Various environmental, social and governance (ESG)-related funds from Abrdn, Morgan Stanley and UBS have recently been renamed to omit sustainability-related phrases.
In addition, according to data from Morningstar Direct cited by the FT, launches of environmental, social and governance (ESG)-related funds have been steadily declining, with only six launched in the second half of 2023 compared to an average of nearly 100 a year between 2020 and 2022.
The trend follows a ruling from the SEC in September 2023 that 80% of assets in funds must be related to the name.
“The hype around sustainable investing has been receding for a number of reasons,” commented Christopher Papadopoullos, senior analyst at GlobalData. “Investors have realized that funds labelled ‘green’ or ‘ESG’ are usually limited in their impact and stricter regulation has come in in Europe and the UK on what funds can label themselves as sustainable.”
Banking not taking climate change seriously
The fall in the number of ESG-named funds is reflective of a wider pattern.
GlobalData’s recent Banking Predictions Report highlighted that ESG has fallen and will continue to fall on banks’ lists of priorities since 2021. The report also pointed to growing disillusionment and cynicism across the industry about how seriously finance is taking climate change. It cited a poll that found 53% of respondents believe that ESG pledges are merely a marketing exercise for most companies.
Source: Privatebankerinternational.com
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