November 22, 2023

Is Wall Street’s ESG Fixation Fizzling Out?

Where investments are concerned, a funny thing is happening on the way to The Great Reset.

Money talks, and ESG walks. Or at least that’s the unmistakable assessment of Wall Street these days, where the erstwhile belle of the ball, the globalist environmental-social-governmental movement, has been unceremoniously kicked to the curb.

“Wall Street’s ESG Craze Is Fading” trumpets the headline of — who else? — The Wall Street Journal, whose subhead says that its investors have yanked “more than $14 billion from sustainable funds this year.”

Ya hate to see it.

“Wall Street rushed to embrace sustainable investing just a few years ago,” writes the Journal’s Shane Shifflett. “Now it is quietly closing funds or scrubbing their names after disappointing returns that have investors cashing out billions. The about-face comes after tightened regulatory oversight, higher interest rates that have slammed clean-energy stocks and a backlash that has made environmental, social and corporate-governance investing a political target.”

Tony Turisch of Calamos Investments states the obvious: “This really is the result of too many managers looking to cash in on increased awareness and demand for ESG investments.”

We saw glimmerings of this glorious development on the horizon late last year, when Elon Musk called out the whole enterprise: “ESG is a scam,” he said back in May 2022. “It has been weaponized by phony social justice warriors.” As we wrote at the time:

ESG, the innocent-sounding acronym of Environmental, Social, and Governance, is an integral part of The Great Reset and represents nothing less than a new way of evaluating the business enterprise. Rather than assessing traditional factors such as revenue, profit, debt, the quality of goods and services, brand loyalty, and other metrics, ESG assesses companies according to their fealty to social justice and other “progressive” causes.

At its core, ESG is about wealth redistribution — a leveling of the economic playing field by moving away from the extraordinarily effective wealth-production model of shareholder capitalism toward a so-called “stakeholder capitalism” model, which turns decent countries into socialist dystopias. Briefly put, ESG is where wokeness meets Wall Street.

Perhaps “sustainable” isn’t as sustainable as Klaus Schwab and the rest of his “strategic partners” at the World Economic Forum had hoped. Perhaps a funny thing is happening on the way to The Great Reset.

One of big “tells” in all this is the behavior of the asset managers themselves. While they were claiming to be all-in on ESG, the dirty little secret was that they were quietly hedging their bets and buttressing their investments with billions in fossil-fuel stocks. Imagine that. Those ESG funds aren’t as “E” as they’re promoting themselves to be.

All this, of course, is great news for the 61% of Americans who own stock. After all, we don’t invest our money to lose it. We don’t plow money into our 401(k)s in order to shrink them.

What a difference a bad investment can make. The Street isn’t even bragging about its ESG bona fides anymore. As the Journal’s Shifflett writes, “Wall Street is quietly scrubbing terms like ‘sustainable,’ ‘global impact,’ and ‘carbon transformation’ from fund names or closing ESG investment products altogether as investors continue to cash out.” He further notes that at least six funds say they’ll “drop their ESG mandates this year,” while 32 others will close altogether. Again, ya hate to see it.

To be sure, $14 billion is a pittance, a mere drop in the big bucket of Wall Street “sustainable” funds, which, according to Morningstar, still has $299 billion in it. But $14 billion is not nothing. ESG is a proven and notable drag on investment, and this shift is an unmistakably encouraging reaction to it.

Indeed, it’s good news, and it’s just one more blessing for which we can be thankful.

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