Nervous investors tear up ESG playbooks in election supercycle
Investors have pared exposure to sectors including renewable energy and electric cars as candidates in some of the dozens of nations holding polls this year have raised concerns over the costs and speed of efforts to curb emissions.
A shift to clean energy “is just not going to be a straight line like maybe we all hoped for,” said Sarah Norris, head of ESG equities and manager of the Global Impact Equity strategy at abrdn plc, which has trimmed some holdings in renewable project developers.
Greater uncertainty over the transition away from fossil fuels, and tougher political rhetoric, have seen clean energy firms jolted following recent polls in India, South Korea and Europe, though some have since recovered ground.
A Solactive European Renewables gauge has dropped about 3% since this month’s European Parliament election — which saw support slump for Green candidates.
Government debt has tumbled in France with Marine Le Pen’s far-right National Rally leading polls ahead of a June 30 vote in France, and development bank SFIL SA postponed a green bond sale.
In the US, a backlash against green principles and positioning for a potential new Donald Trump presidency have contributed to a surge in liquidations of exchange-traded funds aligned with ESG goals, and seen the largest-ever quarterly outflows from products tied to the theme.
Bets by hedge funds against the $2.2 billion iShares Global Clean Energy ETF, a flagship renewables fund, have risen to the highest in a year, short interest data compiled by Bloomberg
