Wall Street brokers and other market insiders are focusing on the left-wing investment strategy known as “ESG” or “wake capitalism,” with more and more people saying it’s little more than a passing fad, a poll found.
A survey of Bloomberg’s terminal clients — mostly major financial institutions — also found that large numbers of funds guided by environmental, social and corporate governance (ESG) values expect to lose money this year.
It comes as Republicans in Congress oppose ESG funds, and as consumers reject firms that champion liberal causes, as evidenced by the wakelash against Bud Light’s affiliation with trans influencer Dylan Mulvaney.
Researchers found that 87 percent of 116 Bloomberg terminal clients not directly involved in ESG expect the industry’s mutual funds to underperform market benchmarks in the coming year.
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The 181 terminal customers who work in ESG — and have more skin in the game — are also pessimistic, polls showed. A whopping 55 percent said Wake funds would underperform in the coming months.
In a stronger rebuke of ESG, 69 percent of respondents who don’t work directly in the field called the strategy a fad, while only a small number said it was becoming increasingly relevant.
“These research results are evidence that the ESG scam is unraveling,” Will Hild, director of Consumers’ Research, a nonprofit policy organization, told DailyMail.com.
“ESG is a fad and fad that will underperform investment strategies aimed at serving consumers rather than arousing politicians.”
ESG refers to a set of standards for a company’s behavior that help investors put their money where their mouth is, for example financing wind farms to fight climate change, while pulling out of damage-causing oil and tobacco giants.
The strategy becomes especially controversial when it directs funding to companies that promote diversity, equality, and inclusion (DEI), angering conservatives who say they help women and minorities by sidelining white men.
This has led to a tricky debate about whether efforts to make society fairer and reduce carbon emissions are in the strategic interest of investors by mitigating the risks of climate chaos and social disorder.
BlackRock CEO Larry Fink, an early champion of ESG investing, announced in June that he would no longer use the term, saying it has been “misused by the far left and the far right.”
“ESG is a fad and fad,” says Will Hild, director of Consumers’ Research, a policy nonprofit organization
The markets say ESG will be gone in a few years
House Republicans held a series of hearings last month calling for the Securities and Exchange Commission’s efforts to enforce more transparent rules for corporate disclosure of ESG-related factors to be quashed.
In addition to targeting the SEC, GOP politicians are pushing for tighter oversight of proxy consultancies, as well as favoring limiting — or even excluding — ESG-focused investments from some pension funds.
Bloomberg also collected comments from users of their terminals – which are expensive multi-screen systems rented by traders and others to analyze real-time financial market data and place trades.
They surveyed 349 clients, mostly in the US, where respondents were more critical of ESG.
Some said the strategy was here to stay, others called it a “politically driven ideology that has no place in a professional investor’s decision making.”
“Our job is to provide returns to investors, not to change the world,” one respondent wrote.
Bloomberg surveyed 349 users of their expensive terminals, mostly large financial institutions
Another said ESG has “turned from risk management to political activism for the left.”
Yet only a small minority of all respondents said their company was moving away from ESG products. Most respondents agreed that ‘we all have a role to play in protecting the world’s resources’.
About two-thirds of those surveyed who are concerned with ESG said the backlash is likely to force companies to abandon terms like ESG as they continue to support efforts to achieve the same goals.
Ultimately, however, a majority of all respondents expect politics to leave the conversation and be replaced by a more practical discussion about the future of ESG.
“Participants in this survey are financial industry insiders and they are increasingly realizing what we have been saying all along,” added Hild.
“We expect the collapse of ESG to continue, especially in the US, and we will hold BlackRock or any other asset manager accountable when they use other people’s money to push their far-left political agenda.”