Global Socially Conscious Investment Portfolio Declines by $5 Trillion Over 2 Years

Global investments using “woke” environmental, social, and governance (ESG) standards led to trillions of dollars of losses in a two-year span, especially in the U.S., according to a recent report.

The biannual assessment by the Global Sustainable Investment Alliance (GSIA) showed the absolute value of reported sustainable investing ESG assets — such as those addressing social justice, climate change alongside biodiversity and nature loss — dropped from $35.3 trillion in 2020 to $30.3 trillion in 2022, a 14% decline.

The decline was no more apparent than in the U.S., where governors in Republican-led states have pushed to block ESG investments at the state and local level. Congress also earlier this year moved to nullify a new Department of Labor rule that allows retirement plan managers to incorporate ESG standards into their investment decisions. But President Joe Biden vetoed Congress’ action and the new rule has survived court challenges.

The GSIA assessment showed ESG investments in the U.S. went from $17 trillion in 2020 to $8.4 trillion in 2022, a drop of 50.5%. The only other region that showed a loss was Canada which declined 2.7% from $2.423 trillion to $2.358 trillion. Europe, Australia and New Zealand and Japan saw substantial gains.

“The market for ESG bonds decreased significantly in the past two years as state leaders from across the country have fought back against the injection of woke politics into the bond market,” Will Hild, executive director of Consumers’ Research, told the Daily Mail.

Assets under management in ESG funds in the U.S. declined from $339 billion in the second quarter of 2023 to $315 billion by the end of September, CNN reported in October.

“ESG investing … entering the final quarter of 2023 continues to be a story of declining flows and assets under management,” Robert Jenkins, head of global research at Lipper, a U.S. financial services firm, told CNN.

Jenkins said ESG investment had a fairly stable growth line before the COVID-19 pandemic.

“Then the pandemic supercharged them, and everyone started jumping on board,” he said.

But the boom appears to be slowing as investors are souring on the concept. The S&P Global Clean Energy Index has dropped 30.4% this year and investors reportedly expect the downturn to continue into 2024.

Jenkins said the ESG concept doesn’t work and going forward, he will be abandoning the concept and its measurements altogether. He said the problem with ESG investing is that it’s based on feelings and opinions and not concrete factors.

“We saw ratings from various companies, ours included, that made no intuitive sense,” he said. “When you have a fracker getting an ‘A+’ on the environment and you have a company like Netflix getting a ‘D-‘ on the environment, that makes no sense.”