Mar 28, 2024 - Economy

ESG on the ropes, not completely out

ESG on the ropes

ESG investing is dead. Long live ESG investing, Axios' Javier E. David writes.

Driving the news: A Pitchbook analysis of the often derided environmental, social and governance investing trend paints a mixed picture of what some critics have denounced as "woke capitalism."

  • Pitchbook notes that asset managers are retreating from ESG commitments — at least in public.
  • But it also found others are leaning into it as a method of "value creation and protection … in the challenging macroeconomic environment."

Zoom in: Pitchbook's study found that programs were being downplayed in favor of more silent support for ESG (known as "greenhushing" in certain circles).

  • Additionally, the analysis cited the "extreme" political backlash — in combination with macroeconomic factors like still-high inflation rates —as reasons for asset managers to reconsider their stance.

What they're saying: Marcos Carrington, CEO and founder of Environmental Stock Exchange (ENVX), tells Axios that "ESG is a qualitative construct created to influence behavior" that on various metrics, hasn't been "well-suited or adapted for investment in global financial markets."

Yes, but: Pitchbook insists that it's found little evidence that ESG practices sacrifice returns in the name of environmental or social goals.

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This story was an excerpt from Axios Closer, a recap on the day's biggest business stories.

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