Billions flow out of ESG as investors turn their backs on ‘green’ investing
- Media Manager
- Oct 30, 2023
- 1 min read
Microsoft Start - The Telegraph
Written By: Charlotte Gifford
Published: October 31st, 2023
Not long ago, the investment world was gripped by green fever. But a mere two years after “sustainable” funds were thrust into the mainstream, investors and asset managers alike are turning their backs on the once-booming trend.
Nearly £2.5bn has flowed out of funds focused on environmental, social and governance issues (ESG) since May, according to data from global funds network Calastone.
The S&P Global Clean Energy Index, a measure of companies investing in renewable energy, is also down more than 25pc over the past year due to soaring interest rates that have increased borrowing costs.
By comparison, the S&P 500 Energy Index, which tracks the broader energy industry including oil companies, is up 2pc over the same period of time.
As demand has fallen, the asset managers who once sang ESG’s praises are backing off. Only 102 new sustainable funds were launched in the most recent quarter of 2023 – down from almost 350 at the peak in 2021.
Meanwhile, in Europe – by far the biggest sustainable funds market – the number of funds adding “ESG” to their names has plummeted amid mounting concerns over “greenwashing”.
