After starting as a niche corner of the finance world, ESG investing has since exploded to become a major force on Wall Street — and the latest front in the nation's cultural schism.
NEW YORK — After sweeping through battles in statehouses across the country, the war against ESG investing is heating up in Congress.
People are also reading… ESG has become popular across a wide range of investors, from smaller-pocketed regular people to pension funds responsible for the retirements of millions of workers. On the flip side, measuring a company's environmental awareness could also unearth companies that could be better positioned for the future. Companies that care about climate change may be better prepared for its repercussions, whether that means potential flooding damage at factory sites or the risks of increased wildfires.
Increasingly, companies are also getting called upon to take positions on big social issues, such as abortion or the Black Lives Matter movement. Some ESG investors encourage this, saying companies' employees and customers want to hear it. Not only have sharp drops for all kinds of investment prices raised worries, so has the increased political backlash. During the final three months of 2022, which was a particularly tough period for financial markets, investors pulled nearly $6.2 billion more out of sustainable funds than they put in, according to Morningstar.
In 2021 a relatively small fund known as Engine No. 1 shocked corporate America after it convinced some of Wall Street's biggest investment firms to approve its proposal to replace three directors on Exxon Mobil's board, citing a decarbonizing world.
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