Woke goes broke! £1bn pulled from ESG funds

UK investors have pulled a record £1 billion from ESG funds this year, amid a backlash against ‘woke’ stock selection.

Apparently ‘responsible’ investment funds saw a record outflow of £544m in September, meaning there is still more than £1bn left in 2023, according to figures from the Investment Association.

These so-called ‘sustainable’ funds, which take environmental, social and governance factors into account in their investments, exploded in popularity pre-Covid as DIY investors sought out their green credentials.

But “woke capitalism” has increasingly come under fire for prioritizing social goals over providing services and goods to customers and making money for investors.

Critics point out that companies like BAE play an important role in helping defend democracy in countries under attack by aggressors.

And last month, consumer goods giant Unilever gave the clearest hint that it will scale back its own “woke” agenda.

Hein Schumacher, who took over the maker of Hellmann’s mayonnaise in July, said he would stop “forcing” social justice messages on brands.

Greenwashing, where companies inflate or mislead consumers about their environmental performance, has also eroded investor confidence in ESG.

The share of investors concerned about greenwashing has risen from 48 percent in 2021 to 63 percent in 2023, according to a recent survey by industry body Association of Investment Companies.

But analysts have suggested that the record outflows could be rooted in continued pressure on household budgets, eventually pushing them away from investment.