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The ESG story starts in 2004, when the three-letter acronym appeared in a UN report arguing for environmental, social and governance considerations to be hardwired into financial systems. Since then the term has been on a long but rapidly accelerating journey from NGO-world obscurity into the financial mainstream and subsequently the political limelight, prompting strong reactions from a chorus of prominent figures. Elon Musk calls it “a scam.” Peter Thiel says it’s a “hate factory.” Warren Buffett describes it as “asinine.”

Unsurprisingly for a piece of UN jargon that has become part of the political cut and thrust, “ESG” is often used to mean different things. Properly defined, it refers to an investment strategy that factors in environmental, social and corporate governance considerations. That might mean not investing in oil and gas companies, for example. Or it might mean only investing in companies that have a stated commitment to diversity, equity and inclusion. As it has grown in infamy, the acronym has also come to refer not only to investment products billed as ESG, but to other practices through which investment firms use their customers’ money to push political ends. For example, your pension may not be invested in an ESG fund, but the manager of that money may still be using stocks owned on your behalf to pursue political goals. A third, even broader, meaning is as a synonym for woke capitalism: a broad catch-all for big business’s embrace of bien pensant opinion, particularly on the environment.

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While treasurers are flexing their state’s financial muscles, attorneys general have been using their legal authority to push back. In August, nineteen state attorneys general wrote to Larry Fink, warning that BlackRock “appears to use the hard-earned money of our states’ citizens to circumvent the best possible return on investment, as well as their vote.” The charge is that by factoring in anything other than maximizing return on investment, money managers are in breach of the “sole interest rule,” which requires investment fiduciaries (i.e., money managers) to maximize financial returns. Others go further, claiming not only that asset managers have breached their fiduciary duty to their customers, but that trustees who sit on public pension boards that invest with those firms have also violated their fiduciary duty.

The next step will be for states to strengthen their fiduciary rules. The American Legislative Exchange Council, a conservative nonprofit that helps draft legislation for state governments, has devised a bill that does exactly that.

Vivek Ramaswamy calls the use of customers’ money to advance political objects rather than their best financial interests a “cut and dried fiduciary breach” and one that he thinks is happening on a large enough scale that “it might be the largest fraud of the twenty-first century.”

A biotech entrepreneur turned anti-woke crusader, Ramaswamy is the author of Woke, Inc.: Inside Corporate America’s Social Justice Scam. He sees the rise of ESG as an opportunity as well as a threat. That opportunity is two-fold, he thinks. First: if investment decisions are increasingly being made based on factors other than maximizing returns, then politically unpalatable stocks should, logically, be undervalued. Second: if more and more large asset managers are putting ESG considerations ahead of maximizing their customers’ returns, there is an opening for firms with a ruthless focus on the bottom line to scoop up disgruntled customers.

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