In a recent interview with The Associated Press, Maria Lettini, the chief executive of US SIF, discussed the backlash against ESG investing in the U.S. US SIF is an advocacy group that supports sustainable investing, which takes into account environmental, social, and governance factors to improve returns. Lettini mentioned that the backlash against ESG was more widespread in the U.S. than she expected, especially after returning from the U.K. where sustainable investing is more accepted.
Lettini noted that in the U.K. and Europe, there is a strong emphasis on sustainable investing among both everyday citizens and investors. The general public in these regions cares about climate change, social issues, and corporate governance. While the U.S. population also shows concern for these issues, there are some differences at the government and investor levels. Some U.S. government parts are engaged in climate change response, while others are not, leading to varying levels of commitment to sustainable investing.
Globally, Lettini believes there is not a huge divide in sustainable investing practices between the U.S. and Europe, but there are some differences in investor appetites. Many European clients expect their money managers to consider environmental and social risks, contributing to outperformance. However, in the U.S., there is pressure to prioritize short-term financial impacts, which may hinder the consideration of long-term risks and opportunities associated with sustainable investing.
While Lettini was surprised by the depth and breadth of the anti-ESG movements in the U.S., she noted that the pushback did not gain significant momentum. The market did a good job of explaining the benefits of ESG investing and its alignment with free-market principles. Despite the backlash, there is excitement around the opportunities that climate transition can bring, as seen at US SIF’s annual conference in Chicago. Despite the challenges posed by anti-ESG laws in some states, the sustainable investing industry remains resilient.
Looking ahead, Lettini emphasized that US SIF will continue to advocate for sustainable capital markets, regardless of who wins the election. She highlighted the importance of better disclosure of material information and shareholders’ rights, which are essential for efficient markets. While political rhetoric around ESG issues may persist, Lettini believes that sustainable investing priorities will remain consistent. The industry is maturing rapidly, with members delivering on client demands for investments in resilient and forward-thinking companies.
Overall, Lettini’s first year at the helm of US SIF has not differed much from her expectations. Despite the challenges posed by the anti-ESG movements in the U.S., the sustainable investing industry continues to grow and mature. US SIF’s members have remained committed to sustainability philosophies, reflecting the ongoing demand for investments in companies with strong ESG practices. As the industry evolves, Lettini envisions a future where sustainable investing becomes more mainstream and integrated into the global capital markets landscape.
