Green investing: global sustainable fund inflow declines sharply in second quarter to US$18 billion: Morningstar

Global investment in sustainable funds plummeted more than 40 per cent in the second quarter amid investors’ concerns over persistent inflation, rising interest rates and recession fears, according to funds researcher Morningstar.

The net new investments in sustainability-themed funds reached US$18 billion globally in the second quarter, compared with US$31 billion in the first quarter of 2023.

This was, however, better than the performance of the overall global fund universe, which saw net outflow of US$37 billion, versus inflow of US$77 billion in the previous quarter.

“Market volatility and global macroeconomic pressures, including persistent inflation, climbing interest rates and fears of recession, contributed to this retreat,” according to Morningstar.

Hong Kong was also affected by sustainable fund outflows, witnessing the fourth largest decrease in Asia after Japan, India and Singapore at US$22 million, but significantly less than the US$117 million seen in the first quarter. Japan was the worst affected, with outflows nearly doubling to US$1.9 billion from US$961 million in the previous quarter.