For more than a decade, money manager Garvin Jabusch would show a chart of the planet's rising temperatures when pitching investment ideas to clients, saying they could help save the planet and still make money. These days, he no longer uses the chart and avoids talking about climate change.
"I've given up on anyone ever caring about that," said Mr Jabusch, investment chief of Green Alpha Investments, which manages about US$300 million.
He isn't the only climate-focused investor downplaying references to global warming and related topics. Parnassus Investments, the biggest US sustainable-investing firm, has removed references on its website that its funds are "fossil-fuel free".
And Engine No 1, the small activist firm that led the shakeup of ExxonMobil Corp's board in 2021, has removed wording on its web page that corporate performance is "greatly enhanced" by investing in workers, communities and the environment. The fund now says it invests in companies that are "powering innovation and driving the reindustrialization of the United States".
Shifting messages to match changing markets is nothing new. But after four years of declining prices for green investments, as well as Republican attacks on behalf of Big Oil for allegedly shunning fossil fuels, sustainable investors are shifting their past talking points in increasing numbers. The election of Donald Trump, an avowed enemy on topics that fall under ESG investing who has called global warming a hoax, may have sealed the deal.
The panicked retreat by investment firms also follows a year when clients pulled a record $20.1 billion from sustainable-investment funds, according to researchers at Morningstar Inc.
Parnassus was founded in 1984 and manages $46 billion out of San Francisco. The firm accounted for almost a third of the industry's withdrawals amid trailing investment performance. Its biggest fund, Parnassus Core Equity, returned 18.8% last year, compared with the 25% gain of the S&P 500. The fund is up 4% so far this year, outperforming the index.
In response to the outflows reported by Morningstar, Parnassus spokesman Joseph Collins said in an email that those withdrawals are being offset by inflows to products that aren't public.
Back in 2020, during the boom in environmental, social and governance investing, Parnassus described itself as the "largest pure-play ESG fund company", with a website replete with references to the strategy. Those are largely gone. Last year, Parnassus said it will no longer explicitly state in its fund prospectuses that it excludes companies that generate significant revenues from extracting, producing and refining fossil fuels.
Mr Collins said the term ESG has been "overused and inconsistently applied across the industry", resulting in investor misunderstanding and confusion.
"We recognised the need for greater clarity and precision," he said. "We chose to use the term 'sustainability' because it's a better fit for us as it describes how the high-quality companies we seek for our portfolios can sustain their advantages and long-term success."
In 2020, Engine No 1 emerged with its shareholder push against Exxon, pressing the oil giant to invest in more profitable drilling and clean energy, among other things. The firm, founded by hedge fund manager Chris James, had said on its website that the interests of Main Street and Wall Street would eventually align, creating opportunities to work with companies to boost shareholder value.
That wording has been removed. Engine No 1 said last month that it's partnered with Chevron Corp on a project focused on data centres, which rely on immense amounts of energy and water to operate. The fund said the Chevron deal is about allocating capital in an economy that "needs dramatically more power".
Engine No 1 has always focused on creating value for shareholders, said Erik Belz, the firm's president. The Exxon campaign was focused on governance and capital allocation. It wasn't about ideology or fossil fuels or renewables, he said.
Back in Colorado, Green Alpha's Jabusch, whose fund declined 4% last year, said he puts greater emphasis on innovation and technology when discussing investments with clients.
He talks about the technological prowess of electrical vehicles rather than their low-carbon footprints, for example. And that advances in technology will only make solar and other clean energies cheaper relative to commodity-based fuels.
"It's a more positive and optimistic message rather than being pessimistic" about climate change, he said.
Critics of America's retreat from the global stage, as in Mr Trump's attempt to zero-out foreign aid, warn that China will quickly fill the gap. The same could be said for the fight against global warming and the rise of green finance. China's impending listing of an inaugural sovereign green bond in London will test appetite among international investors to shift climate bets to the world's top polluter. The yuan-denominated bond, scheduled to debut before the end of the year, is aimed at showcasing China's green leadership credentials as America looks inward amid a widening domestic crisis. "It's positive that China wants to give a new impetus to the green finance market," said Ramnath Iyer, research lead for sustainable finance in Asia at the Institute for Energy Economics and Financial Analysis. Supporting the green bond market can also help "burnish its credentials even more," he said.
The financial scramble continues. Macquarie Group Ltd, a major backer of global renewable energy and green investments, has joined banks in the US and elsewhere in quitting the finance sector's top climate alliance.
Europe's sweeping efforts to regulate for everything from carbon neutrality to social inequity were once hailed as setting the agenda for the rest of the world. Not anymore.
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Saijel Kishan is reporter at Bloomberg News.