Trillion Dollar Values-Based ‘ESG’ Funds Pit Wall Street Against Main Street

According to a 2021 Gallup survey, 60% of Americans have little to no familiarity with the term ‘ESG’ or Environmental, Social and Governance. But these non-financial factors are redefining capitalism and dominating corporate America’s decision making.

What was once a narrow focus on shareholders and profits has been replaced by words such as “communities,” “environment,” “stakeholders,” and “sustainability.” BlackRock CEO Larry Fink’s annual letter to CEOs echoes this shift when he assures his peers that profits don’t drive value, but rather “values” drive value. The reality is that while ESG creates value for Wall Street, there is a lack of consistent, reliable data proving that it helps Main Street.

The Securities and Exchange Commission (SEC) recently estimated the size of the ESG industry in the United States to be $17.1 trillion. More than $68 billion poured into ESG equity funds in the first two years of the pandemic alone. Middle-class Americans are heavily impacted by these investment strategies because more than half of all assets in state public pension funds (at least $3 trillion) apply ESG criteria.