The shift away from promoting ESG values in corporate culture abroad has yet to trickle down to New Zealand, according to one local fund manager, with companies seemingly holding firm on their commitments to best practice.

Harbour Asset Management Senior Manager Responsible Investment Sue Walker says in the US, a lot of companies and banks are pulling back on their diversity, equity and inclusion initiatives in particular, which is disappointing to see.

“And the big global banks and the global fund managers are pulling back from their net zero asset management or net zero banking alliance targets.

“Obviously it's a big shift, and it's driven by the political environment.”

The re-election of US President Donald Trump has prompted a rapid reset of corporate culture in the US, with the rollback of certain ESG practices and renewed support for oil and gas drilling.

Whether the global sentiment will affect New Zealand corporates is yet to be seen, says Harbour Asset Management ESG Research Manager Jorge Waayman, although he admits it is early days and most of the reporting flow is for the half year when commentary doesn’t typically elaborate on ESG practices.

“From what I've seen, especially among some of those companies that are more exposed to the effects of climate, like the power generation sector, you know, they're still pushing ahead with a lot of investment into new renewables, spending billions of dollars in new projects, so we haven't seen any evidence of them kind of stepping back from that and changing their tune due to some of these global political shifts.”

Changing tide tests the drivers of ESG practice

Questions were raised about BlackRock’s commitment to “green” initiatives, when in November last year, the global giant pulled the pin on its investment in New Zealand company SolarZero, liquidating the solar power company which it had purchased only two years prior. BlackRock said at the time it remained committed to New Zealand despite its sudden decision.

Speaking to the Australian about the culture shift, BlackRock Chief Executive Larry Fink conceded the cultural pendulum was very far left and is now moving right. Fink told the publication it is BlackRock’s job to work with society and any government, in any environment, given the company was awarded $US641 billion of client money in 2024.

The wishes of clients and shareholders could also be what keeps strong ESG practices in play, says Sue Walker of Harbour Asset Management.

“If they have an investment mandate with clients, they still have to follow that.

“So if their clients want to vote in some way that might be related to diversity, equity and inclusion initiatives or climate-related initiatives, they can either override what they (government) advise them to do, or they would do it on their behalf.

“I think that's a really important thing to note that will still happen.

“And I also think that for us and for a lot of fund managers, ESG is about risk and opportunity,” says Sue Walker.

And while it may look like companies are backing down, investors will need to look carefully at what is underneath, says ESG research head Jorge Waayman.

“I think behind the scenes there is still a lot of action happening by those companies, but they're just a bit more careful around the whole political landscape and how they are viewed by some of the regulators as well.”