ESG & Investing
Anti-Woke Scorn Poses Risks for ESG Funds' Concentrated Ownership
- Under a dozen firms own 29% of sustainable ETF assets in US
- GOP ire has ‘spooked’ firms from marketing ESG, Edmondson says
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Once a thriving corner of the $6.9 trillion US ETF industry, ESG investing is showing signs of weakness as flows wane and the group comes under growing targeted political attacks. A further, more subtle threat to the sector’s future is the concentration of the few firms backing it.
That’s because the environmental, social and governance slice of the US exchange-traded fund market is highly institutional, making it more reliant on decisions by a handful of firms rather than a more diverse investor base. This could exacerbate the sector’s market volatility and put its growth prospects at risk as headwinds mount from political factions as well as the broader economy and rising interest rates, according to Bloomberg Intelligence.