ESG and Dei are down, but not out, analysts say

Despite recent eulogies for the environmental, social and governance (ESG) movement, and diversity, equity and inclusion (DEI) policies, many insiders say funerals are premature.

“Their end is inevitable and accelerated,” David Bernsen, chief investment officer of the Bernsen Group and former asset manager for Morgan Stanley, told the Epoch Times. Ta.

But “they’re not finished,” he said.

The institution’s asset managers collectively own approximately 80% of the stock in the S&P 500 company, giving companies significant leverage to the ESG movement. Shortly after its introduction, the ESG was approved by 23 financial institutions and represented assets of more than $6 trillion at the time.

Most major banks, asset managers and insurance companies quickly joined non-sponsored climate clubs, including the Net Zero Banking Alliance, Net Zero Asset Manager Initiative, and Net Zero Insurance Alliance. This was followed by expansions of ESG rating agencies, consultants, accountants and other other focused on compliance with ESG standards.

“ESG is in Deathwatch,” Daniel Cameron, CEO of 1792 Exchange, analytics nonprofit, told the Epoch Times. “Last year, I saw a lot of iconic brands, especially away from Day.”

Companies intervening through diversity programs include Amazon, Google, Target, Meta, Walmart, Boeing, Molson Coors, Lowe’s, Ford, Toyota, Harley-Davidson, Jack Daniels, Caterpillar, John Deere, McDonald’s, Nissan, Stanley Black & Decker, Tractor Supply.

Rethinking or rebranding

Some experts say this trend may just be a rebrand.

“Boeing just removed its (DEI) division and in a press release it said none of them were fired. Will Hild, executive director of consumer research and longtime ESG critic, said told the Epoch Times.

Many companies, including Apple, Cisco, Costco, Microsoft, Delta Airlines, and JPMorgan Chase, have also advocated and claimed to retain the DEI program in some way.

Tim Schwarzenberger, portfolio manager at Inspire Investing, says the concept of “Dei is dead or it depends on life support” is wrong.

“I was talking to major energy companies and talking to their chief diversity officers. They make their living,” Schwarzenberger told the Epoch Times.

The defender says the idea behind the ESG was incorrectly malicious.

“DEI is not a synonym for ESG’s “S,” Julie Anderson, a professor of business administration at the Kogod School of Business at the American University, told the Epoch Times. “When I refer to “, it’s usually labor, health, human rights.

“Politics intentionally confusing and stealing the “S” category and turning it into a question of gender and race.

Whether it’s an ESG or an alias, its fundamental principles seem alive and well.

In this study, environmental and social proposals accounted for 62% of the total in 2024, up from 44% in 2014. Recently, environmental and social proposals have increased by 57% between 2020 and 2022, reaching a record of 610 proposals per year. It will end in June 2024.

We split from Europe

What has changed, however, is that America’s most powerful asset managers appear to be less likely to support these proposals, at least during corporate proxy votes.

Support among American asset managers has declined, but reports that “the average support for key E&S (environmental and social) resolutions by Europe’s largest asset managers is consistently close to 100%.” The book states.

Utah treasurer and ESG critic Marlo Oaks called for laws and regulations that “have a major challenge to use proxy systems to advance the political agenda,” and explained the fund manager They ask for the creation of responsibility. Shareholder. ”

He also said the ESG agenda is increasingly moving outside the proxy voting process.

“Many of business activities happen behind closed doors, such as through engagement meetings, such as, “there are little accountability or transparency,” Oaks told the Epoch Times.

Again, some say the movement may be losing momentum.

“We don’t know what their corporate engagement is,” Hild said. “But what I’m hearing is that (asset managers) are far less aggressive than they used to be for the corporate management team. That’s alleviating a lot of pressure on corporate America.”

While the focus of ESG is on climate and environmental issues, there is currently growing concern about the extent to which the raw materials and components of wind, solar and electric vehicles flow through China.

“The emphasis is on energy independence and is not dependent, directly or indirectly, on our enemies of energy,” Cameron said. “I think the more people understand it, the less desire there is to boycott the fossil fuel industry.”

Some analysts say support for ESG and DEI is not deeply rooted among many business executives.

Bahnsen believes that most companies “never commit it ideologically from the start.”

“I think it was marketing, surrender and fear, and it was a sign of a lot of Pharisique virtue,” he said.

“Their integrity towards dropping ideology may not be as integral as they first adopted. For some, it’s reassuring that they have to pretend anymore. ”

The decline in the value of the alliance

That doesn’t mean ESG is dead, analysts say. The SEC’s climate reporting mission has been removed, but many companies will carry out what is called “green accounting” anyway.

“All multinational companies have an international investor base, and internationally investors continue to demand, and policymakers are still moving forward with (climate) reporting requirements,” Anderson said. said. He said ESG has become a “regular business” risk analysis tool for investors.

The collapse of the Net Zero Alliance also doesn’t mean that ESG is over, she said.

“The utility of these alliances is diminishing and I think we’ll see more people, more asset managers, away from them,” Anderson said. “They don’t have to be part of the alliance. They don’t have to pledge it publicly. They don’t have to tell anyone that they’re doing it.

“They embed it in their investment process as part of their fiduciary duties.”