Post by account_disabled on Feb 18, 2024 2:30:58 GMT -8
The attacks on ESG, an area of the investment community that focuses on highlighting risk in investors' portfolios, against a matrix of environmental, social and governance factors , do not stop. With the rise of the Republican political group in the US to the House of Representatives in 2023, an intensification against investments that take into account climate-related risks is expected .
The above has aroused the concern of investors, but also of international organizations and society in general due to the activation of alarms due to the climate risks that are already occurring globally. Will banks and asset managers focused on sustainable investing succumb to ESG attacks?
ESG threatens capitalism
Republican officials in Washington and more than a dozen states say they are targeting firms that are using their financial power to push a so-called political agenda, which they describe as " woke capitalism ," rather than trying to maximize profits. Woke Middle East Mobile Number List capitalism, also called “conscious capitalism,” is focused on the idea of “producing profitable solutions to the problems of people and the planet, and not profiting by generating problems for people or the planet.” Simply put, it involves ESG criteria.
As part of the anti-ESG campaign, the US states of Florida , Louisiana and Missouri have collectively withdrawn more than $3 billion from investment manager BlackRock for putting sustainability ahead of profitability . Faced with this political backlash, Vanguard, another large asset manager, decided to withdraw from the UN Net-Zero Banking Alliance, which asks members to commit to decarbonizing their portfolios.
Republicans say they are fighting a coordinated effort by big investors to impose progressive policies that threaten shareholder capitalism, which signals that corporations have one purpose: to make as much money as possible and that to try to do anything else would be going against its nature.
esg-vs-fossil-fuels-
ESG discriminates against fossil fuels
Rep. Andy Barr, Republican of Kentucky and ranking member of the House Financial Services Committee, says ESG investing aims to “politicize capital allocation and actively discriminate against fossil energy.”
However, Jon Hale, director of sustainability research at Morningstar, a financial services company, notes: "For the asset managers who manage [investment funds] and the public companies they invest in, things like climate change are real. and they represent a real threat to many companies.
According to an analysis by Ceres – a non-profit organization focused on sustainability – more than 50% of the companies listed in the S&P 500, Russell 3000, MSCI World and MSCI EM indices are exposed to risks due to lack of water, which They range from medium to high. Negative consequences encompass impacts on sectors as diverse as agriculture, mining, utilities, technology, consumer staples and energy.
So what is the reason for the attacks towards ESG? Mindy Lubber, CEO of Ceres, says the fact that ESG has become a more common concern built into all companies helps explain why it is receiving criticism. A December hearing Texas lawmakers held on ESG investing could be a preview of what's to come in Congress. Texas lawmakers said the practice of analyzing climate risks to make investment decisions threatens fossil fuel companies in the state and across the U.S. economy.
Do attacks towards ESG deter investors?
The Republican offensive could deter some investors from publicizing what they are doing to address climate threats, such as rising sea levels and worsening drought. But financial experts say there is no subsidence in the belief spreading among many investors that global warming is creating bottom-line risks that must be taken into account.
In fact, funds that have had ESG as a core strategy have raised around $3 billion during 2022 “painting a much brighter picture than the broader US fund market,” according to Morningstar .
Furthermore, the type of considerations that are at the heart of ESG investing are appearing across the world of business and finance. Most large companies and investment fund managers have established their own ESG initiatives or consider such issues when making investment decisions, even if sustainability is not their primary focus.
The above has aroused the concern of investors, but also of international organizations and society in general due to the activation of alarms due to the climate risks that are already occurring globally. Will banks and asset managers focused on sustainable investing succumb to ESG attacks?
ESG threatens capitalism
Republican officials in Washington and more than a dozen states say they are targeting firms that are using their financial power to push a so-called political agenda, which they describe as " woke capitalism ," rather than trying to maximize profits. Woke Middle East Mobile Number List capitalism, also called “conscious capitalism,” is focused on the idea of “producing profitable solutions to the problems of people and the planet, and not profiting by generating problems for people or the planet.” Simply put, it involves ESG criteria.
As part of the anti-ESG campaign, the US states of Florida , Louisiana and Missouri have collectively withdrawn more than $3 billion from investment manager BlackRock for putting sustainability ahead of profitability . Faced with this political backlash, Vanguard, another large asset manager, decided to withdraw from the UN Net-Zero Banking Alliance, which asks members to commit to decarbonizing their portfolios.
Republicans say they are fighting a coordinated effort by big investors to impose progressive policies that threaten shareholder capitalism, which signals that corporations have one purpose: to make as much money as possible and that to try to do anything else would be going against its nature.
esg-vs-fossil-fuels-
ESG discriminates against fossil fuels
Rep. Andy Barr, Republican of Kentucky and ranking member of the House Financial Services Committee, says ESG investing aims to “politicize capital allocation and actively discriminate against fossil energy.”
However, Jon Hale, director of sustainability research at Morningstar, a financial services company, notes: "For the asset managers who manage [investment funds] and the public companies they invest in, things like climate change are real. and they represent a real threat to many companies.
According to an analysis by Ceres – a non-profit organization focused on sustainability – more than 50% of the companies listed in the S&P 500, Russell 3000, MSCI World and MSCI EM indices are exposed to risks due to lack of water, which They range from medium to high. Negative consequences encompass impacts on sectors as diverse as agriculture, mining, utilities, technology, consumer staples and energy.
So what is the reason for the attacks towards ESG? Mindy Lubber, CEO of Ceres, says the fact that ESG has become a more common concern built into all companies helps explain why it is receiving criticism. A December hearing Texas lawmakers held on ESG investing could be a preview of what's to come in Congress. Texas lawmakers said the practice of analyzing climate risks to make investment decisions threatens fossil fuel companies in the state and across the U.S. economy.
Do attacks towards ESG deter investors?
The Republican offensive could deter some investors from publicizing what they are doing to address climate threats, such as rising sea levels and worsening drought. But financial experts say there is no subsidence in the belief spreading among many investors that global warming is creating bottom-line risks that must be taken into account.
In fact, funds that have had ESG as a core strategy have raised around $3 billion during 2022 “painting a much brighter picture than the broader US fund market,” according to Morningstar .
Furthermore, the type of considerations that are at the heart of ESG investing are appearing across the world of business and finance. Most large companies and investment fund managers have established their own ESG initiatives or consider such issues when making investment decisions, even if sustainability is not their primary focus.
