- There's no definitive answer to what makes a good ESG strategy
- Platforms are growing their responsible investing options but questions linger over authenticity
The wind has left the sails of many environmental, social and governance (ESG) focused funds. ESG funds have underperformed their conventional peers over the past year in the Investment Association’s global and UK sectors. Elsewhere signs indicate that demand may have faltered. According to Morningstar, flows into ESG-focused exchange traded funds (ETFs) came to €13bn (£10.95bn) in the first quarter, less than half of the €27bn inflow in the fourth quarter of 2021.
However, if market conditions have favoured energy stocks and other unloved areas, that’s not to say that sustainable investing is a passing fad – particularly when it comes to the environment. According to research carried out by Aviva (AV.) for the UK’s Make My Money Matter campaign last year, the average UK pension saver can cut their carbon emissions by 19 tonnes a year by switching their savings into a sustainable fund. That’s the equivalent of 21 times more than the combined annual carbon savings from using electricity from renewable sources, giving up flying and going vegetarian, the research says.