As Trump Takes Office, NGOs will continue to push ESG

Last month, the American people delivered a stunning rebuke to the Biden Administration and its policies for the last four years. This has not stopped Biden’s subordinates from rushing through last-minute rules, nor has it stopped non-governmental organizations from pushing left-wing agendas Democrats could not achieve through the political process.

Two NGOs are especially powerful in setting industry standards that could force the private sector to adopt left-wing ESG standards when both the public and the market has rejected it: NAIC and NIST.

The former, the National Association of Insurance Commissioners, is an association of state insurance regulators that wields immense power to set uniform state laws. The federal government leaves most business insurance regulation to the states. To make sure that a company headquartered in one state can easily be insured while operating in another, NAIC develops standards that all fifty states usually adopt out of necessity – to try and go their own way would make states less attractive to business.

This gives NAIC staff immense power to shape what are effectively federal regulations on the insurance industry. It is only reasonable that there be some transparency in their decision-making.

But NAIC currently operates with complete opacity. As a tax-exempt nonprofit, NAIC would normally have to file an annual Form 990 with the IRS. However, due to a court ruling in 1955 that found NAIC to be a “wholly owned instrumentality” of the states, it enjoys an exemption from that requirement. Because it is not considered part of any government, NAIC is also exempt from Freedom of Information requests.

NAIC uniquely gets the best of both worlds, subject to neither the disclosure requirements of a private entity nor the transparency laws of a government agency.

They are currently using their power to push ESG initiatives.

NAIC is a member of the International Association of Insurance Supervisors, which often shapes insurance standards that countries adopt. IAIS recently released a report endorsing left-wing ESG and divisive DEI standards. The report also purported to show the benefits of ESG standards, such as taking into account “climate risk.”

Climate risk is difficult to quantify due to the subjectivity of what constitutes “material” risk. Even the Bank for International Settlements acknowledges there are “technical difficulties in coming up with a plausible stressed climate scenario and translating it into concrete stress factors.”

The IAIS report included an explicit call for racial quotas in hiring for insurers. This despite a peer-reviewed Rutgers University Social Labs study indicating the exact opposite coming out around the same time. According to the Rutgers researchers, DEI in education and HR actually stirs up racial division where none previously existed.

This is dangerous because NAIC generally aligns with IAIS suggestions on these issues. In 2021, NAIC stated that the organization “and its members actively participate in the IAIS to address climate related issues.” NAIC also acknowledges they were “considering enhancements to NAIC Climate Risk Disclosure Survey to align with international standards and encouraging broader participation.”

NAIC is using recommendations from the IAIS to shape insurance regulation at the state level. Opaque NGOs should not be in the business of influencing state insurance regulations in the U.S.

Neither should federal public-private partnerships, but that is precisely what Senate Majority Leader Chuck Schumer attempted to do with the National Institute of Standards and Technology.

NIST is a public-private partnership that sets standards for government use of technology, but it is increasingly attempting to assert itself in the regulation of artificial intelligence. Schumer’s recent push pass legislation codifying NIST standards as legally binding AI regulations was a similar attempt to take decision-making out of the hands of democratically-elected representatives accountable to the people and put it in the hands of staffers at an NGO who are not subject to Senate confirmations or Congressional oversight.

And the standards Schumer was looking to enshrine before President Trump takes office next year with a Senate majority included a requirement that unions get input on how technology can be used to enrich Big Labor bosses, racial bias trainings that would cause more racial division in AI than it would prevent, and major energy regulations with economy-wide implications. As our own Rowan Saydlowski has argued at Townhall.com,

The Left’s reflex to throttle AI with increased government regulation stands in contrast to the body of evidence showing innovation in the AI space will continue to increase energy efficiency in the United States, both for AI products themselves and for other industries that implement AI technology.

With Democrats out of power, expect NGOs to ramp up their efforts in the coming years to seize power away from the elected representatives of the American people and the appointees they oversee. What the Left cannot pass through Congress or defend in court will be pushed through outside organizations exercising government-like power.