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Public Opinion Reflects Little of ESG Political Battle

ESG Investing

In recent years, efforts to promote the use of environmental, social and governance (ESG) factors in investing have become caught up in the country’s culture wars, yet the public apparently remains largely unfamiliar with the concept, new polling data shows.  

Image: Shutterstock.comAdoption of ESG principles has been promoted by the Biden administration, as well as by prominent organizations in the United States and globally, that point to ESG investing as a way to minimize investment risk while promoting social good. Critics on the political right, meanwhile, decry it as a system designed to achieve progressive goals at the expense of shareholders and have advanced anti-ESG legislation in many states.

While this political backdrop is evident in the new polling data by Gallup, it does not appear to be an overwhelming factor driving the public’s interest in, or views about, ESG.

According to the firm’s data, 37% of Americans currently report being “very” or “somewhat familiar” with ESG—a level that remains largely unchanged from 36% in 2021. At the same time, another 22% today are “not too familiar” with the concept, while 40% of respondents say they are “not familiar at all.”

These findings are from a Gallup poll conducted April 3-25, in which respondents were told that ESG “includes factors like the record of a business on human rights, the environment, diversity or other social values” and that some people take these factors “into account when making decisions about buying products and services or investing.”

Most Have No Opinion

Underscoring the public’s lack of familiarity, roughly 6 in 10 Americans (59%) selected the “no opinion” option when asked if they view the movement to promote the use of factors in business and investing as a “positive” or “negative” development. The remaining 4 in 10 are about evenly divided between expressing a positive (22%) and negative (19%) view of the practice.

Not surprisingly, adults who are familiar with ESG are more likely to express an opinion about it than those with less familiarity. That said, they are just as likely to be divided on the question—with 36% viewing ESG positively and 35% negatively.

Likewise, adults who report owning stock—about 6 in 10 respondents in the current poll—are more likely to have an opinion about ESG than non-stock owners, but they are just as divided on the merits of promoting ESG in business and investing.

Investment Decisions

Turning to whether retirement fund managers should only take financial factors into account when making investment decisions or also consider ESG factors, the findings show that the public tends to lean toward the former—48% versus 41%, respectively. Stock owners’ views on this are nearly identical to the national averages, according to the polling.

Adults familiar with ESG are closely split on the question, with 50% preferring fund managers to limit their investing criteria to financial factors while 46% want ESG factors considered. “Those not familiar with ESG lean more strongly toward only considering financial factors but are also more likely to have no opinion on the question,” writes Lydia Saad, Director of U.S. Social Research at Gallup.

Political Lens

Looking at the issue through a political lens, Gallup found that there is no difference between Republicans’ and Democrats’ familiarity with ESG, as just under 4 in 10 in each group say they are “very” or “somewhat familiar” with it and an equal proportion are “not at all familiar.”

Further, awareness of ESG hasn’t increased much among either group since 2021, when 33% of Republicans and 38% of Democrats said they were “very” or “somewhat” familiar with it.

“Republicans are far more likely to have a negative than positive view of ESG, while the reverse is true of Democrats, but majorities of both groups say they are unsure,” observes Saad.

Only when asked to choose between two modes of investing—with or without taking ESG criteria into account—do majorities of Republicans and Democrats take opposing sides. In this case, 64% of Republicans think fund managers should only consider financial factors when choosing investments, while 59% of Democrats think they should include ESG.

For now, proponents remain focused on ESG initiatives and are actively working to have ESG scores become a standard part of corporate fiduciary reporting so that consumers and investors can make informed decisions. Conversely, Republican lawmakers at the state and federal levels have ramped up their opposition to the movement, including the introduction of legislation to prevent state governments from investing in funds that use ESG criteria, as well as filing lawsuits to overturn the Department of Labor’s ESG rule.

Yet, public opinion apparently reflects little of this political battle. “To be sure, Republicans’ and Democrats’ underlying tendencies align with their parties’ respective positions on ESG policy—but at least for now, the issue does not seem highly politicized among the American public,” Saad concludes.

The American Retirement Association’s DC Pension Geeks podcast recently held a series of podcasts (part 1 and part 2) on this issue, including ARA CEO’s Brian Graff interviewing Tim Hauser of the DOL’s Employee Benefits Security Administration to cut through the partisan hype to address the thinking behind the DOL’s action.