British investors have pulled a record £1billion out of ESG funds this year amid a backlash over ‘woke’ stock-picking.
Apparently ‘responsible’ investment funds saw a record outflow of £544m in September, meaning more than £1billion has left in 2023, according to figures from the Investment Association.
These so-called ‘sustainable’ funds, which consider environmental, social and governance factors for their investments, exploded in popularity before Covid as DIY investors sought their green credentials.
But ‘woke capitalism’ has come under increasing fire for prioritising social goals over delivering services and goods to customers and making money for investors.
Critics point out that firms such as BAE are instrumental in helping to defend democracy in countries under attack from aggressors.
Backlash: Apparently ‘responsible’ investment funds saw a record outflow of £544m in September, meaning more than £1billion has left in 2023
And last month consumer goods giant Unilever gave its clearest hint that it will dial down its own ‘woke’ agenda.
Hein Schumacher, who took over the maker of Hellmann’s mayonnaise in July, said he would stop ‘force-fitting’ social justice messaging on to brands.
Greenwashing, where firms inflate or mislead consumers about their environmental credentials, has also dented investors’ trust in ESG.
The proportion of investors who are concerned about greenwashing has jumped from 48 per cent in 2021 to 63 per cent in 2023, according to a recent survey from trade body the Association of Investment Companies.
But analysts have suggested that the record outflow could be rooted in the ongoing pressures on household budgets – ultimately putting them off investments.