U.S. asset management executives eager to talk about their firms' ESG credentials have become rare as hen's teeth this year, with a number attributing their reticence to a desire to steer clear of "politics."
Good luck with that.
Over the past year or so, efforts to take environmental, social and governance-related risks into account when investing U.S. retirement assets have somehow managed to move from the financial mainstream to the vortex of America's political divide, joining hot-button cultural issues such as critical race theory.
Larry Fink, chairman and CEO of BlackRock Inc., the world's biggest money manager with $8.59 trillion in assets under management, in his latest annual letter to shareholders referred elliptically to that newly complex environment, noting the challenges "a truly global asset manager like BlackRock faces" now amid the divergence of opinion emerging across regions as well as "within regions — especially in the U.S."
Admittedly, politics has never been a total stranger to the world of public pension funds, as any executive answering to boards representing teachers' unions as well as fire and police departments can testify.
But for big money managers balancing efforts to maintain businesses in a U.S. market newly divided on ESG-related risks while moving ahead in markets wholeheartedly embracing them such as Europe, the operating environment has become considerably more complex in a short space of time.
After four or five years of the wind being in the sails of money managers focusing on sustainable investments, "suddenly over the last six months it feels like there's a real organized, concerted effort to attack ESG as so-called woke capitalism," noted Joseph Keefe, Portsmouth, N.H.-based president of Impax Asset Management LLC.
London stock exchange-listed Impax was managing $48.6 billion as of Feb. 28, with a focus on investing in a global economy in transition to greater sustainability, Mr. Keefe said.
While there have been skeptics over the years, "last year is when we saw a much more fully formed anti-ESG reaction in the United States," prompting internal discussions at asset management firms asking "how do we navigate these divergent directions that are emerging," said Jag Alexeyev, head of ESG insights with New York-based Broadridge Financial Solutions Inc., a New York-based provider of investor communications and technology solutions for financial services companies.