The acronym refers to a form of investing that considers environmental, social and governance risk factors. But in the US, many Republicans have also adopted “ESG” as shorthand for a left-leaning agenda that’s un-American.

The New York Post, a city tabloid owned by Rupert Murdoch’s News Corp., published a story on Saturday with the headline, “While Silicon Valley Bank collapsed, top executive pushed ‘woke’ programs,” which pointed out that the head of financial risk management at SVB’s UK subsidiary was also an executive sponsor of the bank’s affinity group for LGBTQ employees. A day later, sister newspaper The Wall Street Journal ran an editorial noting that SVB’s board of directors included a Black person, an LGBTQ person and two military veterans, and suggested that the company “may have been distracted by diversity demands.” 

Politicians have also started to pile on. Florida governor and Republican Presidential candidate Ron DeSantis, who has made anti-ESG policies a signature part of his platform, said on Fox News Sunday morning that SVB was “so concerned with DEI and politics and all kinds of stuff. I think that really diverted them from focusing on their core mission.” Later on the network, Representative James Comer, chairman of the House Oversight Committee, called SVB “one of the most woke banks in their quest for the ESG-type policy and investment.” 

ESG, which was hardly known outside the finance industry just a few years ago, has now morphed into a political flashpoint, with Republican officials attacking asset managers and companies for a wide swath of environmental and social policies. State legislatures have barred state pensions from taking into account climate or social risks in their investment decisions. Led by Republican lawmakers, the US Congress voted to prohibit retirement plans from considering ESG factors. 

“This focus on ESG is completely preposterous,” said Vinnie Lauria, a founding partner of Golden Gate Ventures, a Singapore-based firm started by Silicon Valley entrepreneurs. “People are leaning into it because it’s something that gets a voter base kind of excited.” 

SVB, one of the 20 biggest US banks by assets, was seized by regulators on March 10, after its clients began withdrawing money en masse. The reasons for the bank run were both technical, in that SVB failed to manage its exposure to rising interest rates, and not, in that customers’ panic made it worse.

“Blaming ESG and ‘woke’ policies for the fall of SVB is absurd,” said Michael Sheren, a former Senior Advisor at the Bank of England, now a fellow at the Cambridge Institute for Sustainability Leadership. “SVB failed due to poor bank treasury choices and a concentrated and lumpy tech deposit base that was highly sensitive to rate moves in the market.”

It’s not clear yet why SVB missed the warning signs, but there’s no evidence to suggest that the demographics of its board was a weakness, or even especially unique. In fact, there’s plenty of data to show that boards with people from different backgrounds may improve profitability relative to homogeneous groups, and post better shareholder returns. It’s also true that all-male, all-White corporate boards are now almost non-existent among the biggest US companies.

Diversity, equity and inclusion programs are also increasingly the norm. According to a study by Harvard Business Review Analytic Services, Trusaic and human resources organization SHRM, two-thirds of companies surveyed said DEI is a high strategic priority. That’s good business, particularly among SVB’s clientele: In a 2017 paper, Harvard Business School professor Paul Gompers and co-author Sophie Q. Wong found that having at least one woman in a VC fund improved performance by approximately 10% and increased the percentage of successful startups supported by those funds.