Rising ‘Anti-ESG’ Sentiment in the US Is Affecting Funds: HSBC

According to a survey by HSBC Holdings Plc, the reaction against investing strategies that take into account Environmental, Social, and Governance (ESG) issues is growing in the US and is having an impact on how managers feel about integrating such aspects into their funds.

Between May 31 and June 24, 2023, the London-based lender surveyed 310 professionals worldwide who held positions that involved making ESG decisions. According to a note released this month by HSBC’s global research team, which was directed by Wai-Shin Chan and Anushua Chowdhury, those who participated represented $8.9 trillion in assets under management across 292 institutions.

In the US, the pushback impacts are clear. For instance, fewer people in North America now identify sustainability as a fund’s purpose. In North America, over 25% of respondents indicated sustainability is a key or secondary priority, compared to 37% who said the same thing in 2016. According to the poll, over 44% of North American respondents also stated that their justifications for implementing an ESG approach have gotten weaker during the previous 12 months.

The concept that investors should consider Environmental, Social, and Governance risks in their financial calculations gave rise to the acronym ESG roughly two decades ago. However, Republican politicians in the US have criticized ESG financial practices in recent years and have tightened their monitoring of what they refer to as “woke capitalism.”