After many months of warnings and early boycotts, conservative efforts to resist progressive attempts at implementing environmental, social, and governance (ESG) standards within various corporations appear to begin slowly turning the tide at last.
According to Fox News, U.S. sustainable funds have seen substantial losses in recent months. During the fourth quarter of 2022, sustainable funds fell to their lowest level in five years, losing over $6 billion during that time period. Sustainable funds is one particular area of the economy where corporate activists pushed to incorporate ESG guidelines, so that such companies could use these as metrics for determining where to invest their money by favoring progressive companies over less progressive ones.
Although sustainable funds netted about $3 billion in 2022, demand for them has been on the decline for the last two years; most of the cash inflow for ESG funds occurred during the first quarter of the year, prior to the disastrous results of the fourth quarter. Investors ultimately pulled their money from such companies for a variety of reasons, and although some of the reasons given include inflation and an overall downward trajectory of the U.S. economy, backlash against ESG is also widely considered a leading factor.
“In the United States, prominent politicians have spoken out against ESG investing, and some have taken measures to limit state investment funds from doing business with asset managers based on perceptions of those managers’ ESG approaches,” said the report on the situation by financial services firm Morningstar. “Although both sustainable funds and their conventional counterparts saw outflows in the fourth quarter, the short-term withdrawals were more severe for sustainable funds.”
ESG funds have risen substantially in the last few years, ballooning to a combined global value of $35 trillion, and projected to exceed $53 trillion by 2025, led primarily by companies such as BlackRock. But there has been considerable pushback from both within the economic world and politically; Republicans on the House Financial Services Committee say they are prepared to create a task force that will further investigate the impact of ESG, and ways to combat it.
“Progressives are trying to do with American businesses what they already did to our public education system — using our institutions to force their far-left ideology on the American people,” said Congressman Patrick McHenry (R-N.C.), chairman of the Financial Services Committee. “Their latest tool in these efforts is environmental, social, and governance proposals. This is why I am creating a Republican ESG working group led by Oversight & Investigations Subcommittee Chair Bill Huizenga.”