Money Managers Facing More Blowback Over ESG as GOP Pressure Mounts

Partner and chair of Herrick's Corporate Department, Morris DeFeo, spoke to Bloomberg about how money managers, like BlackRock and Vanguard, are responding to mounting pressure from anti-ESG clients and politicians to withdraw from climate-finance coalitions. 

The article discusses "the battle over sustainable investing" and highlighted that the10 largest ESG funds by assets have posted double-digit losses this year. Morris noted that while the financial impact will likely be muted for BlackRock, which is in charge of almost $8 trillion, "the asset manager has been tangled in the messy debate on whether sustainable investing comes at the expense of investor returns, and could inflict reputational damage."

“If you are a fund manager — it’s not so much the dollars that are being pulled out, it’s the dialog that’s going on,” Morris continued. “If they are hearing from a number of different investors that are saying ‘I’m not happy with the direction you are heading, I don’t see it helping my portfolio, in fact I think it might be hurting my portfolio and I don’t want you thinking for me’ — if they’re getting a lot of pushback from investors, they are going to take that into consideration.”

Market turbulence and a dim economic outlook have helped amplify anti-ESG voices, Morris explained.

“In an environment where everyone’s portfolio was knocking it out of the park — those voices might get drowned out,” Morris concluded.

Read the full article in Bloomberg here. Access may require a subscription.