WS, I think I agree with your basic position, although I'm trying to come up with the contrary position to see how strong a case it may have. I think the case would have to be one of two things: either a company is not acting in its shareholder's interests for non-business reasons, or it's operating in response to a kind of pressure that itself is anti-competitive. For an example of the former, imagine that the board and CEO of a company want to shine up their resumes by showing that their company is doing all this ESG stuff, but that this stuff actually helps their image but not their company. I could see the rationale that their public shows could be self-serving rather than a legitimate business decision. Or another example of this could be if you viewed certain ESG initiatives as fraudulent or deceptive (I watched a video about one case where an environmental initiative was a plain boodoggle), the board and CEO should perhaps not be entertaining this type of investment due to its dangers.
For the second idea, about anti-competitive practices, if we were to assert that ESG moves by companies are often not done out of an innate self-interest but out of public pressure, it could be argued that this pressure forces companies to either comply or else face harassment (including internally). And likewise, a company or fund looking to invest may be attracted to those ESG participants for similar reasons, i.e. not because they in fact think it's strategic but because they are afraid not to. Making it illegal to consider that would remove the threat against them and allow them to judge a business decision purely on its merits. The ESG-attribute would be anti-competitive because it effectively bars companies from choosing to be different from other companies without being attacked.
I'm not actually saying either of these scenarios is certainly the case, but maybe they're worth protecting against if they were?
