Is ESG investing losing momentum? (2024)

ESG investing appears to be losing momentum, as evidenced by several developments in October 2023.

Firstly, total assets under management in ESG funds fell by about $163.2 billion globally during the first quarter of 2023 from the year before. The term "ESG" is falling out of favor, with S&P 500 companies citing “ESG” on earnings calls last quarter, reaching their lowest number since the same quarter in 2020. This suggests a declining interest in ESG investing among major companies1

Secondly, BlackRock, the world's largest asset manager, has significantly reduced its support for environmental and social proposals. In the 2020-2021 season, BlackRock supported over 40% of these proposals, but this year, it supported just 8.7% of them2This decline in support was also observed in other major investors like Vanguard and State Street2

Thirdly, ESG bonds are losing momentum in the United States. Research by Goldman Sachs found that U.S. companies are on track to halve the amount of ESG-labeled debt they issue this year3

Lastly, there has been a growing conservative backlash against ESG initiatives, with ESG becoming a politically charged term. This has led to calls for the term to be replaced with something more meaningful1In conclusion, the declining support for ESG proposals by significant investors like BlackRock, the reduction in ESG-labeled debt issued by U.S. companies, and the growing political backlash against ESG initiatives all suggest that ESG investing is losing momentum.

However, it's important to note that while the term "ESG" may fall out of favor, its principles remain crucial. As Lynn Forester de Rothschild, founder of the Council for Inclusive Capitalism, stated, "We need to lose the term, I believe, and double down on the objective"1

Perplexity, co-piloted with Claude developed this article.