resolution under the Congressional Review Act to overturn it, which President Joe Biden blocked by using his first veto.
On the state level, Republican officials also continue to propose and pass legislation restricting investing in ESG-themed strategies.
In late June, GOP lawmakers in North Carolina overrode the governor's veto to enact a law that bars state entities from considering ESG criteria in investment and employment decisions.
"Around the world, we're not seeing anything like this anti-ESG backlash in other places," PRI's Hershman said, acknowledging that while there's some pushback in Europe, it's primarily over implementation of ESG regulations that have been proposed for years.
And while other countries move "full steam ahead with responsible investment," there is the possibility that U.S. investors become frustrated by the barriers that other markets don't have, he said.
"What would be sad is if we get to a place where investors are saying, 'there's better information in other countries,' and that will affect their investment decisions," Rothstein said, specifically referring to climate disclosure regulations.
Ultimately, investors will be making the final call, Hershman said.
"Everything that we hear from the actual investors, from the market, from the demand for these products is that the (anti-ESG) rhetoric is not reflecting the reality in the markets and on the ground," Hershman said.
"My expectation is that the market demand is going to prevail in the end," he added.
Palash Ghosh contributed to this story.