US fund managers have just experienced their worst quarter for ‘woke’ ESG-focused products, with client withdrawals reaching a staggering $8.8 billion in the first three months of 2024, according to a new report from Bloomberg.
This stark contrast to the $11 billion inflows into European ESG funds highlights the growing skepticism among US investors towards the ESG investment strategy.
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Hortense Bioy from Morningstar attributes this shift to various factors, including high energy prices, interest rates, and a political backlash against ESG in the US.
The poor performance of core ESG industries like wind and solar has further eroded investor confidence.
The impact of US redemptions has been felt globally, with worldwide ESG fund inflows amounting to a modest $900 million in the first quarter.
Has the ESG fraud bubble finally burst? ESG Funds Suffer Biggest Monthly Outflows On Record | Climate Depot https://t.co/hUR9s9NvDK
— Marc Morano (@ClimateDepot) June 8, 2022
As investors await the outcomes of key elections in the US and Europe, the future of green policies and their impact on ESG investing remains uncertain.
Companies pursuing ESG goals are learning the hard way that investors prioritize returns above all else.
Despite a slight increase in global sustainable fund assets, the organic growth rate was close to zero, compared to 0.5% in the broader funds universe.
As the balance between sustainability and profitability continues to be a challenge, investors are reevaluating their priorities in the face of a complex and ever-changing landscape.
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The future of ESG investing hangs in the balance, with traditional financial metrics seemingly taking precedence over ‘woke’ environmental, social, and governance considerations.
