Amac Reports: The woke investing craze may have reached its zenith.

According to a new report from the Financial Times, investors have withdrawn a net $40 billion from so-called “environmental, social, and governance,” or ESG, funds since the start of 2024. These withdrawals represent “the first year that flows have trended negative” and come amid, according to the Times, “poor performance, scandals, and attacks from U.S. Republicans.”

This trend has been particularly pronounced in the United States. In April alone, American investors pulled $4.4 billion from ESG equity funds. BlackRock, once one of the most prominent champions of ESG, has now halved its ESG assets since 2021. BlackRock CEO Larry Fink has also publicly stated that he will no longer even use the term “ESG” because “it’s been entirely weaponized.” Parnassus Core Equity, “the largest US sustainable fund,” managing $28.4 billion in assets, has “been one of the ten biggest losers in terms of flow for two years straight.”

As the Times also reports, perhaps the primary cause of ESG’s sudden fall from grace is notably diminishing returns. Over the past year, while conventional stock market funds averaged a 21 percent return, ESG funds averaged just 11 percent. As fossil fuel companies have seen sharp upticks in their stock prices, ESG-laden funds have missed out on all those gains.

Jamie Franco, global head of sustainable investments at asset manager TCW, told the Times that many ESG funds launched in 2020-2021, right at the height of the movement’s popularity, “probably went out a little too quickly [and] probably took advantage of some ESG marketing sentiment.” In other words, Franco appears to be suggesting, ESG “investing” is driven more by politics than actual sound economic reasoning.