In the US, the past several weeks have seen an increasingly polarised and politically charged debate about ESG principles. While 24 Republican-led states lined up to forbid ESG investing via public pension funds, 13 blue states responded with an anti-backlash letter.
The critics argued that ESG-influenced investing goes against fiduciary duty of the fund managers, who are obliged to maximise the profits. The advocates refute that, saying the anti-ESG practices negatively impact competitive costs, and increase potential risks that will be left for others to deal with in the future. Both camps blame each other for subjecting financial decision-making to political ideology.