Summarised by Centrist
The Environmental, Social, and Governance (ESG) bubble is continuing to show signs of deflation. Zerohedge reports investor’s are pulling back from sustainable investments due to a combination of factors. These include rising interest rates, poor returns, declining renewable energy stocks, stricter SEC regulations, political backlash, and Elon Musk’s war on woke capitalism.
US ESG funds sank by $13 billion USD and lagged behind conventional funds. Studies suggest significantly lower returns than conventional funds.
Also telling is that ESG mentions (terms such as “climate change” and “clean energy” and green energy” and net zero,” ) on corporate earnings calls have plummeted despite peaking at 28,000 mentions in Q1 2022. Part way through Q1 2024, and mentions are down to less than 5000.
A key to ESG funds is their alignment with the UN Sustainable Development Goals (SDGs). Recent data reveals that 542 funds, collectively managing $125 billion in assets, are dedicated to supporting these objectives. Among them, Climate Action reigns supreme, reflecting a global push towards emission reduction and sustainability.
The future of ESG investments may depend on interest rates falling in the future.
