davos For a long time it was the biggest trend in the financial world: investing according to ecological, social and ethical standards, or ESG for short. The World Economic Forum (WEF) in Davos also drove the discussion forward.
It was about the demand that the leading managers from the financial world should not only care about their returns, but also have to consider the impact of their business on employees and the environment. “ESG was still part of the zeitgeist last year,” emphasizes Sandra Navidi from the New York analysis house Beyond Global, who has been a guest at the WEF for many years.
But something has changed. In Davos this year, hardly any CEO is talking about the promising-sounding three letters – especially not if he works for an American financial institution. “Don’t just say ESG,” says one of the managers.
There is a reason for the new restraint: Nobody wants to be dragged into the limelight as much as Blackrock boss Larry Fink.
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Blackrock boss: “I’m being personally attacked”
The CEO of the world’s largest wealth manager has got caught between the fronts with his ESG initiative. For a long time he had advocated stronger social and ecological standards and called on other company leaders to do the same. This has made him a target for Republicans.
They accuse the influential CEO of acting too ideologically and discriminating against oil and gas producers. A number of Republican-run state pension funds have already withdrawn their funds from Blackrock.
For the first time in my career, I’m also being attacked personally. Blackrock boss Larry Fink
The ESG debate is “extremely polarized” in the USA, Fink admitted at the World Economic Forum in Davos. “For the first time in my career, I’m also being attacked personally,” he said in an interview with financial services provider Bloomberg.
“It’s the biggest investment trend of the next 30 years”
In Europe, the topic is much less polarizing, but all the more complex. The 7,000-page set of regulations of the European Union is too detailed, especially for small and medium-sized companies, complains Deutsche Bank boss Christian Sewing.
Brian Moynihan, CEO of Bank of America, spoke out in Davos in favor of an “international body for sustainability standards”. “That’s where investment managers, consumers and other representatives of society can sit” and work out which business practices are acceptable and which are not. In this way, capitalism can be “adapted to the expectations of society”.
comprises the regulations of the European Union for investing according to ecological, social and ethical standards, ESG for short.
But especially in the deeply divided American society, there is unlikely to be any consensus on this topic any time soon.
>> Read also: Activist investor Bluebell calls for the resignation of Blackrock boss Fink
At Blackrock, for example, they prefer to talk about “transition investing” instead of ESG these days – i.e. investments in everything that makes the economy greener. But no matter how you call it in the end – there are more than enough investment opportunities.
“It’s the biggest investment trend of the next 30 years,” predicts Blackrock manager Mark Wiedman, who is being traded as a possible successor to Fink. He adds that, paradoxically, despite all the criticism of ESG, the US is “the best place to research, innovate and invest in anything related to the transition to a low-carbon economy”.
Financial effects of the anti-ESG movement small
The importance of the topic also supports an analysis by the consulting firm PwC. The experts there assume that ESG investments could increase by 84 percent to almost 34 trillion dollars by 2026.
Despite the great damage to his reputation, Blackrock boss Fink also comes to the conclusion that the financial effects of the anti-ESG movement in the USA are negligible. Although pension funds withdrew money worth four billion dollars, 230 billion dollars in fresh US customer funds were added last year. The numbers speak a clear language.
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