Sovereign wealth funds ESG investments double in 2021

Sovereign wealth funds are increasingly focusing on sustainability-centred products according to data acquired by Finbold.

These sovereign wealth fund (SWF) investments in the ESG space globally surged 215.27 per cent between 2020 and 2021, from $7.2bn to $22.7bn, SWFs' involvement in the oil and gas space dropped 46.92 per cent to $6.9bn from 2020’s figure of $13bn, meaning that ESG funds are now a larger investment area than these fossil fuels, and last year recorded the lowest deals in oil and gas.

The report highlights the implications of increased SWFs investment in various sustainable-focused funds. According to the research report: “Last year’s growth indicates that the ESG space has a financial appeal for investors, and SWFs play a crucial role. In general, the SWFs are uniquely positioned to promote the global environmental, ESG agenda and investing in certain products is the first step.”

In general, the increasing focus on ESGs comes as investors seek to integrate corporate environmental, social, and governance risks hoping to attract better returns. This concept is now rapidly spreading across capital markets globally.

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