The environmental, social and governance movement is retreating globally. Yet, higher education continues to push this failed investment strategy. As a result, university students will be ill-equipped to excel in the private sector.
Prestigious institutions like the University of Pennsylvania, Georgetown University, Harvard Business School and the University of California Berkeley mandate ESG courses for business students. But ESG is pervasive and equally incorporated into non-ESG courses through stated program priorities and popular textbooks.
A new Independent Women’s Features investigative report reveals that despite corporate America’s apparent retreat from ESG, business schools and textbooks still champion this ideology, inculcating the next generation of business leaders with a controversial social agenda.
The goal of financial investing is to maximize earnings for shareholders–not appease stakeholders with virtue signaling on climate issues. Because ESG investing prioritizes nonfinancial criteria over maximizing shareholder value, its related funds naturally result in a low return-on-investment. The Harvard Business Review conceded that ESG investing results in low, diminishing returns for investors. It observed that “ESG is redundant” to efforts in the corporate world and “companies publicly embrace ESG as a cover for poor business.” The publication also cited a joint study from Columbia University and the London School of Economics that determined ESG funds frequently underperform compared to non-ESG funds, while charging higher fees.
Due to poor performance, ESG fund closures have increased since 2023. Earlier this year, financial services firm MorningStar reported 2024 was the most turbulent year for ESG funds due to record-high sustainable fund outflows attributed to rising inflation and growing opposition to net-zero climate policies. ESG bond issuances are also expected to precipitously drop in 2025.
ESG investment strategies may have emanated from Wall Street, but they are hardly reflective of the free market. Governments aggressively tie ESG investing to climate policies to transition from fossil fuel usage to 100% renewables by arbitrary deadlines. They’re often presented as voluntary, but are typically forced by executive orders and regulations.
For example, the Biden-Harris administration adopted ESG principles across the whole of government, especially with climate executive orders. Regulations prioritized climate considerations even if government rules had nothing to do with this issue. Notably, the Department of Labor finalized a rule mandating retirement plan fiduciaries to weigh and prioritize ESG factors for investment decisions and shareholder rights in 401(k) savings accounts. It amended the Employee Retirement Income Security Act to “protect life savings and pensions of America’s workers and families from the threats of climate-related financial risk.” With 401(k) plans already strained, these ESG considerations jeopardized 152 million retirement funds worth $10 trillion. In May 2025, the Trump administration announced it would terminate the Biden-era rule under its deregulatory agenda.
The situation is worse in Europe, where the European Union’s Corporate Sustainability Due Diligence Directive mandates companies to report ESG disclosures in accordance with United Nations climate commitments. These top-down climate rules from Brussels will negatively impact 3,000 American companies doing business in Europe.
Ironically, ESG investing notably fails in delivering better environmental outcomes with its overreliance on carbon offsets.
An October 2025 research paper found carbon offsets, in use for 25 years, “greatly overestimate their probable climate impact often by a factor of five to ten or more” – inviting an “intractable problem.” It also concluded that United Nations carbon market rules finalized at COP29 last year aren’t working at scale.
The issue isn’t the voluntary nature of carbon offsets or credits; it’s the concept altogether. ESG investing inflates emission reduction promises while reduction goals lean on vague future forecasts. Carbon credits are essentially worthless, and offsetting has been deemed a “scam” that, ironically, invites more environmental damage under the guise of going net zero by 2050.
Even the The Science-Based Targets Initiative, a climate action organization setting targets for corporations to achieve carbon neutrality by 2050, is in damage control for embracing, then walking back on, a carbon credit plan. An SBTi document revealed carbon offsetting practices encouraging the sale of carbon credits “are ineffective in delivering emissions reductions.” That’s why Amazon founder Jeff Bezos ended support for the group in February of this year.
According to the Stanford Graduate School of Business, there is declining support for ESG among younger investors. Only 11% now say it’s “extremely important” for companies to weigh in on climate issues–down from 44% in 2022.
ESG was first coined by the United Nations in their 2005 report Who Cares Wins: Connecting Financial Markets to a Changing World. 20 years later, it’s more unpopular than ever.
Business schools must get with the times and return to their free market roots.
