Top five 2023 stories opposing ESG (2024) (2024)

Twenty-two state attorneys general, led by Tennessee’s Jonathan Skrmetti, are warning financial services companies that they may be violating antitrust and consumer protection laws by engaging in a climate activist alliance aimed at achieving net zero carbon emissions.

The letter to financial services providers that are signatories to the Net Zero Financial Service Providers Alliance (NZFSPA), which is identified as “a global group of Service Providers committed to supporting the goal of global net zero greenhouse gas emissions by 2050 or sooner.”

“We are writing to express our concern that your NZFSPA commitments may violate state and federal law, including antitrust laws and consumer protection laws,” the letter states. “Although many NZFSPA signatories are direct competitors with each other, they nevertheless commit to using their market influence to enforce their collective climate agenda in the broader economy.”^[1]

At 37 years old, Vivek Ramaswamy has made hundreds of millions of dollars, written a New York Times bestseller and become a fixture on Tucker Carlson’s show. Recently, he was dubbed by the New Yorker as the “CEO of Anti-Woke Inc.”

But on a chilly Monday evening last month, Ramaswamy found himself in a place far from the Fox News green rooms and high-powered corporate board rooms he’s used to. He was at a dinner event in Iowa, addressing a crowd of dozens of the state’s agricultural royalty tucked inside a huge upscale barn with exposed wood beams and the heads of elk and bison mounted on the walls. …

Ramaswamy was there to do what people with ambition, a thirst for the spotlight and an overflowing sense of self-confidence occasionally go to Iowa to do. He is exploring a run for president, testing, among other things, whether his warnings about the dangers of “wokeism” and socially-responsible investing — in business vernacular what’s called environmental, social and governance (ESG) investing — has political currency with Republican politicians, business leaders and, yes, farmers.^[1]

Florida Gov. Ron DeSantis spoke at Florida SouthWestern State college’s Collier Campus in Naples. Signage at the event read “Gove spoke at a college on February 13 and again attacked ESG and, again, discussed government efforts to address the matterrnment of Laws, Not Woke Politics.” The governor proposed new legislation to end ESG “woke” banking.

He called it a push against “these elites” attempting to “inject political ideology into investment decisions, corporate governance, and really just the every day economy,” saying it would not work out well in Florida or in the United States, and that there wasn’t much support among everyday Americans. …

DeSantis said the purpose of ESG was to limit oil and gas, and that companies using ESG “did not want us to be energy independent.” He did not cite specific examples of either specific companies or statements made to that effect by any.^[1]

Donald Trump is seizing on growing objections among Republicans to investments based on environmental, social and governance principles, with a campaign video posted Friday opposing so-called ESG strategies.

The former president, who’s making his third White House run, complained in the video about Wall Street and employers using “radical-left garbage” when investing retirement accounts. He vowed to sign an executive order, if he returns to office, “to support a law to keep politics away from Americans’ retirement accounts forever.”

During the final months of his presidency, Trump pushed to ban private-sector workplace retirement plans from considering ESG principles when selecting or monitoring investments.^[1]

The outlook for ESG is getting bleaker based on the results of Bloomberg’s latest industry survey.

Most Bloomberg terminal clients taking the survey expect ESG funds to underperform general market benchmarks in the next year, while a growing number say ESG is nothing more than a passing fad. …

[A]lmost 90% of 116 Bloomberg terminal clients who aren’t directly engaged with ESG expect the sector’s investment funds to lag behind market benchmarks in the next year, and 55% of 181 terminal clients who are engaged in ESG — and have more skin in the game — also are pessimistic.^[1]

BlackRock Inc. and other money managers spent years rolling out sustainable funds, seeking to capitalize on surging interest in ESG investing. Now they’re abandoning an increasing number of those products in the US amid political backlash and investor scrutiny.

State Street Corp., Columbia Threadneedle Investments, Janus Henderson Group Plc and Hartford Funds Management Group Inc., among others, unwound more than two dozen ESG funds this year, according to data from Morningstar Inc. …

While the US had 656 sustainable funds as of June 30, according to Morningstar data, the number of liquidations is increasing from prior years. More US sustainable funds have closed in 2023 than the prior three years combined, the data show. Investors pulled more money from the funds in the first half of the year than they put into them.^[1]

Investors in Britain dumped both stocks and bonds in August as they continued to opt for the safety of cash and money-market funds, according to data from fund network Calastone published on Tuesday.

Funds focused on environmental, social and governance issues (ESG) also saw a fourth consecutive month of net selling, down 953 million pounds - taking the total pulled from such funds to nearly 2 billion pounds since May. …

“The move out of ESG funds has gathered pace in a remarkable reversal after the boom in recent years. Four months of outflows signals a new trend emerging that fund houses will have to work hard to counteract.”^[1]

Banks and financial firms are quietly recalibrating how they talk about ESG investing in the US, navigating around potential political fights in order to avoid losing lucrative business.

Eleven major banks and money managers told Bloomberg News that they’re adjusting the language they use in pitch books, marketing materials and investor reports when seeking to sell funds and take part in financial deals. In some cases this means avoiding using the ESG acronym and related terms in Republican-led states, while for blue states, they’re playing up their ESG credentials, according to representatives of the financial firms who asked not to be named discussing private information.

The different language doesn’t reflect a change in underlying services, just an acknowledgment that words need to be adjusted depending on who the client is, the people said. In general, they spoke of a desire to tweak language to refer to the long-term cost of things like flood risk, land erosion and extreme weather, rather than using potentially divisive terms like climate change.^[1]

BlackRock CEO Larry Fink said he's no longer using the term "ESG" (environment, social and governance) because it is being politically "weaponized" and he's "ashamed" to be part of the debate on the issue. …

What he's saying: "I'm ashamed of being part of this conversation," Fink said.

"When I write these [investment] letters, it was never meant to be a political statement. … They were written to identify longterm issues to our longterm investors," he told the crowd.^[1]

BlackRock's Larry Fink isn’t the only CEO no longer using the now-controversial acronym ESG.

ESG — which stands for a focus on environmental, social, and corporate governance principles — was mentioned by just 74 S&P 500 companies on corporate conference calls held during the first-quarter earnings season, according to data gathered by FactSet.

That was the lowest count in nearly three years and down from a peak of 156 in the fourth quarter of 2021. Executives are now more likely to mention artificial intelligence (AI), which garnered 110 mentions in calls held from March 15 through June 9.^[1]