Sehoon kim University of Florida
The Federal Reserve raised interest rates again on May 3, 2023, by a quarter point, making it the Fed’s 10th rate hike since March 2022 in an ongoing fight to tame inflation. These rate increases have been reverberating throughout the economy and raising the prospect of a recession.
The rate hikes are also rattling sustainability-focused investing, better known as ESG investing.
Over the last decade, asset management has been reshaped by ESG investing. This trend puts pressure on businesses to meet benchmarks in terms of environmental, social, and governance. ESG funds are now a multi-trillion dollar market.
The high level of uncertainty surrounding interest rates, as well as the prospect of a recession and political backlash have put the future of ESG Investors at a crossroads.
I am a specialist in sustainable finance. Recent work of mine has documented how tough economic conditions can impact ESG investing. Since 2022, the net flows into U.S. Sustainable Mutual Funds have been at their lowest in five years. Here are how three critical factors can affect investors’ zeal for socially…
