The war on 'woke': will the anti-ESG wave in the US reach Asia?

GOP lawmakers are lobbying against climate-conscious nominees to federal posts and using tax dollars under their control to punish companies that want to reduce carbon emissions. Is Asia next?
The war on 'woke': will the anti-ESG wave in the US reach Asia?

A Republican wave of anti-ESG sentiment is gaining momentum in the US, as GOP officials and lawmakers leverage their power to promote gas and oil interests by discrediting the asset management industry’s efforts to combat the climate crisis according to a recent investigation by the New York Times published on August 4.

The author, David Gelles, reviewed more than 10,000 pages of documents and emails throughout his investigation, which uncovered a concentrated effort by nearly two dozen Republican state treasurers to halt climate action and oppose regulations that would make clear the economic risks of the climate crisis.

The GOP lawmakers are lobbying against climate-conscious nominees to key federal posts and using tax dollars under their control to punish companies that want to reduce carbon emissions.

On July 28, Riley Moore, the treasurer of West Virginia, announced that BlackRock, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo are ineligible for state banking contracts because they are “engaged in boycotts of fossil fuel companies”.

Moore along with the treasurers of Louisiana and Arkansas have since pulled over $700 million out of BlackRock, the world’s largest asset manager, over objections that the firm is too focused on “woke” environmental issues and not on maximising the returns on government money.

More recently, the attorney general for the state of Arizona solicited the signatures of 18 red states in a letter to BlackRock CEO Larry Fink challenging his company’s reliance on environment, social and governance (ESG) investment criteria rather than shareholder profits in managing state pension funds.

A BlackRock spokesperson told AsianInvestor that these claims are without merit, as the firm acts as a fiduciary to its clients, helping them navigate investment risks and opportunities so they can reach their long-term financial goals.

“The money we manage is not our own. It belongs to our clients, many of whom make their own asset allocation and portfolio construction decisions. We offer a range of products and strategies to achieve their desired outcomes.  It’s their choice,” said the spokesperson.

Many of BlackRock’s clients are choosing to invest in a mix of traditional energy companies, natural gas infrastructure, renewables and new decarbonisation technologies because of the investment opportunities stemming from their crucial role in the economy, they said.

“Earlier this year, we further expanded client choice by offering institutional clients, including all US public pension clients, the ability to directly vote their shares. Clients entrusting us with $550 billion, more than a quarter of our institutional clients’ assets, have taken this option.”


Florida governor Ron DeSantis has joined the growing list of Republican legislators to lash out at the ESG investing within state pension funds.

DeSantis has proposed a law for the 2023 legislative session that would amend Florida’s Deceptive and Unfair Trade Practices statute to prohibit fund managers for the State Board of Administration (SBA) from implementing ESG analysis in their management of the state’s pension fund portfolios.

AsianInvestor reached out to the State Board of Administration of Florida, which oversees about $250 billion in total assets for the Florida Retirement System, to ask how they view the proposed legislation and the effect it would have on their investments.

“The SBA has a long history of maximizing the returns to our beneficiaries while effectively managing the risks incumbent in the investments we make. The Trustees of the SBA (governor, chief financial officer, and attorney general) remain focused on ensuring that the SBA continues to maximise returns and manage risk as a fiduciary for the economic best interests of our beneficiaries,” said an SBA spokesperson.

“In this regard, the SBA and its investment managers are required to take all relevant risks into account when making investment decisions.  Neither the SBA or its managers use ESG scoring as a way to screen or limit the available investment opportunity set,” they said.


While the red wave against ESG investment is gathering momentum in the US — Claudia Wong, investments associate, Asia, for Willis Towers Watson told AsianInvestor  that her firm has not encountered any Asian asset owners who are actively pushing back against ESG or expressing an anti-ESG view.

If anything, they have observed the opposite trend.

Claudia Wong,

“Asian governments or governing bodies, companies, and investors are increasingly paying attention to ESG and incorporating it into their policies and actions. ESG is not a trend or fad, but a growing investment factor that is here to stay,” said Wong.

However, asset owners have raised questions around the consistency in ESG data, the difficulty in measuring areas such as Scope 3 emissions, the potential green premium or trade-off between financial returns and ESG metrics, she said.

“These are valid questions that open the way for meaningful discussion. From our observation, the conversation has moved beyond the debate to specific action, spurred by increasing regulation around ESG incorporation and disclosure in the region.

"Regardless of the reason, we hope to see more asset owners in Asia actively consider and incorporate ESG factors into their investment processes as soon as possible over the upcoming years,” said Wong.


The red states in the US make the claim time and time again that the managers of their state pension funds and government investments could generate higher returns on investment if they chose to invest ignoring ESG data.

Wong explained the main argument actually boils down to short-run versus long-run returns.

“Taking climate change as an example, there are two possible courses of action to take here. Either one, ignore ESG data and allow the climate to transition on its current trajectory, or use ESG data and transition to a net-zero economy. Our analysis suggests that choosing the former will cause global equity indices to fall by 50 to 60% by the end of the century whereas choosing the latter option will cause global equity indices to fall by only 3% by century-end,” she said.

Danielle Welsh-Rose,

Danielle Welsh-Rose, head of sustainability investment specialists and APAC sustainability at abrdn told AsianInvestor that while she has also not observed any pushback toward ESG investing in Asia, “It is fair to say, at a high level, ESG integration and performance are not mutually exclusive.”

“Asset managers use a range of different ESG data and use it for different purposes and in different ways,” said Welsh-Rose.

“On the risk side of the equation, for example, many ESG issues translate to material financial risks, and therefore ignoring them may lead to poorer investment outcomes, and in some cases regulatory compliance issues. ESG data can be used in many others ways, including to inform company engagement activities, and to meet specific client requirements for strategies that include exclusions,” she said. 


A press release from Governor DeSantis’ office declared that the language surrounding ESG is a threat to the vitality of the American economy, and also accused its advocates of trying to “advance a woke ideological agenda”.  

Characterising the effort to reverse the effects of climate change as a “woke ideology” is ubiquitous among US Republican lawmakers opposing ESG investing, who continue to frame these efforts as a threat to employment and revenue.

“The term ‘ESG’ is now often used as a ‘catch all’ for a range of different investment approaches, styles and asset classes to include strategies as diverse as private equity social impact funds, religiously-aligned ethical active-listed equity funds, green bond funds, unlisted direct green real estate funds, and passive ESG integrated ETF strategies,” said Welsh-Rose.

“Viewing ‘ESG’ investing as being aligned with a particular movement or ideology is a tempting way to simplify a highly complex and fast evolving space, but at the end of the day it is a misnomer,” she said.

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