• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Economy GOP pushback to ‘woke’ ESG investing begins to bear fruit
Economy

GOP pushback to ‘woke’ ESG investing begins to bear fruit

by February 13, 2023
by February 13, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Republican-led pushback against a controversial investing movement that critics decry for pushing ‘woke’ political causes appears to be having an impact.

U.S. sustainable funds, which use ESG criteria to evaluate investments or assess their societal impact, sank to their lowest level in more than five years by bleeding over $6 billion during the fourth quarter of 2022, according to a report from financial services firm Morningstar.

ESG, short for environmental, social, and governance investing, is based on the concept that investors should use these three broad categories when evaluating where to put their money, prioritizing progressive values and ‘social responsibility’ when making financial decisions.

Sustainable funds netted more than $3 billion in 2022, boosting their assets to $286 billion and performing better for the year than other U.S. funds. However, nearly all the inflow into ESG funds occurred during the first quarter as demand for them has steadily declined over the least two years.

According to Morningstar, investors pulled their money for a variety of reasons, including high inflation, rising interest rates, risk of an impending recession, poor market returns, and ‘greenwashing’ — the practice of companies deceptively promising to be environmentally friendly but not living up to their promises.

Another factor was political backlash against ESG.

‘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,’ the report stated. ‘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 has become a politically explosive issue over the past couple years.

The theory underpinning ESG is that corporations should deemphasize their traditional responsibility to maximize value for shareholders and instead make new commitments to alternative stakeholder groups, serving other interests and society at large.

Many investors now use ESG as a rating system to measure a company’s advancement of policies designed to address climate change, increase corporate board demographic diversity and support a progressive ‘social justice’ agenda, among other initiatives.

ESG has become increasingly influential in recent years, evolving into a roughly $35 trillion industry, with that much in global assets being invested using ESG principles.

By 2025, global ESG assets are expected to exceed $53 trillion, representing more than one-third of the $140.5 trillion in projected total assets under management.

However, critics of what they describe as ‘corporate wokeness’ have been mobilizing against the march of ESG advocates, arguing the financial movement is a way to push left-wing causes through business rather than the legislature.

Republican leaders on the House Financial Services Committee are creating a task force to coordinate their response to various proposals related to ESG. 

‘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,’ Financial Services Committee Chairman Patrick McHenry, R-N.C., told Fox News Digital earlier this month. ‘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.’

Sen. Joe Manchin, D-W.Va., recently joined Republican lawmakers in introducing legislation meant to block a new rule implemented by the Biden administration rule that allows managers to factor environmental and social issues into investment decisions for the retirement funds of more than 152 million Americans. 

At the state level, red states have begun implementing measures to push back on ESG policies.

In Kentucky, for example, State Treasurer Allison Ball last month threatened to pull state pension funds from about a dozen companies — including banks and major asset managers such as BlackRock, Citigroup, and JPMorgan Chase, if they continued boycotting the oil and gas industry.

Around the same time, Florida prohibited state-run fund managers from taking ESG factors into consideration when making investments.

‘Thanks to the leadership of Governor [Ron] DeSantis, the Florida cabinet reaffirmed today that we don’t want a single penny of our dollars going to woke funds,’ Florida Chief Financial Officer Jimmy Patronis said in a statement at the time. ‘We need asset managers to be laser focused on returns and nothing more. Florida’s not going to subsidize the actions of a bunch of Leftist ideologues who hate America; we’re not going to let a bunch of rich people in Manhattan or Europe try to circumvent our democracy.’

Critics argue companies are violating their fiduciary responsibilities to their shareholders by sacrificing the main financial objectives of the company for a ‘woke agenda’ and not doing what the shareholders want.

BlackRock CEO Larry Fink, one of corporate America’s biggest promoters of ESG, responded to such criticism in a letter he penned to CEOs last year.

The ESG movement ‘is not about politics. It is not a social or ideological agenda. It is not ‘woke,” wrote Fink. ‘It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper … Make no mistake, the fair pursuit of profit is still what animates markets; and long-term profitability is the measure by which markets will ultimately determine your company’s success.’

In December, Patronis announced that Florida would dismiss BlackRock as manager of about $600 million in short-term overnight investments and an additional $1.4 billion in long-term securities.

Two months earlier, Missouri pulled $500 million in state pension funds from BlackRock. Meanwhile, Louisiana removed $794 million from BlackRock funds. Both states said that BlackRock’s ESG commitments were the reason for their divestments.

In Texas, State Comptroller Glenn Hegar declared in August that BlackRock and other asset managers were boycotting the Texas fossil fuel industry, prompting the state’s pension fund to divest from the firms.

Such efforts may be bearing fruit. According to Morningstar, sustainable funds shed $2.4 billion during the fourth quarter, their steepest outflows in more than three years. Meanwhile, active sustainable funds bled $3.8 billion, causing these funds to land in negative territory for 2022 with a $1.3 billion net outflow.

Overall, 2022 was a bad year for U.S. funds. All mutual and exchange-traded funds suffered more than $370 billion in withdrawals, marking the first year of net outflows since Morningstar began tracking data in 1993.

Aaron Kliegman is a politics reporter for Fox News Digital. 

This post appeared first on FOX NEWS
You Might Also Like
  • Watch top moments in Nikki Haley’s Iowa town hall, from torching Trump to defending recent comments
  • New York Senate rejects Gov. Hochul’s nominee to lead the state’s highest court
  • Hong Kong puts bounties on pro-democracy activists, including American citizen, under China-imposed law
  • Cruz defends comments about Obama, Iran and nuclear weapons, scolds ‘ridiculous’ fact-checker
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Lawmakers demand accountability from Biden admin after 4th flying object shot down by military: ‘Unacceptable’
next post
Rep. Swalwell references Santos’ alleged drag performances ahead of Super Bowl

You may also like

Marjorie Taylor Greene says she was ‘attacked’ in restaurant by...

February 28, 2023

Biden jokes he was ’12’ when he first met Israeli...

July 25, 2024

Steve Scalise, McCarthy’s longtime No. 2, announces bid for House...

October 5, 2023

Cruz’s new book ‘Unwoke’ shows readers how to ‘defeat cultural...

November 6, 2023

Chinese Embassy emails House Republican staff expressing ‘grave concern’ with...

April 16, 2023

Top Republican moves to force Biden energy secretary to disclose...

June 14, 2023

House ends week behind schedule with days until possible government...

November 11, 2023

Mayorkas pleads with migrants not to enter US illegally when...

May 6, 2023

Mike Pence dodges on Trump conviction, says indictment allegations are...

June 19, 2023

UFO whistleblowers to testify unknown objects are ‘far superior’ to...

July 26, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,632 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,303 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Trump touts Silicon Valley support, says...

    June 7, 2024

    Border Patrol arrest 16 people on...

    May 18, 2023

    Police find female designer’s stolen clothes...

    September 20, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here