Investing sustainably is high on the fund management agenda in 2021, with Morningstar stating globally inflows into ESG funds topped $178bn in Q1 this year; up from $38bn in Q1 2020.
This approach to investing has evolved greatly in recent years as demand for strategies that achieve market-rate returns whilst simultaneously considering the positive environmental impact grows.
Threadneedle UK Sustainable Equity fund manager, Sonal Sagar, says that it is a “great thing” that the industry has been seeing a rapid move towards ESG investing over the last few years.
“Greater awareness for the environment, the social aspects and the desire to become more responsible custodians has resulted in a huge shift in the narrative of what the true goal of investing is,” she notes.
Yet inconsistencies in terms of what sustainable/ESG investing comprises is creating instances of greenwashing and inconsistent disclosures, meaning fund managers like Sagar have to work harder to define their strategies – and responsibilities as sustainable asset managers.