Whoops! "Socially Conscious" ESG Funds Have Just Taken a $15 Billion Blood Bath
The more the public gets a good look at ESG (environmental, social and governance) investing, the more those prominent ESG funds suffer.
ESG funds have lost over $15 billion in the second quarter of 2023.
Reuters reports that, “Outflows were driven by economic and regulatory worries in Europe, analysts said, and by concerns connected to an anti-ESG backlash in the United States, where funds saw their fifth consecutive quarter of net outflows, according to Refinitiv data on the sustainable investment industry so far in 2023.”
The article noted Republican opposition to ESG in the United States, “dented enthusiasm” among asset managers due to backlash, and European Union regulations that pushed some funds to remove their ESG classification.
While the Reuters report tried to put a positive spin on the situation, other coverage reveals that Americans increasingly understand and dislike Environmental, Social, and Governance investing.
Notably, several states have moved to divest from ESG pension funds, costing ESG funds billions in that move alone.
Attorney General Sean Reyes of Utah and Attorney General Steve Marshall of Alabama recently testified before Congress about the threat of ESG investing to American energy and prosperity.
Twenty-five Republican Attorney Generals have sued the Biden Administration over allowing ESG investing by retirement fund fiduciaries.
A huge proponent of ESG, Larry Fink, CEO of Blackrock, who once told an audience that “you have to force behavior” to achieve ESG goals, desperately wants to change the conversation and cease using the acronym “ESG”.
MORE – BlackRock’s CEO Larry Fink said, “you have to force behaviors” in companies regarding “diversity and inclusion.” pic.twitter.com/CSom8Bv9TU
— Disclose.tv (@disclosetv) June 4, 2023
On top of this American revolt, Reuters mentions that, “European Union regulations had encouraged some firms to reclassify their ESG funds as traditional products, impacting investor flows.”
According to Bloomberg ESG Analyst Shaheen Contractor, firms in Europe do not want to be “named and shamed” for being insufficiently environmentally friendly, and thus historically have tried to classify themselves as ESG investing firms.
If firms are reclassifying their ESG funds to something a little more standard, presumably they fear the costs of compliance more than the demands of activists and ESG pressure groups.
Shaheen Contractor pic.twitter.com/DysyWkV0k6
— Tom Olohan (@tolohan) July 6, 2023
For many Americans, these activists and pressure groups simply cannot be allowed to run amok, regardless of whether they refer to their proposed investment strategy as ESG investing or rebrand to something like “conscientious capitalism.”
From environmental goals that could negatively impact American quality of life, to threatening access to cheap energy, it’s easy to see why so many Americans are concerned about large pro-ESG firms like BlackRock and Vanguard being allowed to “force behavior.”
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