Not so long ago, the acronym ESG was trendy in investment markets. The woke thing to do was to invest in ESG-friendly funds. Their popularity promised a maximum return on investment with a commitment to woke ideals.
ESG stands for investing in corporations based on environmental, social and corporate-governance factors. By adopting an environmental, social and governance approach, mutual fund operators could deliver maximum ROI while maintaining a minimal carbon footprint.
Investors could virtue signal their support for LGBT and other social causes while making profits. Corporate structures could be made inclusive despite threats that such social engineering would affect productivity.
Best of all, ESG investment funds excluded all those things liberals love to hate: fossil fuels, weapons, tobacco and alcohol stocks.
Investors Leaving
Everything has now changed with ESG. In a turnaround that surprised Wall Street, woke funds are no longer trendy. The savvy investors are staying away. Call it something else, but avoid the ESG tag at all costs.
The heyday of ESG investing was between 2018 and 2021, when the trend took hold. Hundreds of billions of dollars entered this new market. At that time, the ESG juggernaut seemed impossible to stop. Wall Street giants like BlackRock and Vanguard put their weight behind the move. Investment capital and state pension funds poured into these ESG funds that favored leftist causes.
The left also used these funds to promote shareholder activism. In the name of their (often unaware) investors, ESG mutual funds could use proxy voting to push through resolutions demanding greater climate disclosures, director diversity and other matters. These votes often made headlines when they disrupted business operations with their leftist agendas.
The Backlash
In the spring of 2022, investors started to get the jitters when conservatives denounced a woke agenda behind ESG guidelines, mandates and proxy votes. Companies suffered egregious restraints and unrealistic ecological goals. Investors soon withdrew money from these markets.
Not only did individuals react, but red states that needed a good place to park their vast governmental pension funds also withdrew from ESG-related instruments. Conservatives responded to the left’s weaponization of these funds by redirecting their tens of billions of dollars into more profitable and market-friendly alternatives.
As demand fell, the launch of new ESG mutual funds declined sharply. New fund launches declined from 116 in 2021 to a mere 9 in 2025. The firms also pulled back on the high-profile proxy voting that had caused so much concern and publicity.
Finally, people left because of disappointing returns. Leftist projects rarely make money unless they are about acquiring government money. Investing in woke causes may make someone feel good, but those involved often end up losing out on money-making opportunities. The woke funds have underperformed because they excluded some of the largest and most profitable non-woke companies (such as oil companies) from their indexes and portfolios.
Is the Reign of Woke Investment Over?
Thus, ESG has lost its way in the investment world. People are asking if the ESG is dead. Indeed, a Wall Street Journal report titled “The State of ESG Investing: How Dire Is It?” asked the question.
Some fund managers say they manage to keep it alive by following the same guidelines but calling it something else. However, the ESG movement has lost momentum. Defenders of the market have every reason to rejoice.
There are three lessons to be learned from the fall of woke investment.
The first one is that leftist financial initiatives can be defeated even when supported by the most powerful Wall Street firms and liberal media. All it takes is the courage to say no. Never underestimate the power of protest, even when the odds seem great.
The second lesson is that projects like these are never about money; they are all about ideology. The backers of these initiatives target the economic system and seek to dismantle structures they deem contrary to the ruling zeitgeist. They are willing to lose money (and encourage others to do the same) to see their egalitarian ideals triumph.
Finally, investors must be vigilant lest ESG mutants appear. Some defeated investment managers are doubling down on ESG—but without the name. They are engaged in the dishonest effort to repackage it with something that sounds better. Investors must be wary and insist upon no quarter being given to these subversive funds.
Lack of Originality
The left has few original ideas. It progresses little by little by disguising its dreadful ideals of complete equality and free license. Once exposed for what they are (socialist schemes), the public often rejects them.
When these radical projects suffer defeat, their activists must pull back and find a way to recycle them.
That is why conservatives must always resist such trendy ideas. By forcing the left back, its activists are then saddled with the arduous task of inventing new initiatives that take time and effort.
This is a victory in a battle but not the war. Thus, ESG will have to be retired. If being woke means being trendy, activist investors will have to find another word to replace woke to describe their leftist financial initiatives. Indeed, it is no longer woke to be woke anymore.
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