The interpretation — as presented in “Investors pull $40bn from ESG funds as sustainable stocks frenzy subsides” (Report, June 6) — that sustainable investing is in retreat oversimplifies the dynamic and overlooks the substantial change occurring in the real economy.
Fund flow data represents only the most liquid and lowest impact segment of the sustainable investment universe. After all, when an investor’s dollar enters or exits a mutual fund or exchange traded fund, no additional capital flows to the underlying companies. Fund flow data should therefore be thought of as an indicator of sentiment rather than economics.
Looking at primary markets, whose capital funds the real economy, tells a different story. Multiple authorities — like the International Energy Agency — report record aggregate investment levels in “green” industries such as renewable energy, electrified transport and power grids. Meanwhile PwC’s data indicates that climate tech’s share of all private market equity and grant investment is now over 10 per cent, up from just 2 per cent a decade ago.
That investment is delivering tangible real-world change. Electric vehicle sales increased by over 30 per cent in 2023, and are set for another record year, according to Bloomberg.
Last year’s global solar installation rates topped 440GW — more than double the 2021 figure. And, in the social domain, the share of female S&P 500 corporate CEOs and directors both edged higher in 2023 by a percentage point, as measured by the Conference Board.
While the popularity of sustainable investing funds may ebb and flow with changing political sentiment, the impactful economic megatrend of sustainability quietly continues.
James Purcell
Former Deputy Chief Sustainability Officer, Credit Suisse,
Kilchberg, Switzerland
