Oops! “Socially Conscious” ESG Funds Lose $15 Billion

The Downfall of ESG Funds: A $15 Billion Blood Bath

The world of ESG (environmental, social, and governance) investing is facing a harsh reality as prominent ESG funds suffer significant losses. In the second quarter of 2023 alone, these funds have lost over $15 billion.

According to Reuters, the outflows can be attributed to economic and regulatory concerns in Europe, as well as an anti-ESG backlash in the United States. Refinitiv data reveals that this is the fifth consecutive quarter of net outflows for ESG funds in the US.

The article highlights Republican opposition to ESG in the United States, which has dampened enthusiasm among asset managers. Additionally, European Union regulations have forced some funds to remove their ESG classification.

While the Reuters report tries to put a positive spin on the situation, other coverage reveals that Americans are increasingly understanding and disliking Environmental, Social, and Governance investing.

Notably, several states have decided to divest from ESG pension funds, resulting in billions of dollars lost for these funds. Attorney General Sean Reyes of Utah and Attorney General Steve Marshall of Alabama have even testified before Congress about the threat of ESG investing to American energy and prosperity.

Furthermore, twenty-five Republican Attorney Generals have sued the Biden Administration for allowing ESG investing by retirement fund fiduciaries.

Larry Fink, CEO of Blackrock and a huge proponent of ESG, is desperately trying to change the conversation and move away from using the acronym “ESG.” This comes after Fink once stated that “you have to force behavior” to achieve ESG goals.

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

In addition to the American revolt against ESG, European Union regulations have led some firms to reclassify their ESG funds as traditional products, impacting investor flows.

According to Bloomberg ESG Analyst Shaheen Contractor, European firms are reluctant to be labeled as insufficiently environmentally friendly and have historically tried to classify themselves as ESG investing firms.

Shaheen Contractor pic.twitter.com/DysyWkV0k6

— Tom Olohan (@tolohan) July 6, 2023

For many Americans, the actions of these activists and pressure groups cannot be allowed to run amok, regardless of whether they refer to their proposed investment strategy as ESG investing or rebrand it as “conscientious capitalism.”

From environmental goals that could have a negative impact on American quality of life to threatening access to cheap energy, it’s no wonder that many Americans are concerned about large pro-ESG firms like BlackRock and Vanguard being allowed to “force behavior.”

Source: The Western Journal