Asset managers tune out anti-ESG noise

investmentnews.com:

Asset managers are tuning out political opposition to ESG when it comes to selecting investments but are being more careful in how they talk about ESG, according to a report from Cerulli Associates.

Political pressure related to the use of environmental, social and governance factors in investing has been mounting. Capitol Hill Republicans have blasted ESG proposals from the Securities and Exchange Commission, and Republicans in several states have advanced legislation and regulations to curb the use of ESG by public pension funds.

Opponents assert that an ESG orientation places environmental and social policy goals ahead of investment returns. Supporters counter that a focus on ESG can increase returns and that ESG has a material impact on business performance.

Even though political controversy is swirling, asset managers are maintaining a commitment to ESG, according to the new Cerulli report.

“No participants surveyed plan to stop incorporating ESG considerations into investment decisions or expect to stop offering ESG/sustainable investment products,” Cerulli said in a statement. “Yet, nearly one-third (30%) of asset managers will be more cautious about messaging around ESG-related activities through websites, marketing materials, prospectuses and other formal investment documents.”

The Cerulli findings echoed what US SIF: the Sustainable Investment Forum has heard from its members.

“Asset managers understand that considering ESG factors helps them make better investment decisions,” said Bryan McGannon, managing director at U.S. SIF. “Politically motivated ESG attacks don’t change these underlying factors.”

Investor demand for the “E” — environment — in ESG appears to have been sustained despite political