A Republican-led pushback is gaining momentum as conservative financial firms and activists challenge companies over their efforts related to climate change and social inequality.
The increase in oil prices in 2022 had a negative impact on many ESG funds that had moved away from energy stocks responsible for producing a large share of climate-damaging carbon emissions.
Meanwhile, pro ESG corporations and activists have also made significant inroads in the past year. Last January, Larry Fink, chief executive of the world’s biggest asset manager BlackRock Inc (NYSE: BLK) sent a powerful missive entitled The Power of Capitalism, in which he stated, “Stakeholder capitalism is not about politics.” In a subsequent interview with CNBC he stated he was frustrated with the process of the energy transition, saying it would require “a combination of government and private sector and that’s just not happening.”
BlackRock, along with JPMorgan (NYSE: JPM), Goldman Sachs (NYSE: GS) Morgan Stanley (NYSE: MS) and Wells Fargo & Co (NYSE: WFC), was later barred from winning state business from West Virginia because of its stance on climate change. Other states, including Texas, accused BlackRock, Bank of America (NYSE: BAC), and other banks of boycotting fossil fuel companies, and Florida stated it would pull $2 Billion in investments from BlackRock.
However, Pro-ESG corporations have the support of Democratic state officials, which collectively have more money to invest. Influential left-leaning groups are also committed to supporting ESG efforts.
Another challenge facing climate change initiatives is the prevalence of “greenwashing” wherein corporations issue misleading statements that exaggerate their ESG efforts.
The politicization of environmental efforts further complicates an already complex situation as scientists continue to report that when it comes to saving the planet as we know it, time is running out.