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The American bubble of hiring managers in environmental, social, and governance roles is starting to bust amid pressures for firms to cut costs and backlash from investors against ESG.
The number of departures in ESG roles exceeded arrivals in six of last year’s 12 months, per data from employment data provider Live Data Technologies cited by The Wall Street Journal.
Tech giants Amazon, Meta, and Google saw the biggest outflows as the sector began job cuts. Consulting companies have also shrunk ESG roles, according to the data reported by the Journal.
More ESG departures than arrivals in these roles reverse a multi-year trend in which ESG was the buzzword and companies were racing to hire ESG professionals as many pledged to be more proactive in reducing emissions from their businesses.
However, the ESG fad has now started to cool, also reflected in fewer hires for such roles at U.S. firms.
Claims of greenwashing and the underperformance of sustainable funds have also contributed to fewer ESG roles at U.S. companies.
Last year, investors began withdrawing money from sustainable funds as the ESG enthusiasm of the past few years started waning amid high interest rates, poor returns, plunging renewable energy stocks, tightened SEC rules, and political backlash.
It’s not only the recent flop in renewable energy stocks that’s keeping Wall Street away from sustainable investments. The high interest rates and politicians targeting sustainable investing have also played a role in investor decisions, industry executives and analysts say.
In addition, sustainable investing in the U.S. has been criticized by Republican states, most notably Texas, which says that ESG standards are harming America’s energy industry and threatening millions of jobs. Texas prohibits state contracts and investments with companies that boycott energy companies.
Last year, the Florida Treasury divested $2 billion worth of assets under management by BlackRock because of the ESG investing by the world’s largest asset manager.
“If Larry, or his friends on Wall Street, want to change the world – run for office,” Florida Chief Financial Officer (CFO) Jimmy Patronis said at the end of 2022.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.