Nonprofits are ditching Environmental, Social and Governance (ESG) policies at a stunning rate, according to a 2023 report by the Council on Foundations and The Commonfund Institute.

The share of community foundations that plan on adopting ESG policies in the next 12 months dropped from 34% in 2022 to 16% in 2023, with private foundations dropping from 10% to 7% in the same timeframe, according to the report. ESG policies have become less popular following scrutiny from conservatives and investors pulling funding.

The share of private foundations with plans to invest in firms with “diverse managers,” defined as firms that have 25% or more “diverse leadership,” also decreased from 22% in 2022 to 19% in 2023, according to the report. The share of community foundations planning such investments increased from 23% to 24%.

The percentage of private foundations seeking ESG investments was 27% in 2023 from 28% the year before, with the number of community foundations seeking investments remaining unchanged at 26%, according to the report. “Impact investing,” which seeks to allocate funds to causes in line with the “institution’s mission,” increased for private foundations to 24% in 2023 and community foundations increased to 23%, both up two percentage points from 2022.

Companies use ESG criteria to direct investments to causes that would be “socially conscious” in regards to the environment, social issues and government, according to the Corporate Governance Institute.

House Oversight Committee Chairman James Comer probed the Internal Revenue Service (IRS) in June on alleged ESG actions by retirement plan administrators that were potentially in violation of tax code. Republican Tennessee Attorney General Jonathan Skrmetti sued private equity firm BlackRock in December 2023, alleging that their ESG push harmed financial products that are marketed as non-ESG funds.

In Nevada, asset managers, including BlackRock, used state pension funds to back ESG shareholder resolutions on various issues related to race, gender and climate.

ESG has also struggled in recent years in the private sector, with investment funds focused on sustainability losing $2.7 billion in the third quarter of 2023, according to Morningstar.

This story originally was published by the Daily Caller News Foundation.

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