Bonds that fund companies’ environmental projects, or give corporations an incentive to improve their governance or achieve social goals like boosting gender equality, have seen sales drop this year. U.S.–based companies sold just $18.2 billion of the debt, known as environmental, social, and governance (ESG) bonds, through August 16—the least since 2019’s $12.5 billion, data compiled by Bloomberg shows. The decline comes as sales of other investment-grade corporate debt has jumped.
Banks and investors cite a series of reasons for the drop. Republican politicians in states like Texas and Kansas have been trying to block government entities from considering ESG issues when buying securities. More investors are questioning whether the bonds achieve their goals or just amount to greenwashing. And U.S. ESG-related stock mutual funds have returned 14 percent on average this year, underperforming the S&P 500 index.
This…
