US President Donald Trump has a letter to the UN indicating the American withdrawal from the Paris Agreement during the inaugural parade within Capital Onena, Washington, DC, on January 20, 2025.
Jim Watson | AFP | Getty images
Investors continued to get money supposedly ESG funds At the beginning of 2025, in a “intensifying” success fueled by the “anti-climate program” of President Trump and the policies of his administration targeting diversity, actions and inclusion initiatives, according to a new Morningstar Morningstar report.
Also known as the socially responsible, sustainable, impact or investment in -laws based on values, “environmental, social and governance” funds allow people to invest according to certain values such as climate change or the diversity of companies.
Investors withdrew $ 6.1 billion from ESG funds in the first three months of 2025, after eliminating $ 4.3 billion in the fourth quarter of 2024, according to Morningstar.
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The exodus in Q1 marked the 10thth Consecutive district of outings.
“The continuous loss of appetite among American investors for sustainable funds can be partly attributed to an anti-ESG reaction, which has intensified since President Trump's return to the White House,” said the report.
At the end of Q1, American investors held $ 330 billion in ESG funds, or around 10% of the world total.
Hiking against the climate, policies toi
Yaorusheng | Moment | Getty images
Even before Trump takes up his duties, the interest rates constantly high weighed on Performance in the ESG market segments, such as clean energy and other “green” actions, according to Morningstar. The increase in borrowing costs loads the renewable energies sector because projects can be at high capital intensity.
But Trump added additional pressure.
A few days after its inauguration, Trump announced the United States would withdraw of the Paris Agreement, Blocked subsidies For electric vehicles, pushed More production of fossil fuels and begin A “huge decline” against Dei's policies, Diana Iovanel, economist of higher markets in Capital Economics, wrote in research note In March.
At the end of March, the Securities and Exchange committee led by the Republicans decree to defend a climate change Disclosure rule in court. There is also an uncertainty about the fate of Inflation reduction lawA historic law on the mitigation of climate change signed by President Joe Biden.
Even before Trump's second term, at least 18 States led by the Republicans had adopted “anti-ESG legislation”, which prompted certain major asset managers to “reduce” their ESG efforts, Iovanel wrote.
Trump also signed an executive decree to eliminate all the mandates and programs related to the DEI within the federal government, which prompted large companies like Walmart (Wmt), Lowe's (WEAK) and meta (Meta) To start “reducing their commitments from I,” wrote Morningstar.
Why is Trump not “ game over 'for esg
Despite the opposite winds, the Trump agenda “is not” Game Over “for ESG investment”, wrote Iovanel.
The demand for ESG investments “is there to stay” even in the face of political pressure, she wrote.
On the one hand, despite the republican antipathy for ESG investment, he also has great support, Iovanel wrote. States and California have implemented Pro-ESG regulations and surveys indicate that most major asset managers (including those in the United States) invest in ESG assets despite the apparent controversy, she wrote.
The demand among individual investors also seems relatively high, in particular among young investors, analysts said.
In the United States, around 84% of individual investors are interested in sustainable investment, according to a 2024 Morgan Stanley investigation. About two thirds, 65%, respondents said their interest had increased in the previous two years.
While criticism derbered it like “awake” capitalismThe defenders say that there is a strong investment thesis for the ESG.
More specifically, they argue that ESG investors in investment are positioning investors for higher long -term yields because companies that adopt such practices are about to be more resilient, and therefore more successful than peers.
