It’s all over but the shouting, as the saying goes. The war on ESG investing, financed by Big Business and waged by political opportunists who built a straw man out of “woke capitalism,” is rapidly running out of steam.

“Recent polls show limited enthusiasm among the public for the ‘anti-woke’ culture war that GOP politicians have launched against corporations’ handling of environmental and social causes — including among many Republican primary voters,” Politico reported in August. It turns out that people don’t want the government meddling in the way they invest, or the way Wall Street and corporate America manage ESG risks in their portfolios and businesses. The voting public is “hitting snooze” when the topic is mentioned, according to Politico.

Republican strategist Ron Bonjean told Politico that far-right lawmakers, “…have squeezed most of the juice that they’re going to be able to get out of corporate wokeism on ESG issues for now.”

Why the retreat? Voters in red states are starting to feel the pain inflicted by anti-ESG measures, which have caused significant financial damage to state pension funds, tax revenues, and the balance sheets of local businesses. The media has covered this fallout extensively, often echoing the words of executives at large financial institutions who insist that ESG is an integral part of the risk-management process and consistent with their fiduciary duty to protect shareholders.

In the face of attacks against ESG, large banks and state pension funds are pushing back simply, “because it’s good business,” according to the Harvard Business Review. “Environmental and social issues do have sizeable material impacts on companies, which means investors are legally required to consider them.”

A Wharton School of Business study estimates that anti-ESG legislation in Texas cost the state as much as $532 million in higher interest payments on municipal bonds. 

The battle has even lost its appeal for Harvard Professor Robert Eccles, a mathematician who ruffled some feathers by dissecting and analyzing various segments of anti-ESG and pro-ESG factions. “It was fun while it lasted,” he told ImpactAlpha for an August 25 article entitled “How Anti-ESG Ends.” 

More and more mainstream media organizations are noting that voters are disinterested in the war on ESG and woke capitalism, thereby invalidating any points politicians like Florida Governor and Republican presidential candidate Ron DeSantis are hoping to gain by attacking brands like Disney and Bud Light.

Furthermore, money flowing into anti-ESG mutual funds, which started out strong in 2022, has slowed to a trickle, according to Morningstar. “The anti-ESG fad might be over before it [ever really] got going,” the research firm reported in June.

Conversely, the issue of sustainability continues to gain traction among investors, corporate leaders and individual workers. Roughly 60% of the executives surveyed recently by Diligent Institute and Spencer Stuart said they are taking extra measures to ensure that their ESG efforts are adequately reflected in annual reports and regulatory filings. And a new report from Deloitte shows that nearly half of all high-income workers in the U.S. are considering leaving their jobs to join companies with more robust sustainability and ESG practices.

In addition to the additional expenses companies can incur when executives overlook important ESG issues, the goodwill and solid reputations that took decades to earn can be lost in an instant. One example: Hawaiian Electric stands accused of ignoring important safety measures on Maui, allegedly causing downed powerlines to set off the catastrophic wildfires that have claimed the lives of at least 100 people. Thirteen separate lawsuits have been filed against the utility company, according to NBC News. The company has denied the allegations in detail, but its stock price fell from $20.15 on June 14 to $14.50 by August 24.

What does this shift in sentiment mean? While public criticism of ESG investing is bound to continue, the air has been let out of its tires. It is no longer a flashpoint for grandstanding politicians. The war on ESG investing is over. It ended with a whimper, not with a bang.