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Are investors seeing through the smoke and mirrors of sustainable investments?

With the tremendous growth of sustainable investments over the past decade now slowing down, as accusations of greenwashing and “fake it ‘til you make it” are bandied around the sector, CAMRADATA’s latest whitepaper on Sustainable Equity explores how far equity funds have come and what needs to be done to ensure their sustainability.

The whitepaper includes insights from AllianceBernstein, American Century Investments, Sanlam Investments UK, Isio, Cambridge Colleges’ Federated Pension Scheme, WTW and XPS Pensions Group who all attended a roundtable hosted by CAMRADATA in London in July.

Sustainable equity investing has gone from fringe and niche to fully mainstream over the past few years. Inflows hit an all-time high amid the pandemic as investors reflected on the implications of their capital allocations. Yet inflows to funds with a sustainable label have slowed down in the last 18 months.

The report considers if this is just a blip while investors reassess and what the future might hold. It looks at the attitude shift among institutional investors over the past five years that is driving momentum in sustainable investing and the “boom” in the DC pensions market for various ranges of ESG self-select funds.

It explores the challenges, opportunities and risks in sustainable equity investing, and evolving attitudes and regulation across the world which mean investors must adapt. It also looks at the importance of engagement and voting in sustainable investing.

CAMRADATA’s report ends with a look at what’s next for sustainable equity funds – with biodiversity highlighted as set to become the next big topic of conversation.

Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “With only a few exceptions, financial institutions around the world have rushed to offer a dazzling array of new products, ranging from exclusion funds to straight-up impact vehicles.

“But with such a large (and profitable) bandwagon comes the inevitable issue of smoke and mirrors; and, thanks to such a rapid and unstructured rise investors are relying on acres of data fields that range from unstandardised to downright deceiving, leaving them caught in a bind.

“With equity funds leading the sustainability pack by some margin – both in terms of product and inflows – our whitepaper offers valuable insight on the growth of sustainable equity investing, what’s behind the slow down and how it can be sustained in the future.”

The whitepaper also includes three opinion articles from the sponsors:

  • AllianceBernstein – ‘Carbon Handprints: A New Approach to Climate-Focused Equity Investing’
  • American Century Investments – ‘Sri Lanka: A Cautionary Tale About a ‘Just Transition’ to Sustainability’
  • Sanlam Investments – Reflections of a sustainable investor’

 

To read the Sustainable Equity whitepaper, please click here.

For more information on CAMRADATA visit www.camradata.com.

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