This has been a tough year for Environmental, Social and Governance (ESG) investing. Aside from increasingly harsh criticism like that above, ESG funds have suffered unprecedented withdrawals, their performance for investors has lagged the broader market and most elected officials who support it fared poorly in the recent election.
Illinois’ progressive establishment is undaunted, however. In Springfield, Washington and the City of Chicago, they continue to use billions of taxpayer dollars for investments they claim serve social justice goals. Those goals are being increasingly exposed as political, if not outright fraudulent, as seen in the unfolding FTX scandal.
ESG investment principles shun investments in sectors progressives deem undesirable such as guns, tobacco and fossil fuels in particular. They tend to favor tech companies, supposedly because they are environmentally friendly, though most Silicon Valley is far left.
But those scorned sectors have been the better investments this year, and tech companies have been hammered. Only 31% of actively managed ESG equity funds beat their benchmarks in the first half of 2022, compared to 41% of conventional funds, according to Refinitiv Lipper, as Reuters recently reported. So far this year, 19 of the 20 best-performing companies in the S&P 500 are either fossil-fuel producers or otherwise connected with fossil fuels.
Consequently, ESG funds “have been hit by unprecedented outflows in the market downturn, as investors prioritize capital preservation over goals such as tackling climate change,” wrote Reuters.
Predictably, the issue has become political since state and local officials invest trillions of dollars owned by taxpayers. Republican candidates generally oppose ESG investment of public funds, and five positions — in Kansas, Iowa, Missouri, Nevada and Wisconsin — flipped from Democratic to Republican in recent races for state auditor, controller or treasurer. Of the 50 directly elected positions,…
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