Trump’s repercussing is not a “game” for ESG investments

Investors withdrawn money from the so -called ESG funds In recent years, between political recitlance, High interest rates and other contrary winds.

But analysts say that the prospects and long -term investment thesis for the category of funds, which represent “environmental, social and governance”, are favorable.

The agenda of President Donald Trump “is not a game from Esg Investing”, wrote Diana Ivanel, an economist of Senior Markets of Capital Economics, in a research Note on Tuesday.

The demand for ESG investments “is here to stay” even in the face of political pressure, Ivanel wrote.

Investors have torn almost 20 billion dollars from mutual funds and negotiated on the US Stock Exchange in 2024, after withdrawing about $ 13 billion in 2023, second A Morningstar.

On the contrary, investors paid $ 740 billion in the overall universe of mutual funds and ETF in 2024, discovered Morningstar.

“I don’t think we really expected something different, due to the anti-ESG backlash in the United States and in the political environment there,” said Hortense Bioy, responsible for research on sustainable investments in Morningstar.

Critics Call ESG a form of “Woke Capitalism” that the sacrifices return for the good of liberal objectives.

Supporters argue that Esg Investing Positives for investors for higher long -term returns because companies that adopt these practices are ready to be more resilient, and therefore more successful, than their peers.

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Despite the deceased, the overall activities of the ESG fund grew slightly in 2024, at $ 344 billion, due to the market appreciation, found Morningstar.

The demand for investors also appears relatively high, especially among the younger investors, analysts have affirmed.

About 84% of individual investors in the United States are interested in sustainable investments, according to a 2024 Morgan Stanley survey. About two thirds, 65%of the interviewees said that their interest had increased in the previous two years.

In the first days of its inauguration, Trump he pulled the United States out of the Paris agreement, blocked subsidies for electric vehicles, pushed for more production of fossil fuels e started He wrote a “enormous rejection” against diversity, equity and inclusion policies, I wrote Ivanel of Capital Economics.

Thursday the commission for titles and exchanges led by the Republicans said it would do so stop defending a climate change Disclosure rule in court. The regulation required basic transparency on climatic risks and greenhouse gas emissions by some companies listed on the United States stock exchange.

There is also uncertainty about the fate of Law on reducing inflationA historical law on climate change signed by President Joe Biden.

Even before the second term of President Trump, at least 18 Republican states He had adopted the “anti-ESG legislation”, pushing some great patrimonial managers to “put back” their ESG efforts, Ivanel wrote.

The number of ESG funds contracts for the first time in 2024 – at 587 from 646 of 2023, a drop of 9%, according to Morningstar. This means that property managers have made less options available for investors.

“It is very complicated for any patrimonial manager now to sell ESG products,” Bioy said. “They don’t want to attract attention.”

In addition, oil and gas prices increased after Russia invaded Ukraine in 2022. The first 10 titles in the’s & P 500 that year they were from the energy sectorFor example. The ESG portfolios that minimize the exposure to the fossil fuel seemed delayed relative accordingly, the analysts said.

However, the performances were “very good” before 2022, Bioy said.

For example, the typical USE stock exchange bottom beat the returns of its peers of about 4 percentage points in 2020, according to Morgan Stanley analyses. ESG bonds have overperformed about 1 point that year, found.

“Any investment and any ESG investment are no different: they cross minimums and maximums,” Bioy said.

McKinsey Research has discovered that companies with C-shore leaders “chase growth without considering how their strategies could have an impact on people, the planet and long-term sustainability of their company” are less likely to “guide their companies to the full growth potential”, said advice in a Analysis 2023 Of the 10,000 largest global companies from 2016 to 2022.

The objective of the ESG investment is to reduce the long -term risk of a portfolio, said Jennifer Coombs, head of content and development at the United States sustainable investment forum, known as Us Sif.

Even the money managers who supervise the ESG portfolios do not aim to sacrifice investment returns for the good of pursuing an environmental or social agenda, said Coombs. Instead, in general they believe that investments according to ESG principles in the end increases adequate returns to the risk for long -term investors, said.

“This is investing,” Coombs said. “It’s not philanthropy.”

“Sustainability takes a long time,” he said. “It’s long -term. And this is the whole idea.”