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ESG’s reckoning

Many of these pages have been dedicated to our cynicism towards fund managers hopping on the bandwagon of so-called environmental, social and governance investing. That’s not to say we don’t think climate change or social issues are important, but as more money is being attracted to the ESG sphere, it is inescapably a marketing opportunity for those who manage other people’s money.  

Research company Morningstar’s global sustainable fund flow report shows how quickly the sector is growing. Globally, sustainable funds attracted $323bn (£232.96bn) in the first half this year. That’s up from around $120bn in the first half of last year and just $65bn in the first half of 2019. While this only includes funds which have a sustainability agenda and ESG criteria in their investment selection process, I doubt if there are any fund managers now who don’t ‘formally integrate ESG considerations’. 

As the sector continues to grow, more and more questions will be raised about its authenticity. A number of events in the past month have shown that the scrutiny placed on ESG investors is starting to escalate.

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