Republicans in New Hampshire have floated two bills that would make it a felony to invest taxpayer dollars in ESG funds. These are investment funds that incorporate environmental, social and governance factors into their portfolio.

In addition, the investment research firm Morningstar just came out with an analysis that showed, for the first time on record, investors pulled more money out of ESG and sustainability funds than they put into them.

Until recently, investors were pouring money into ESG and sustainability funds — roughly $20 billion in 2019, $50 billion in 2020 and $70 billion in 2021, said Alyssa Stankiewicz, who researches ESG funds at Morningstar.

And during that period, ESG actually generated better returns than traditional investments. Then in 2022, Russia invaded Ukraine and the price of oil went nuts.

“When Exxon and Chevron took off in 2022, sustainable funds didn’t perform as well as their conventional funds because they didn’t benefit from that rally,” Stankiewicz said.

She said the Federal Reserve’s fight against inflation didn’t help.

“When someone’s looking at an environment of high interest rates, it can make activities like building out renewable energy less profitable,” she said.

So part of the ESG retreat is just investors chasing higher returns elsewhere. The other part is politics.

“About 40% of U.S. companies have experienced some form of backlash, which can range from healthy skepticism all the way to being the targets of political opportunism,” said Paul Washington, executive director of the ESG Center at The Conference Board.

Conservatives have charged big financial firms like BlackRock with prioritizing a so-called woke agenda over their fiduciary duties. So instead of greenwashing, a new term has entered the chat: greenhushing.

“The fact we no longer use the term ESG on analyst earnings calls, that fund prospectuses are dropping the term ESG, doesn’t mean they’re changing what they’re doing,” said Witold Henisz, vice dean of the ESG Initiative at the Wharton School. “But they’re self-censoring because they don’t want to be called out in a congressional hearing.”

He said the right way to judge ESG investing is how it performs in the long term — even if it’s not called ESG by then.

Correction (Jan. 22, 2024): A previous version of this story misspelled the first name of Witold Henisz and misstated his title at the Wharton School.