ESG’s Reign of Tyranny Wanes, as More People Learn What It Is and Investors Return to Prioritizing Profit

Craig Bannister | October 23, 2023
Text Audio
00:00 00:00
Font Size

The era of leftist investment managers imposing their ideological and political will, at the expense of their clients’ retirement accounts, appears to be drawing to a close, as more Americans begin to learn what the ESG (environmental, social, governance) movement actually entails.

Today, 78% of Americans have either never heard of “ESG” or don’t understand what it means – but, the 22% who are familiar with the term is up from the mere 15% who were aware of ESG last year, according to the Global ES Monitor survey Global Strategy Group and SEC Newgate.

While that means that that four of five Americans are still in the dark about the dangers of ESG driving investment decisions, the increasing awareness may be prompting investors to back off from putting politics over profits.

The percent of investors who say they consider they consider environmental, social and governance (ESG) factors when investing has fallen from two-thirds (65%) in 2021 to 60% in 2022, to about half (53%) this year, according to the annual ESG Attitudes Survey of the Association of Investment Companies (AIC).

All three elements of ESG – environmental, social and governance – have declined in importance as investment consideration over the last year, AIC notes. What’s more, August (the most recent AIC data) was the third month of outflows – a record $547 million – from the Responsible Investments category.

The top reason investors gave for abandoning ESG is that the performance of their portfolios is more important than advancing ESG ideology.

“Our ESG Attitudes Tracker suggests that 2021 may have been a high point for enthusiasm about ESG investing,” AIC Chief Executive Richard Stone said.

The general public appears to be far less interested in advancing ESG ideology than those who invest their money, the ESG Monitor survey reveals. Just 5% of people say they are often looking for information on companies’ ESG activities and performance. Another 28% report they “sometimes” investigate companies’ ESG record.

Likewise, a company’s ESG factors are among the least important considerations for U.S. job-seekers.

Asked to rate the importance of each of 18 different factors when “considering a potential new employer,” only the opportunity to work remotely (#18) was rated less important than either “The company's commitment to environmental sustainability” (#16) or “The diversity of its employees” (#17).

“As a consumer, it’s hard to navigate all of this and understand what is for real, and what are just fancy terms,” Svante Göthe, head of sustainability at supply chain and retail planning technology company RELEX Solutions says.

“It’s not just about performance. It’s also about the constantly changing definitions of ESG,” Bloomberg’s Merryn Somerset Webb observed in a recent column. The defense sector, for example, is typically shunned as evil by ESG investment managers. But, when national security is threatened, the defense sector is suddenly deemed to be a social good, Webb explains.

Likewise, while providing the public with energy security is both good governance and a social essential, ESG investing discriminates against traditional forms of energy. But, traditional energy sources, like minerals and fossil fuel, are still required to meet today’s needs – and even to enable the low-carbon technologies envisioned by “green” politicians and activists, Webb notes.