"Is the ESG investment bubble bursting?"

" Is the ESG investment bubble bursting? \r\n\r\nEnvironmental, social, and governance-focused investment was all the rage a couple of years ago. The impulse to signal an environmentally or socially responsible reputation was so strong that ESG investment funds saw massive influxes of fresh assets.\r\n\r\nNow, ESG funds are shutting down or dropping the \u201csustainable\u201d part from their names. Their performance is leaving a lot to be desired, and investors are fleeing. It is a moment of truth for the nascent market niche, and the truth hurts.\r\n\r\nReuters\u00a0 reported \u00a0this week that funds classified as sustainable saw net new inflows of $68 billion over the first 11 months of the year, which compares with $158 billion last year, per data from LSEG Lipper, the fund performance data provider owned by Reuters\u2019 parent.\r\n\r\nThat\u2019s quite a drop, but compared to 2021, the 2023 figure looks even worse: in 2021, net new inflows into ESG funds totaled $558 billion, LSEG Lipper data shows.\r\n\r\n\u201cWhat happened?\u201d is the question that\u00a0 should \u00a0now be asked.\r\n\r\nWhat happened was a number of things. First, oil prices tanked in 2020 because of the lockdowns. They stayed tanked in 2021, leading many investors to flee the sector and seek diversification. Second, greenwashing reared its ugly head. Third, the transition leaning on these funds stuttered amid soaring cost inflation.\r\n\r\nIn April 2020, the price of U.S. crude oil slipped below $0 for the first time ever. The event, though short-lived, highlighted the impact that pandemic lockdowns were having on global energy markets\u2014and perhaps more importantly, energy demand.\r\n\r\nInvestors quit oil and gas and sought new opportunities. ESG funds were being actively promoted as both profitable and moral\u2014a win-win situation many could not resist, not least because of the firm government hand behind the sustainable future these funds advertised as working to build.\r\n\r\nThen, the pandemic lockdowns ended. People started leaving their houses again. Energy demand rose. Oil demand rose. So did oil prices. Inflation pushed the costs of all forms of energy higher. And reports began to emerge that not everything that calls itself sustainable is actually sustainable.\r\n\r\nESG funds began to close: this year alone, more than two dozen such funds were closed, per\u00a0 Bloomberg . Others are seeing investor outflows because of the absence of clear ESG targets. The \u201csustainable\u201d designation is no longer enough. Some funds are\u00a0 dropping \u00a0the label \u201csustainable\u201d from their names altogether because it is no longer bringing in investors.\r\n\r\nRegulators are tightening the rules about which funds actually have the right to call themselves sustainable. The SEC last year launched an\u00a0 investigation \u00a0into Goldman Sachs\u2019 ESG funds. Tennessee is currently\u00a0 suing \u00a0BlackRock over its ESG strategies, which, the state says, violate consumer protection laws by overstating \u201cthe extent to which ESG considerations can affect companies\u2019 financial performance and outlook.\u201d\r\n\r\nThat lawsuit is an instance of another problem for ESG investing: a Republican state backlash against the trend that saw some states, such as Texas, threaten to pull out their own money from asset managers that, according to them, discriminate against the oil and gas industry.\r\n\r\nMeanwhile, to make matters worse for ESG fund managers, oil prices have livened up considerably. The year 2022 delivered record profits for Big Oil. Investors previously eager to make some money from being environmentally, socially, and governance responsible returned to the land of emissions. Regulators\u00a0 pushed harder \u00a0against greenwashing.\r\n\r\nESG funds did outperform the broader market despite changing investor sentiment. But it wasn\u2019t because sustainable business was making a lot of money. It was because Big Tech was making a lot of money, and ESG funds tend to have a heavy exposure to Big Tech.\r\n\r\nBig Tech majors are indeed the biggest fans of sustainability with their wind and solar PPAs and their\u00a0 carbon offsets . These also fell from grace this year as it emerged that carbon offset projects were not, for the most part, offsetting anything.\r\n\r\nAll in all, this year investor behavior and attitude towards ESG funds has reflected the deepening troubles of transition-related industries. Wind power project costs soared so high that some projects became unviable. For others, project developers asked for and received commitments for higher electricity prices once the projects became operational.\r\n\r\nSolar power did better, but demand is on the wane there, too, not least about those same higher costs and the EU\u2019s and the U.S.\u2019 latest push against China. Most recently, the crisis in the Red Sea that diverted most traffic between Asia and Europe will also add to the cost of equipment coming from China.\r\n \r\n \r\n "

"Is the ESG investment bubble bursting?"

NACOC Hands Over $1.7 Million Worth of Seized Gold to GoldBodAMP

Gold Price Could Hit $4,000 by Year-End, Says FidelityAMP

Dangote Refinery Drops N100 Billion Lawsuit Against NNPCL and Other Fuel ImportersAMP