Investing in ESG funds is the growing trend, but keep an eye out for ‘greenwashing’
- Picking the right asset manager is tricky as many professional investors have been accused of exaggerating their ESG credentials and ‘greenwashing’ their funds
- Those wanting to invest ethically should look under the bonnet of prospective funds to scrutinise if all the right ESG boxes are ticked
Asset managers around the world have long been rubbing their hands at the prospect of socially responsible investing taking off in a big way.
And, after many false dawns, it seems they might now finally be getting what they wished for, with the amount of money flowing into funds that put ethical and social standards front and centre now hitting eye-watering levels.
The pandemic has apparently fast-tracked a shift into ESG funds with parallels being drawn between the unforeseen risks of Covid-19 and mounting awareness of the climate emergency. As a result, more than US$458 billion has poured into ESG retail funds globally over the last 12 months, according to figures from data provider Refinitiv Lipper, with US$6.6 trillion in total now invested.
Picking the right asset manager, however, is tricky. Many professional investors have been accused of exaggerating their ESG credentials and “greenwashing” their funds to create investment products that appear more ethical and responsible than they actually are.
