What’s going on?
As people wake up to the need for better stewardship of our planet, financial and otherwise, the dollars are pouring into sustainable investment – but the euros are a different matter.
What does this mean?
A report out this week from the Global Sustainable Investment Alliance reveals that the amount of money sustainably or responsibly invested across the world’s biggest financial markets hit $35 trillion in 2020. That figure isn’t just 50% higher than in 2016 – it also means that over a third of all professionally managed investments in North America, Japan, Australasia, and Europe are now targeting social or environmental goals.
Financial data giant Bloomberg reckons that global levels of sustainable investment could rise to $53 trillion by 2025 (tweet this). But some places are pulling their weight more than others: while sustainably invested assets increased 42% in the US between 2018 and 2020, they actually fell 13% in Europe.
Why should I care?
The bigger picture: Details matter.
European sustainable investment may have shrunk by $2 trillion over the last couple of years, but that isn’t down to wilting investor enthusiasm. On the contrary, red-hot demand for green investment has led to an ever-expanding range of products – and in the process created fertile ground for misrepresentation. Anti-“greenwashing” rules introduced by the European Union have therefore tightened up the definition of “sustainable” investment – and many funds have been reclassified as a result.
For markets: Going against the grain.
Individual companies can be guilty of greenwashing too. That was the charge leveled against plant-based milk brand Oatly last week by an activist investor betting on its newly public stock price sinking. Short-seller Spruce Point Capital Management claims that Oatly overstated both its financials and its sustainability credentials in the build-up to its stock market launch in May – and the company’s shares have fallen 10% since the accusations emerged.