Environmental, social, and governance (ESG) investing is heading for a resurgence among younger generations, despite the best efforts of the growing anti-ESG movement.
By considering ESG factors in financial decisions, ESG investing aims to protect investors from the risks associated with unsustainable business practices. Simultaneously, ESG investing has been promoted as a way to achieve socially beneficial outcomes for all.
However; some US states, like Florida and Texas, are seeking to ban ESG investing, citing fiduciary duty and anti-boycott laws. But despite this shift, sentiment towards ESG remains strong among younger generations. These youthful investors recognise the long-term viability of these practices and desire the positive social outcomes they promise.
Ethical investments and ESG
At its core, ESG investing is simply integrating environmental, social, and governance considerations into financial decision-making. Asset managers and pension funds will analyse companies’ ESG credentials—such as climate resilience, diversity, equity, and inclusion (DEI) policies, and transparent accounting processes—to determine the long-term feasibility of an asset.
There are two intended outcomes: funds are protected from the risks generated by unsustainable or socially irresponsible investments, and environmentally and socially ‘good’ outcomes are achieved for everyone to enjoy.
The anti-ESG movement is bringing legal challenges
ESG investing has faced massive challenges over the last few years, particularly from the anti-ESG movement. This is a coalition of actors that oppose ESG investments, regulations, and company policies for various reasons, including ideological differences and vested interests in traditional industries.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataRight-wing lawmakers in the US are the driving force behind anti-ESG pressure. One way that they exert pressure is by attempting to ban pension funds and asset managers from considering ESG concerns. These politicians argue that, by aiming to produce socially good outcomes for everyone, ESG investors are not acting in the best interest of their clients, meaning that they are failing in their fiduciary duty. They also accuse ESG investors of violating antitrust and anti-boycott laws by allegedly conspiring against fossil fuel companies.
Some lawsuits based on fiduciary duty and anti-boycott rules have been successful. Several US states, including Florida and Texas, have made moves towards banning ESG investing. This represents a significant hurdle for the sustainability and progressive value in financial services, potentially derailing the investment strategies of public funds and asset managers.
Gen Z and millennials continue to support responsible investment
Despite these setbacks, positive sentiment towards ESG investing is re-emerging, particularly among the young. Polling from GlobalData Strategic Intelligence throughout Q1 2025 assessed sentiment towards corporate ESG. When asked the primary reason why a company should set up an ESG performance plan, more respondents cited pressure from investors than pressure from consumers for the first time since polling began.
A 2025 survey by Morgan Stanley found that 99% of Generation Z respondents and 97% of Millennials report that they are interested in sustainable investing. Approximately 70% of each group took this further, saying they were “very interested”. Clearly, ESG concerns are still prominent in the investment landscape.
Young people are wise to support sustainable investing
The favourable stance of younger generations towards ESG investing is entirely rational. Given the likelihood of increased regulations and the tangible effects of climate change within their lifetimes, non-ESG investments could become unviable, potentially reducing their value significantly.
Similarly, younger investors are more likely to desire the socially good outcomes that the anti-ESG movement claims violate asset managers’ fiduciary duty. Not only are young people often more liberal and idealistic, but these generations will face the devastating consequences of climate change and ecosystem collapse. Despite the current climate, ESG investment is poised for growth, driven by a generation that looks beyond short-term gains towards sustainable prosperity.
