ESG and other socially conscious investing is all fine and dandy when energy prices are modest, however the sharp spike in energy has many reorganizing their priorities. There was already an upward trajectory pre-Russian invasion due to OPEC+ supply constraints but that has escalated with Biden’s latest sanctions. The war is putting pressure on key commodities that are slowing many green energy initiatives and renewable policy proposals. More Americans than ever are worried about the prices at the pumps and calling for expansion in drilling to expand supply. So no matter the political pressure ESG is facing an uphill climb at the moment.

Finsum: This could put more pressure on long term green energy proposals as this crisis highlights dependence on fossil fuels.

While ESG has run white-hot the last three years the main gripe was greenwashing, that was until now as anti-trust is on the horizon. An attorney from Arizona Mark Brnovich is opening an investigation into ESG investing with regards to anti-trust. The idea is pretty simple, while a top-down approach comes from legal agreements like the Paris accord, companies are suddenly allowed to coordinate and self-regulate among each other as to what constitutes good practices. Additionally, they may use ESG as a mechanism to compel or influence the removal of financing for companies from different industries. This coordination takes place through groups like the Climate Action 100+ rather than through the hush tones of a golf course but the effect is a coordinated one targeting companies or industries.

Finsum: There is a compelling case that without legal parameters ESG will turn into anti-energy coordination and tech-centric greenwashing campaign.

Russia’s invasion of Ukraine has triggered tons of sanctions from the west and many of those cut off Russian companies or Russian financers. Direct indexing has been put in one of the best positions of many financial products as they had some of the tiniest exposure to ADRs. With a meager 1% exposure, these portfolios have been left in a fairly healthy position all things considered. Meanwhile, major index companies like MSCI and FTSE Russel have raced to remove any Russian securities. Moreover, Vanguard and BlackRock as well as other major mutual funds were given until May 25 by the Treasury to find an off-shore buyer for Russian stocks. Direct index company dimensional funds have added Russia to a DNP list and have committed to rid of all their Russian stocks.

Finsum: Many funds were able to quickly dump Russian stocks, however, energy prices could be a more difficult problem to navigate.

Biden’s administration has been an outspoken critic of crypto currency and these words now have actions behind them. Biden has signed an executive order to have various government agencies put forth a plan to regulate crypto. The admin is most concerned about consumer protection, national security, and illicit finance. Additionally the explosion in popularity in the industry and the wide array of digital assets is cause for concern because the admin is worried it might be getting out of hand. However, Biden makes it clear they want to maintain an American leadership position when it comes to the growing area of fintech. The director of the National Economic Council and the security advisor see this as a pathway forward to maintaining a leading role in digital assets and the fintech ecosystem.

Finsum: Crypto needs stable regulation; weekly threats coming from global leaders are bad. If this is on that path it's probably a good thing for crypto.

Private equity set many records for itself in 2021 with gigantic inflows and huge market outperformance, but could that all be slowed in 2022 by an escalating Russia-Ukraine conflict and inflation? Bain & Co said that steeper capital costs driven from these two scenarios will undercut PE as an asset class in 2022. Inflation will hurt growing PE investments and the cheap flow of capital is being reduced by the conflict. There are huge risks that valuations will be much flatter from this point out. This means that the huge inflows and record-setting outperformance might not hold up in 2022.

Finsum: 2021 inflows were already higher than market expectations a natural correction could have been in place, but this could be more severe than just a standard correction.