Environmental, social, and governance (ESG) is an umbrella term for a loose family of considerations bearing on corporate conduct, investment decisions, and financial risk. But no uniform body of ESG law corresponds to the label. Instead, the regulatory environment surrounding ESG is fragmented across distinct statutory and regulatory regimes. Such fragmentation has become harder to evade after the Supreme Court ended forty years of Chevron deference with Loper Bright Enterprises v. Raimondo (2024).

Climate disclosure, pension investing, proxy voting, corporate governance, and environmental regulation may all travel under the ESG banner. Their family resemblance, however, owes more to convention than to law. They arise under different statutes, administered by different agencies, under grants of power Congress chose to frame in different terms. Once Chevron disappeared, those differences assumed a significance the acronym tends to conceal.

In Loper Bright, the Supreme Court held courts must exercise independent judgment in deciding whether an agency has acted within its statutory authority. Statutory ambiguity no longer obliges a court to accept an agency’s reasonable interpretation. Yet the Court did not deny Congress the power to confer discretion upon an agency. A statute may authorize an agency to define a term, complete a statutory scheme, or apply a standard whose execution necessarily calls for judgment. The court must then determine the scope of the authority Congress gave and police its boundaries. Indeed, the Court itself recalled an earlier practice of identifying delegations of administrative discretion on a “statute-by-statute basis.”

Recent Notice & Comment essays by Daniel Deacon and Matthew Stephenson have examined the scope of agency discretion after Loper Bright, while Cary Coglianese and Daniel E. Walters have explored its broader consequences for administrative governance. ESG presents a useful application because the label so readily substitutes for the anterior inquiry: what power did Congress confer upon this agency, under this statute, for this purpose?

I develop this statute-specific account of ESG regulation at greater length in my manuscript, “Environmental, Social, and Governance (ESG) Law in a Post-Chevron Era.”

The Employee Retirement Income Security Act of 1974 (ERISA) offers a useful example.

The Department of Labor’s 2022 investment rule, commonly associated with ESG, permits a fiduciary to consider the economic effects of climate change and other environmental, social, or governance factors when they bear upon risk and return. The rule also contains a separate tiebreaker provision. If two investments equally serve the plan’s financial interests, a fiduciary may consider collateral benefits in choosing between them. The rule does not permit a fiduciary to accept a lower expected return or greater risk merely to secure a social benefit.

The distinction is easily lost in the political controversy surrounding ESG, but it is essential to the legal question. The Department did not claim a roving commission to promote environmental or social policy. It located its authority in ERISA’s familiar duties of prudence and loyalty.

After Loper Bright, the Fifth Circuit confronted the rule in Utah v. Su (2024). It did not hold the rule unlawful. Instead, because the district court had relied in part upon Chevron, the appellate court vacated the judgment and remanded for reconsideration under Loper Bright.

On remand, the district court again sustained the 2022 investment rule. Without Chevron, it read ERISA for itself and concluded the tiebreaker provision did not offend the duties of loyalty and prudence. A fiduciary who has already determined two investments equally serve the plan’s financial interests does not abandon the beneficiaries merely by choosing between them on some collateral ground. Nor, under the rule, may the fiduciary sacrifice financial interests to secure the collateral benefit.

The decision proves little about ESG in general, which is precisely why it is instructive. Loper Bright supplied no automatic answer. The court still had to read ERISA. Loper Bright changed the judicial treatment of agency statutory interpretation; however, it did not abolish the separate requirement of reasoned agency decisionmaking within lawfully delegated bounds.

Administrative policy, of course, need not remain fixed merely because a court finds a rule permissible. The Department of Labor has now placed reconsideration of the 2022 framework on its 2026 regulatory agenda, where the initiative is listed at the proposed rule stage. The change illustrates a distinction often obscured in discussions of Loper Bright. That is, judicial review determines the lawful range of agency action while elections and administrative policy often determine where within that range an agency chooses to stand.

The SEC’s climate-disclosure rules arise under a different statutory scheme and therefore pose a different inquiry.

In 2024, the Commission adopted rules requiring public companies to disclose specified climate-related risks with material effects, or reasonably likely material effects, upon business strategy, operations, or financial condition, along with certain related financial-statement information. The SEC stayed the rules in April 2024, ended its defense on March 27, 2025, and—after the Eighth Circuit held the litigation in abeyance on September 12, 2025—the Commission proposed complete rescission on May 29, 2026. The proposal remains pending following the August 3, 2026 comment deadline.

It would therefore be inaccurate to say Loper Bright invalidated the climate rules. No court has so held. The Commission itself changed course before the litigation produced such a judgment.

Still, the controversy exposes the same underlying difficulty. “Climate change” supplies no independent source of SEC authority. Neither does “sustainability.” Yet climate events may affect assets, insurance costs, supply chains, operations, and exposure to loss. Such effects may plainly be financial. A risk does not lose its financial significance because its subject has become politically contested.

The question is narrower and hence more difficult: how far do the Securities Act and the Exchange Act permit the Commission to prescribe standardized climate-specific disclosures? Calling the rules “ESG” neither enlarges nor contracts the statutory grant.

Here lies the central difficulty of ESG after Loper Bright. A policy concern must be translated into the language of the statute from which the agency claims its authority.

Under ERISA, the relevant vocabulary includes prudence, loyalty, diversification, risk, and return. Under the federal securities laws, the vocabulary includes disclosure, materiality, investor protection, and the particular powers Congress assigned the Commission. Environmental statutes speak in still other terms. The same policy concern may fit easily within one statutory scheme, uneasily within another, and not at all within a third.

Sometimes the translation is simple. A changing climate may alter the expected return of an investment. A governance practice may expose shareholders to financial loss. No principle of administrative law requires a court to pretend otherwise because the subject has acquired an ideological label.

Elsewhere the fit will be poor. An agency may pursue an environmental or social objective whose connection to its statutory charge is remote. Before Loper Bright, ambiguity could furnish an agency with room to defend a permissible construction under Chevron. It no longer does. The court must decide for itself what Congress authorized.

The consequence is neither an anti-ESG rule nor a license for administrative ESG policymaking. It is something less dramatic and more demanding: the disappearance of ESG as a useful legal unit of analysis.

A Department of Labor pension rule does not stand or fall with an SEC disclosure rule. Neither rule stands or falls with an EPA regulation. Their political association tells us almost nothing about their legal validity. Each depends upon a statute with its own text, structure, purposes, limits, and delegations.

This may narrow some regulatory programs. Others may survive with little difficulty. Still others may become more durable precisely because agencies, deprived of Chevron, have stronger reason to anchor regulation in statutory text and established legal categories rather than broad claims of administrative purpose.

The debate over ESG has too often begun where legal analysis should end. Proponents invoke new risks demanding governmental attention. Critics invoke agencies pursuing social policy without congressional sanction. Either description may prove accurate in a particular case; nevertheless, neither can substitute for reading the statute.

Congress enacted no general ESG statute. It enacted ERISA, the Securities Act, the Exchange Act, environmental statutes, and scores of other laws conferring different powers for different ends. The fate of ESG in federal administrative law will therefore not be settled in the gross. It will be settled statute by statute, agency by agency, and rule by rule.

Robert T.F. Downes is a PhD candidate in political science at the University of Connecticut, specializing in political theory and public law. This essay is adapted from his manuscript, “Environmental, Social, and Governance (ESG) Law in a Post-Chevron Era,” which received the Best Conference Paper Award from the North East Academy of Legal Studies in Business in 2025.