Money keeps going towards sustainable products. The Morningstar data is clear: flows to ESG funds (an English acronym for products that invest based on environmental, social and good corporate governance criteria) doubled in six months, between March and September 2021 . See more articles on sustainability in the Economist Sustainable Investing and ESG.
This rapid growth is due “mainly to the new European disclosure rules”, say the experts of this data provider in a recent report. On March 10, the European Disclosure Regulation for sustainable finance (SFDR) came into force , which has pushed entities to label their products as sustainable.
The managers have turned to this relabeling of their offer, as well as the launch of new ESG funds, and hence assets in sustainable funds domiciled in Europe have soared from $ 1.6 trillion ($ 1.4 trillion). euros) in the first quarter, up to 3.4 trillion dollars (in euros, 3 trillion) at the end of September.
This acceleration has further widened the gap between heritage in sustainable funds in the Old Continent and in the United States. On the other side of the Atlantic, these products monopolize just over 330,000 million dollars, a figure 10 times less than the European one.
The Disclosure Regulation has echoed the need in this industry to distinguish between products that used the surname of green or sustainable with a mere marquetinian purpose , and those that really were (with the aim of combating the dreaded greenwashing or green face wash). To do this, it indicates to the fund managers how to classify their range of funds, making a distinction between article 8 funds (the so-called light green) and article 9 (or dark green).
“The new ESG language that meets our criteria for classifying a strategy as sustainable has led to an increase in the number of funds included in our [European] universe, which at the end of September was made up of 6,147 products, compared to the 3,730 we reported to end of June. It is an increase of 65% “, emphasize the analysts of Morningstar.
Half a thousand funds
More than 500 new ESG products from European firms saw the light in the first three quarters of 2021, compared to 73 lights in the US. Despite the fact that Europe dominates in terms of the arrival of new products on the market, it is not that the North American country is not stepping on the accelerator; in fact, the third quarter of 2021 marked a record in this type of launches, with 38 new references.