Growth in ESG Funds. Comments by Jalil Boulahssas, Impact Investing Intern, University of Richmond

According to the Deloitte Center for Financial Services, there has been a significant increase in environmental, social, and governance (ESG) investments since 2017.

This follows a clear trend as the public and the global media have begun to focus on sustainability. As a result of this movement, it is predicted that client-driven ESG investments will reach half of all professionally managed investments by the year 2025. While the dollar amount of ESG investments are highest in Europe, the data shows increased American interest in this investment type that will drive future growth.

According to the Deloitte Center report, the share of ESG investments in the United States has grown from 11% of assets in 2011 to 26% of assets in 2018. One factor driving the growth of ESG mandated funds is client demand from both retail and institutional investors.

In response to this unprecedented growth, government agencies and investment institutions are working to establish consistent definitions, regulations, and growth measurements for the asset category. Consistent measurements and data in this category are key to tracking and evaluating environmentally and socially friendly investments.

The rise of this investment style will benefit environmentally-friendly businesses as well as investment managers as ESG funds, mostly actively managed. As ESG investment funds move forward to their fourth straight year of record inflows, there is no sign of slowing down.

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