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Some Activists Are Leading an ESG Backlash

Blackrock headquarters in New York.

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Jeenah Moon/Bloomberg

Investing along environmental, social, and governance lines is finding its way into activist campaigns—but not always in the way that Wall Street expected.

As Barron’s has noted, it’s been a bruising year for sustainable investing. ESG funds, many of which resemble tech funds, have underperformed the broader market this year—and missed out on rallies in oil and coal—and the strategy is under attack from conservative politicians and others railing against “woke capitalism.”

States such as Florida and Texas have railed against sustainable investing, and Texas, Louisiana, and Missouri plan to divest their public pension funds from managers who won’t invest in conventional energy.

It’s no wonder that some activists are questioning ESG practices.

“I look at this as something that was inevitable once asset managers started to make their feelings about ESG more publicly known,” says Patrick Gadson, a Vinson & Elkins partner who covers shareholder activism. “There are trade-offs, and the trade-off that we’re seeing is, ‘Wow, 50% of the country may disagree with this.’”

Bluebell Capital Partners recently targeted
(ticker: BLK) brand of ESG investing, saying in a 17-page letter dated Nov. 10 but publicly disclosed this week that the asset manager faced “greenwashing risk.”

The more clear opponent to ESG this year, however, has been Strive Asset Management, which called on
(AAPL) and
Walt Disney
(DIS) not to engage in political discussions, and told
(CVX) to increase oil production.

Write to Carleton English at


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