Impact of Rising ‘Anti-ESG’ Sentiment on Funds in the US, Reveals HSBC Survey

Description: HSBC’s recent survey highlights the growing backlash against environmental, social, and governance (ESG) investing strategies in the US and its implications for fund managers. Discover the key findings and shifting trends in integrating ESG considerations into investment portfolios.

A recent survey conducted by HSBC Holdings Plc reveals a concerning rise in “anti-ESG” sentiment in the United States, significantly impacting the investment landscape. The backlash against investment strategies that incorporate environmental, social, and governance factors is influencing how fund managers approach ESG considerations. HSBC’s global research team, led by Wai-Shin Chan and Anusha Chowdhury, conducted the survey between May 31, 2023, and June 24, 2023, polling 310 professionals worldwide involved in ESG decision-making roles. These respondents collectively manage $8.9 trillion in assets across 292 institutions.

The survey findings indicate that the rise in anti-ESG sentiment is primarily observed in the US, aligned mostly with political ideologies and limited to this specific region. Notably, the effects of this sentiment shift are visible in North America, where a decline in considering sustainability as a fund objective has been observed. Compared to the previous year, the percentage of respondents in North America identifying sustainability as a primary or secondary objective has decreased from 37% to nearly a quarter.

Furthermore, the survey reveals that 44% of North American respondents feel their reasons for implementing an ESG strategy have weakened in the past twelve months. These findings highlight the impact of the anti-ESG sentiment on investment decisions and the evolving perspectives among professionals.

The fixed income market also showcases a notable shift in investor behavior regarding ESG integration into portfolios. The survey indicates a substantial increase in the use of ESG integration and labeled bonds compared to the previous year and long-term trends. The analysts suggest that this shift signifies progress by investors in developing more customized forms of ESG analysis, with a decline in the utilization of negative screening and ESG ratings as primary methods of implementation.

However, the rise in backlash and scrutiny has negatively affected the sales of ESG-designed bonds in the US, as pressure from investors and Republican politicians intensifies. Critics argue that ESG investing is part of a broader Democratic agenda that prioritizes climate change and societal issues, potentially harming the fossil-fuel industry.

HSBC’s ESG survey aims to provide insights into investors’ current stance on specific ESG issues, identify trends, and gauge future intentions. By understanding the changing dynamics and sentiments surrounding ESG investing, stakeholders can adapt their strategies to align with evolving market conditions.

Image: [Insert relevant image description here] Source: Bloomberg 2023

Tags: ESG investing, anti-ESG sentiment, fund managers, US investment landscape, sustainability objectives, fixed income market, backlash, scrutiny, customized ESG analysis, Republican politicians, market trends

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