November 14, 2024

Investors can’t get in right away. In April 2021,

BlackRock


launched a new exchange-traded fund aimed at identifying winners in the transition to a low-carbon world. It raised a record $1.25 billion in one day, making it the ETF’s biggest debut yet. The success underscores the exploding demand for products tailored to environmental, social, and governance, or ESG, investments—those with a mission to solve complex problems like climate change and economic inequality.

Last year, however, the story began to turn sour. Many ESG, or “sustainable,” funds—the terms are used interchangeably—suffered poor performance, losing out on rallies in oil and coal. The strategy was attacked by conservative politicians who denounced “awakened capitalism.” Some say the strategy has little to show when it comes to improving life on the planet. The industry has also been rocked by several high-profile scandals.

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