A recent survey by Bloomberg reveals a paradox within the financial world regarding the term “ESG.” Bankers, financial managers, and other market participants express a growing aversion to the label, attributing it to the recent negative news flow from the US. Approximately 300 Bloomberg terminal users participated in the survey, with around two-thirds indicating that the US-based anti-ESG movement of the past year will likely prompt companies to abandon the use of the “ESG” acronym in client discussions. However, respondents also emphasized that despite their distaste for the label, they intend to persist in integrating environmental, social, and governance metrics into their business strategies.
Alex Bibani, a senior portfolio manager at Allianz Global Investors in London, remarked, “When it comes to “the three-letter acronym ‘ESG’ — people don’t want to talk about it as much because of the news flow from the US. But from an investment perspective and what we do internally, it has never been more important.”
The finance sector faces a second year of challenges, with key members of the Republican Party launching attacks against ESG. These attacks involve legal threats from state attorneys general and outright bans on ESG strategies in some US states.
As recently as May, Ron DeSantis, Florida’s Governor and a presidential aspirant, signed a comprehensive anti-ESG bill targeting what he perceives as a “woke” bias in finance. Additionally, Larry Fink, CEO of BlackRock Inc., declared his intention to discontinue the use of the term “ESG” after he perceived it had been “weaponized.”
Although these criticisms might influence terminology, they are unlikely to alter the finance industry’s commitment to addressing crucial aspects of ESG, such as climate change, according to the Bloomberg survey. Only 18% of respondents actively using ESG in their work indicated that the backlash against the label was obstructing their incorporation of climate-related factors into decision-making processes. Instead, they cited challenges in obtaining accurate climate data as a more substantial barrier.
