The popularity of ESG remains, even if it’s not as loud

The popularity of ESG is in the spotlight this year. The concept took considerable leaps in the latter part of the last decade, but now, the road isn’t as clear anymore. 

It’s not surprising, by the way, given the myriad of global economic issues that have emerged in the 2020s, which have understandably shifted ESG down the priorities list. 

• We’ve had a pandemic.
• We’ve had wars, sanctions, boycotts, and trade disputes
• We’ve had a supply chain crisis
• We’ve had an enormous demand and soaring prices for fossil fuels, giving the companies producing them more of a foothold in the markets. 
• We’ve had a surge in voices from the right against ESG, particularly in the United States.

The popularity of ESG may be slowing compared to a few years ago. This, combined with the hostile rhetoric from the American Republican Party, may lead you to believe that the concept is no more than a fad. 

A recent Financial Times article compared it to Japanese or Dotcom booms, suggesting that doubts over value will eventually catch up with natural enthusiasm and reduce ESG investing to a mere bubble of hype that ultimately bursts. 

The reality is that this just isn’t true.

Never forget that ESG is only supposed to be a tool for investors – a lens through which they can measure a company’s dedication to certain aspects of modern business. 

It remains so even though the hype has grown around it. Because of that, we need to look at the investing figures to get a true measure of ESG popularity.

• Estimates from the Global Sustainable Investment Alliance (GSIA), PwC, and the Financial Times all report that huge sums remain invested in ESG assets worldwide. 
• The value (as of 2024) is in the region of $30-40 trillion.
• Despite frequent reports that increasing sums are being pulled away from ESG assets, the trend remains localised and insufficient to kill the concept’s popularity.

The noise around ESG has meant that the term itself has suffered. Even leading figures who support the concept won’t use those three pivotal letters in conversation because they know how weaponised the name has become. 

Looking beneath the aversion, though, we continue to see that investors and other stakeholders continue to care about the values attached to ESG, summed up as good governance in the name of the planet and the people living on it.

In a statement, Nasdaq said it wants to “work with our companies to implement this new listing rule and set a new standard for corporate governance.”

“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity,” said SEC chair Gary Gensler in a statement.