Sustainable Finance in Retreat: Can the Sector Recover Trust?

Sustainable finance investments are under pressure like never before...now that we're in the Trump era...

Efforts like the Net-Zero Banking Alliance and the Net Zero Asset Managers Initiative, which were once seen as vital to guide financial markets towards climate goals, are now faltering. Dozens of major institutions have suspended their involvement, and emissions targets by lending and investing are being "revised," another way of saying watered down or quietly abandoned.

This is a shift following a period of huge enthusiasm. For 2021 alone, sustainable funds saw a total of $645 billion inflows globally. Banks and asset managers developed net-zero strategies and ESG funds not just as profitable prospects, but as avowals of underlying values — "necessary convictions" about longer-term responsibility. The idea was that finance had the ability to provide good at no expense to returns.

But that narrative is collapsing. With higher interest rates, inflation, and geopolitics, attention has turned to short-term profitability and energy security. Bloomberg and Reuters write that several of the largest states in the United States have mounted political attacks against ESG investing, accusing it of "woke capitalism" and penalising corporations for taking climate considerations into investment decisions. The pushback went global, and some investors now view ESG as politicised.

Short Term Thinking....?

Obviously.... Sustainable investments are always going to yield at a lower rate than Vesting in whatever company plunders 'free' natural resources.

The problem is that eventually those resources are going to get scarcer and scarcer.

It's just another piece of evidence stacking up that shows markets aren't going to save the planet in the longer term!

Posted Using INLEO