Environmental, social and governance investing has faced pushback from politicians in recent weeks, while at the same time a new crop of anti-ESG products has hit the market.

Last Wednesday Texas comptroller Glenn Hegar announced that the state had added 10 firms — notably BlackRock and UBS — to a list of financial institutions banned from managing money on behalf of state pensions and other pools of money due to the firms' “boycott” of energy companies.

Companies like BlackRock and TIAA/Nuveen began touting their holdings in oil and energy. "We have never turned our back on Texas oil and gas companies," BlackRock's U.S. business head, Mark McCombe, told the Financial Times.

Also last week, the trustees of Florida’s State Board of Administration instructed the agency to consider only financial factors when investing state money and not strategies aimed at “the furtherance of social, political or ideological instances," as reported by Financial Advisor IQ sister publication, FundFire.

The announcement came roughly a month after Gov. Ron DeSantis, who is one of the SBA’s three trustees, vowed to strip political factors from the state’s financial decisions. The state is also updating its investment policies to disallow support of proxy issues that address anything other than financial concerns, FundFire reported.

Meanwhile, the Massachusetts Pension Reserves Investment Management Board last week said it had formed a committee to focus on ESG issues and standards, FundFire also reported.

“We see ESG analysis and potential investing as one more tool in meeting our fiduciary responsibility to our retirees and our taxpayers,” MassPrim Board Chair and State Treasurer Deborah Goldberg told FundFire in an emailed statement.

These high-profile moves add to an already complicated ESG picture that could spark questions from advisors’ clients about the value of impact investing, which has seen tremendous growth in recent years. As of mid-2021, so-called sustainable U.S. mutual and exchange-traded funds represented $296 billion in assets, according to data from Morningstar published in July.

Earlier this year, the Securities and Exchange Commission proposed a rule that would tighten the definition of ESG and compel companies that market strategies under that moniker to disclose more information about ESG practices of the underlying investments. Per one element of the proposal, a fund touting a specific ESG impact would need to describe that impact and summarize the fund’s progress toward that goal regularly. Likewise, a fund focused on environmental factors would have to disclose its holdings’ greenhouse gas emissions, as reported.

The proposed rule could help surface funds that actually deliver on their ESG objectives and weed out those that are more hype, American Century’s ESG and sustainable investing chief, Sarah Bratton Hughes, told Financial Advisor IQ sister publication Ignites.

But not everyone agrees with the investment approach, helping to seed a new crop of products framed as “anti-ESG.”

Strive Asset Management LLC’s first ETF, the Strive U.S. Energy ETF, began trading earlier this month and promotes investments in fossil fuel.

In an announcement accompanying the fund’s launch, Strive pledged to reject “short-sighted political agendas that have caused companies to underinvest in American oil, natural gas and other promising forms of energy.”

Strive announced that its next wave of ETFs, revealed in disclosures filed last week, will espouse a “post-ESG” mandate for proxy voting. The funds will vote “against board members and proposals that advance social or political agendas unrelated to providing excellent products and services to customers,” disclosures say.

Meridian, Idaho-based Inspire last week announced it would remove the ESG identifier from eight of its ETFs representing some $1.1 billion in client money, thereby “renouncing ESG.”

But such strategies could hit a snag under the SEC’s pending fund naming rule that would affect ESG funds, too, analysts tell Ignites. Per the SEC proposal, at least 80% of a fund’s assets would have to align with the fund’s name, but the standard would not be solely for funds claiming to be ESG. So, for example, the yet-to-be-launched God Bless America ETF, a brainchild of Curran Financial Management and Toroso Investments, would have to substantiate its pledged objective of investing in companies that create jobs in America.

“The names of these ETFs are designed, in part, to trigger investors to use them as pushback against the wave of ESG ETF products,” said Todd Rosenbluth, head of research at New York-based VettaFi. “However, the securities inside do not necessarily match up with the name and could result in shifts to the portfolio to meet the SEC standards.”

Some 20 years into the concept of ESG investing, there’s much more to straighten out on each side of the picture. Another VettaFi pro, financial futurist Dave Nadig, predicts stronger battle lines will be drawn, suggesting that regulation may not be finally defined “until lawsuits happen.”