(This Aug. 14 article was corrected in paragraph 6 to clarify that the Missouri Attorney General’s Office is not involved in the case.)

By Daniel Wiessner

(Reuters) – A federal judge in Missouri on Wednesday struck down the Republican-led state’s rule limiting the ability of financial professionals to consider environmental, social and corporate governance factors when making investment recommendations.

U.S. District Judge Stephen Bough in Kansas City sided with the Securities Industry and Financial Markets Association, saying the 2023 rule was invalid because it imposed requirements on investment banks and broker-dealers that were not provided for in federal law.

The rule, issued by Missouri Secretary of State Jay Ashcroft, would require investment advisers that consider ESG goals, such as combating climate change or supporting a social movement, to disclose them to clients and obtain their consent.

Bough said the Missouri rule not only violates federal law, but also infringes on investment advisers’ free speech rights and is so vague that it cannot be enforced under the U.S. Constitution.

State officials could have “launched an information campaign to the public to spread their desired message,” wrote Bough, an appointee of former Democratic President Barack Obama.

Ashcroft’s office hired a private attorney to defend the scheme; the office of Missouri’s Republican Attorney General Andrew Bailey is not involved in the case.

SIFMA CEO Kenneth Bentsen said Missouri’s rule was unnecessary and would disrupt the uniform nationwide regulation of the securities market guaranteed by federal law, which already requires financial professionals to act in the best interests of their clients.

“This means that when recommending securities, they must not put their own interests above the interests of their clients,” Bentsen said in a statement.

The Missouri rule is part of a broader push by Republicans in some U.S. states to restrict the increasing consideration of ESG factors by companies and investors, including corporate retirement plans that collectively invest trillions of dollars.

The administration of former Republican President Donald Trump passed a rule prohibiting pension plans from considering “non-financial” factors in their investment decisions. The Biden administration has eliminated that rule, a move that is being challenged in court.