SUSTAINABLE INVESTING IS IN SURVIVAL MODE

THE KIPLINGER ESG 20 UPDATE

- BY DAVID MILSTEAD

ESG investing—including environmental, social and corporate governance factors as considerations—isn’t dead. It has just gone into hiding, its practitioners say. Political blowback against ESG over the past couple of years caught its advocates off guard and prompted many investors and institutions to walk back a number of their ESG initiatives, particularly with respect to diversity, equity and inclusion. Goldman Sachs, for example, plans to drop diversity criteria for its own board of directors, according to the Wall Street Journal. State pension funds face investigations and lawsuits suggesting ESG investing is a violation of their fiduciary duty to their members. And the Trump administration reversed a key scientific finding that greenhouse gases were a threat to public health—a ruling that had supported many of the federal government’s environmental regulations.

The response to the onslaught is a rebranding away from ESG and DEI to sustainability, a word long used for this style of investing. Using sustainability, its advocates say, refocuses the discussion on a long-term, risk-based approach to investing. “Sustainability is a word that you can’t really taint that much because the alternative would be unsustainable, and that doesn’t sound great when promoting a fund,” says Jennifer Coombs, the head of content and development at the Sustainable Investment Forum. Coombs says membership at her group of big investors and other industry groups has remained stable, even if many aren’t trumpeting their involvement right now.