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CFOs at companies ranging from candy makers to missile manufacturers have tried for years to attract equity capital by adopting environmental, social and governance (ESG) best practices.

By one measure their efforts have paid off — worldwide investment in so-called sustainable mutual funds and exchange-traded funds has more than tripled since 2018 to $2.47 trillion, according to Morningstar.

ESG now faces a hostile rebranding. Critics call it “woke capitalism,” foisted on U.S. companies by a “climate cartel” of shareholder activists, asset managers and politicians.

“ESG is a pernicious strategy, because it allows the left to accomplish what it could never hope to achieve at the ballot box or through competition in the free market,” former Vice President Mike Pence said in May, joining opponents as varied as Berkshire Hathaway Vice Chair Charles Munger and Tesla CEO Elon Musk.

CFOs should not expect the backlash to halt a proposed Securities and Exchange Commission rule that would bring securities laws in closer alignment with climate activism and a corporate movement toward ESG disclosure, according to attorneys and former regulators.

Already, 92% of Standard & Poor’s 500 companies publish ESG reports, the Governance and Accountability Institute said. In response to investor pressure, thousands of companies worldwide have pledged to report on greenhouse gas (GHG) emissions…

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