The era of sustainable investing seems to have come to an end. Environmental, Social, and Governance (ESG) metrics that were once the rage with CEOs and investors alike are now held in disrepute. What brought about this change of heart? I contend that ESG was never a serious strategy for investing. It was a bureaucratic scheme for ensuring compliance to the rules of a cult. While it raged, even the most prudent investment houses felt the peer pressure to offer their clients ESG investment options. I assume that most knew that focusing on environmental factors, social considerations, and government handouts was a poor substitute for more traditional methods that focused on return. In their hearts, they knew that sustainable investing was not sustainable.

However, what gave it the fuel to take off in the first place? Like so much else associated with the environmental movement, it can be explained best as a religious phenomenon, a form of modern-day Calvinism in which virtue is intertwined with profit as a visible marker of grace. ESG investing was a utopian blueprint for prodding corporate America into large-scale social engineering. The fervor for it was at its height in 2020.  A glance at the NASDAQ Clean Edge Green Energy (CELS) index historical chart shows a meteoric rise in the value of green energy stocks from Mar. 20, 2020 to Jan. 20, 2021, a tumultuous period between the COVID lockdown and Biden’s inauguration. It coincided with waning reelection prospects for Trump, an opponent of green energy, and the surge in the polls and election of Biden, a staunch proponent of green energy.

Apart from transitory blips on Nov. 20, 2021, with passage of the Build Back Better Act (H.R. 5376) and Aug. 20, 2022, with enactment of the Inflation Reduction Act (IRA), the index had returned by Apr. 8, 2025, to the level it was at prior to its initial steep rise. The return of Trump has put a nail in the coffin of green energy stocks, but as you have seen, their decline predates Trump’s inauguration. Even before the reelection of Trump, investors must have realized that high valuations of wind, solar and other green stocks could only be sustained through a perpetual regimen of government subsidy and that was unlikely.

However, hope springs eternal in some, and recently green stocks have regained some of their value after a low point on Apr. 8, 2025. I am amused though that analysts are attributing this recent rise to a boom in AI datacenter construction. The idea that datacenter owners would tie their success to an unreliable power source like wind or solar is comical. Moreover, with the shift in political winds, many companies have abandoned their net-zero climate goals. Others are practicing “greenhushing”, or staying quiet about their climate strategies to avoid political blowback. On Wall Street, ESG funds are even altering their names to avoid any stigma. However, a pig will remain a pig no matter how much lipstick you put on it.

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