igel Farage has a new cause. In the wake of the scandal surrounding the closing of the former Brexit Party leader’s Coutts account, Farage announced he is focusing his energy on becoming “a champion and crusader for men and women who have been closed down by the banks.”
In a subsequent opinion piece, Farage set out the overarching problem — woke capitalism. NatWest, in his words, had “morphed into a woke warrior” under the now-former CEO and equality champion, Dame Alison Rose, and was now focusing more on promoting “diversity and inclusion” than “making money.”
This war on so-called “woke” businesses may be new for Farage, but its origins are American. In recent months, US Republicans have put “ESGinvesting”—an investing approach that considers companies’ environmental, social, and governance impacts—at the forefront of the political culture war during a hotly contested election cycle.
Republican presidential candidate Ron DeSantis has branded ESG “woke capitalism,” and the Speaker of the US House, Kevin McCarthy, has labelled ESG investments as “woke priorities” that push a “far-left political agenda.” This conservative campaign is having an impact. After nearly half a decade championing ESG, Larry Fink, the CEO of the world’s largest asset manager BlackRock, announced in June that he’d no longer use the term. Not because he doesn’t believe in it, but because he’s “ashamed” the term has become so politicised.
While Farage’s campaign may feel like the opening salvo of a US-inspired, anti-woke, anti-ESG movement, he is not the first UK politician to echo US culture war rhetoric on ESG. Writing for the Telegraph last month, former Prime Minister Liz Truss cited the ESG agenda as one of the key “enemies of economic growth” over recent decades. In the Government’s 2023 Green Finance Strategy, ministers warned the financial sector that ESG funds shouldn’t steer away from investments in weapons and defence.
Both the Conservatives and Labour have also faced criticism for rolling back their green pledges, with Rishi Sunak planning to issue new oil and gas licences in the North Sea and Labour postponing its seminal £28 billion green investment plan.
As one of the largest financial hubs in the world, London has a unique role in pushing back against this trend. Despite a sustained, negative campaign, ESG investing remains an essential part of the finance sector, with ESG funds managing nearly $2.7 trillion in assets.
New research from my organisation—Atalanta—and the polling experts Opinium finds that UK investors are hungry for ESG opportunities. Our survey found that nearly half (49%) of UK retail investors are interested in investing in ESG funds in the near future, and the vast majority (71%) expect all investment funds to become more sustainable.
With evident enthusiasm from investors and trillions at stake, London’s financial market is well-placed to be the home of ESG. But it’s losing pace with Europe. According to Opimas, 60 of the top 100 ESG funds are now domiciled in the European Union, with just three of the top funds in the UK. As post-Brexit London looks to reinvigorate its reputation as the leading financial centre in Europe it cannot afford to alienate ESG funds.
Political leadership matters as much as business leadership here. With the Mayor of London, Sadiq Khan, now chairing C40 Cities—the global network of mayors brought together to confront the climate crisis—the capital has a unique opportunity to demonstrate its wholesale commitment to sustainability and position itself to service this substantial financial market.
London has the potential to be a global leader in ESG, helping businesses and individuals put their money where their values are. Now is not the time to be complacent as the US-led culture war arrives on our shores.
Eva Barboni is a US-born, London-based political consultant and founder of Atalanta