Young voters turned out in record numbers for midterm elections this year, and they sent a clear message to Big Oil and the billionaires who are bankrolling anti-ESG campaigns:
Stop wasting your money.
In most cases, turnout from Gen Z and millennials was strong enough to counter an estimated $624 million in campaign contributions from super PACs and dark money groups to climate change deniers, ESG critics and other losing candidates who attack progressive policies.
“Last night, across the country, leaders who ran on climate won,” the League of Conservation Voters wrote in a memo to supporters. “In state elections up and down the ballot, we saw a Green Wave of environmental champions.”
Here’s why that happened. Roughly 70% of investors under the age of 42 are “very concerned” about carbon emissions and renewable energy, according to a recent survey from Stanford. These young investors are putting their money where their mouths are, expressing a willingness to give up between 6% and 10% of their investment returns to help the companies they invest in bring their ESG practices up to industry-leading standards.
These are the same investors who are fueling the explosive growth of ESG mutual funds, which Bloomberg says could hold $53 trillion, a third of all global assets under management, by 2025. Some 82% of Gen Z and almost two-thirds of young millennial investors have ESG investments in their portfolios, according to a recent survey by the asset management firm Amundi and the Business Times. Both of these age groups are on the receiving end of the largest generational transfer of wealth in history as Baby Boomers start handing down more than $68 trillion in wealth.
The tsunami of purpose-driven investing that is now gaining strength in the US should be enough to convince ESG naysayers that they are wasting their breath and their campaign contributions. If not, maybe a history lesson will help. As ESG has evolved over the past several decades, the US has generally followed a path blazed by European countries like France. The SEC is now in the early stages of requiring US companies to provide detailed disclosures on carbon emissions and other contributors to climate change. There might be some delays along the way, but we will eventually catch up with France, which already imposes 38 sustainable finance and ESG disclosure requirements on public companies.
After transparency requirements become law, US regulators will start promoting “policies pushing investors to integrate ESG into their strategies,” according to Bloomberg.
Regulators around the world understand something billionaire ESG critics fail to recognize: Ignoring ESG might give quarterly financial results a quick lift. But it jeopardizes the long-term sustainability of publicly traded companies and the entire US economy. Even worse, perhaps, it forfeits rich opportunities for growth. Each of the Big 4 accounting firms in the US has published lengthy reports detailing the numerous ways ESG creates value for shareholders.
“This transition to clean energy is going to make the whole explosion of the internet look like a kid’s lemonade stand,” says Fred Krupp, president of the Environmental Defense Fund.
Conversely, CEOs who turn a blind eye to ESG are guilty of “malpractice,” he told Yahoo! Finance.
If you’ve been following Elon Musk’s acquisition of Twitter, you know exactly how that looks.
