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    The ESG Investing Backlash

    by Ellen Kennedy Sep 06, 2022 3 minutes
    Worker installing rooftop solar panels.

    Divesting from ESG

    Over the past two decades, the financial community has largely come to accept that environmental, social and governance (ESG) factors may influence a company’s profitability and stock performance. In the past year, however, some governors have politicized ESG investing, dubbing it “woke” and banning this investment style from their state pension funds. It seems the culture wars are coming to investing.

    Why the Sudden ESG Backlash?

    The U.S. economy is on the path to a major transformation, powered less by fossil fuels and more by climate-friendly energy sources like wind and solar. The fossil fuel industry the need to decrease greenhouse gas emissions to mitigate climate change, but the industry remains behind the scenes. As a result, ESG investors have pushed the industry to disclose more hard data on how it will manage this transformation. This effort culminated in with the Securities and Exchange Commission. Citing issues like the cost of extra reporting, the attorneys general in 21 red states wrote in August protesting the draft rule. 

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