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Sustainable fund assets hit record $1.7 trillion in 2020: Morningstar

Covering everything from how a company handles climate change or boardroom diversity to how a country is positioned to withstand the impact of changing weather patterns, the belief is that those with a good ESG score will perform better over time.

January 28, 2021 / 10:00 PM IST

Demand to invest in funds which focus on environmental, social and governance (ESG) issues jumped in 2020, driving assets under management up 29 percent in the fourth quarter to nearly $1.7 trillion, industry tracker Morningstar said on Thursday.

In a turbulent year marked by the effects of the COVID-19 pandemic, the surge in ESG assets was bolstered by stimulus-driven market recovery and as investors increasingly looked for more resilient investments.

Covering everything from how a company handles climate change or boardroom diversity to how a country is positioned to withstand the impact of changing weather patterns, the belief is that those with a good ESG score will perform better over time.

The flows have also been helped by an accelerating push from governments globally to transition to a low-carbon economy, changing market rules and tax regimes to encourage climate-friendly investments, many of which are held by ESG funds.