Q4 Global Sustainable Fund Flows Demonstrate Resilience

Despite pressures caused by inflation, interest rates and recession fears, global sustainable fund flows proved resilient in Q4 2022, attracting US$37 billion of net new money. The report by research and data provider Morningstar noted that, while Q4 global sustainable fund inflows were 50% higher than Q3 (US$24.5 billion), reaching US$2.5 trillion in assets by the end of December, the broader market experienced US$200 billion of net withdrawals. “The rebound in global inflows into sustainable funds was driven by Europe, where investor appetite remains strong and supported by a favourable regulatory environment,” said Hortense Bioy, Global Director of Sustainability Research at Morningstar. “The US ESG fund market, however, faced headwinds: macroeconomic of course, but also political, with prominent politicians speaking and acting against ESG investing.” A separate Morningstar report also took stock of the Q4 performance of Article 8 and 9 funds under the EU’s Sustainable Finance Disclosure Regulation (SFDR). Ahead of SFDR Level 2 going live in January 2023, Q4 2022 saw many asset managers reviewing their fund classifications and downgrading Article 9 to 8, the report said, noting 420 products changed their SFDR status since September – 308 of which were Article 9 funds re-labelled as Article 8. “We expect the recent wave of Article 9 fund downgrades to continue, raising questions about what will remain and how useful that category will be,” Bioy said. “Investors will increasingly look beyond Article 8 and Article 9 and focus instead on the level of exposure to sustainable investments, which cut across both classifications.” 

 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2023 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top