Is ESG’s future grim in a new anti-woke society?

In March, conservative critics enthusiastically blamed Silicon Valley Bank’s collapse on the nefarious forces of ESG. By then, “environmental, social, and corporate governance” factors were at their peak as the hottest new trend, everywhere from the Bay Area to Wall Street. But since, they’ve drawn a backlash of epic proportions where each week seems to bring more crumbling support.

Some of SVB’s big clients, like conservative political activist Peter Thiel and venture capitalist Marc Andreessen, have never liked that ESG stood in the way of their beloved cryptocurrency, half-seriously comparing the measures to “a hate factory” and Communist propaganda. But on Monday, Andreessen published a lengthy screed on Andreessen Horowitz’s website—”The Techno-Optimist Manifesto“—which ratchets up the attacks. Here’s what a section, unambiguously titled “The Enemy,” has to say about ESG:

We have enemies.

Our enemies are not bad people—but rather bad ideas.

Our present society has been subjected to a mass demoralization campaign for six decades—against technology and against life—under varying names like “existential risk”, “sustainability”, “ESG”, “Sustainable Development Goals”, “social responsibility”, “stakeholder capitalism”, “Precautionary Principle”, “trust and safety”, “tech ethics”, “risk management”, “de-growth”, “the limits of growth.”

This demoralization campaign is based on bad ideas of the past—zombie ideas, many derived from Communism, disastrous then and now—that have refused to die.

The manifesto goes after newfound efforts to regulate tech, specifically in the field Andreessen believes will determine humanity’s future: artificial intelligence. Not a fan of the ethical finger-wagging over AI, he fires back that technological advancements are “why we are not still living in mud huts, eking out a meager survival and waiting for nature to kill us.” There is “no material problem,” he adds, “that cannot be solved with more technology.”

Coming right after tech’s VC class clamored for (and got) drastic federal help for its failing Silicon Valley Bank, Andreessen’s suggestion that risk management is “the enemy” of progress was quickly panned by everyone from journalist Kara Swisher to an ex-Facebook executive. But it still vaguely tracks with broader critiques over ESG’s implementation that have eaten at its support.

Incidentally, the Techno-Optimist Manifesto’s release occurred on the same day that the Securities and Exchange Commission (SEC) released guidance on the new priorities for regulatory compliance in 2024. Three years ago, that guidance stated that the SEC was “integrating climate and ESG considerations into the agency’s broader regulatory framework.” But for the upcoming year, “ESG” doesn’t appear once as a term, and the previous standard has been removed entirely.

Meanwhile, new data from Morningstar shows that big asset managers like BlackRock and State Street have eliminated more than two dozen ESG funds this year amid the heightened public scrutiny, and that investors have pulled more money from ESG funds in the first half of the year than they put into them. In August, the largest institutional investor, Vanguard, announced it’s rejected 98% of the ESG-oriented resolutions brought by shareholders in 2023—a sixfold hike from 2022. This came one week after BlackRock noted it quashed 742 of 813 such proposals on its end because they “were overly prescriptive or unduly constraining on management decision-making,” or “did not have economic merit.”

The burning question is whether these actions represent pivots in semantics or rejections of the underlying principles themselves. The principles carry a toxic-enough connotation now that BlackRock CEO Larry Fink admitted back in January that the anti-ESG crowd’s attacks had gotten “personal.” Other investment measures show that sustainability investments are down on the year, but ones into social funds are up 2%, suggesting some fine-tuning of the investment strategy.

Fink’s own recent words also suggest a pivot. In June, he claimed he was retiring “ESG,” but reiterated BlackRock’s commitment to “conscientious capitalism” nevertheless, explaining that, strategically speaking, it’s smarter to be direct and specific (“We talk a lot about decarbonization, we talk a lot about governance . . . or social issues, if that’s something we need to address”), rather than generic and vague, especially when it attracts controversy.

In fact, Andreessen Horowitz has recently made pivots of its own. It swapped out some investments in crypto, and made its largest-ever single investment into Adam Neumann’s new startup Flow, which focuses on “community-driven” living experiences, defending this backing of a company with a moral mission as a “heavy lift,” but defending it by saying that “only projects with such lofty goals have a chance at changing the world.”