Investors pulled more than $14 billion from sustainable funds this year
By Shane Shifflett of The WSJ. Excerpts:
"Wall Street rushed to embrace sustainable investing just a few years ago. Now it is quietly closing funds or scrubbing their names after disappointing returns that have investors cashing out billions.
The about-face comes after tightened regulatory oversight, higher interest rates that have slammed clean-energy stocks and a backlash that has made environmental, social and corporate-governance investing a political target.
“This really is the result of too many managers looking to cash in on increased awareness and demand for ESG investments,” said Tony Turisch, senior vice president at Calamos Investments."
"At least five other funds [in addition to Hartford Funds] also announced they would drop their ESG mandates this year, while another 32 sustainable funds will close"
"The retreat comes after investors withdrew more than $14 billion from sustainable funds this year, leaving them with $299 billion"
"Ron Rice, vice president of marketing at Pacific Financial, said a legal fight over the Labor Department’s rule letting retirement-fund managers consider ESG factors may have weighed on the popularity of his firm’s sustainable products.
“We found that the demand for ESG investing, by financial professionals working with retirement-plan participants, was more limited than we anticipated,” he said."
Here is an excerpt from The Wealth of Nations found at The Library of Economics and Liberty.
"Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society."
"But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."
So Adam Smith did not think much of the idea of a business intentionally operating for the common good.
Related posts:
ESG Investing Can Do Good or Do Well, but Don’t Expect Both (2022)
The hidden costs of corporate social responsibility (2021)
Why the Sustainable Investment Craze Is Flawed (2020)
C.E.O.s Are Qualified to Make Profits, Not Lead Society (2020)
ESG Investing in the Pandemic Shows Power of Luck (2020)
ESG Investing Shines in Market Turmoil, With Help From Big Tech: The strength of socially responsible funds suggests they have staying power; ‘ESG is not a fad’ (2020)
Funds that market themselves as sustainable investments aren’t necessarily focused on companies that fight climate change, develop wind turbines or promote diverse boards (2020)
ESG Funds Draw SEC Scrutiny (companies that pursue strategies to address environmental, social or governance challenges) (2019)
Is it a retailer’s job to keep shoppers from their vices? (or Adam Smith vs. CVS pharmacy) (2017)
Can You Find Virtue by Investing in Vice? (2006)
What if companies pledge to adhere to social and environmental accountability guidelines? (2015)
Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)
Data show that socially responsible investments can outperform the S&P 500 index (2017)
Is altruism a result of selfishness? (2017)
Do you have to be selfish to make more money? (2018)
Does collective self-deception mask selfish behavior? (2018)
Why Doing Good Makes It Easier to Be Bad (2019)
Businesses intentionally display their social and environmental performance in addition to their financial performance to stakeholders (2019)
Should you invest according to religious guidelines? (2017)
Companies Adapt to Activism by Athletes (2021)
For a humorous view of this issue see
A Snickers a Day Keeps the Doctor Away: Why does CVS want to make my migraine cures hard to find? by Joseph C. Sternberg of the WSJ (2017)
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