Experience Stern | Faculty & Research

Good news is brewing in finance. The public backlash against ESG—environmental, social and governance investing—has grown, shedding light on the left’s ideological takeover of Wall Street. The bad news is that the anti-ESG coalition isn’t prepared to defeat a global “sustainability” campaign. The movement needs a makeover and should begin by following a few guiding principles:

• Virtue signaling isn’t the only problem. The current bout of woke capitalism in corporate boardrooms is merely a symptom of the underlying malady. Through its pervasive asset integration and overriding focus on nonfinancial factors, ESG is slowly changing the pecuniary purpose of investing. Waging public spats with management over critical race theory and gender ideology distracts from how ESG investing is re-engineering global financial markets. No matter how many brands go broke from misplaced trust in sustainable policies or social-justice activism, it won’t slow ESG’s market momentum.

• Focus on climate. This is ESG’s crown jewel, as evidenced by the countless net-zero initiatives that have been adopted since 2015. Other factors, such as “diversity, equity and inclusion,” are secondary—if not superfluous—to the movement’s priority of using private capital to fund a global energy transition.

Read the full Wall Street Journal article.
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Paul Tice is an Adjunct Professor of Finance at NYU Stern.