Climate-focused fund investments drop by 75% in the US since 2021
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While the world is trying to sprint through the race against climate change, climate investments have taken an antithetical turn in the US.
Owing to high interest rates and an ‘anti-woke’ sentiment fresh in the market, climate-focused mutual fund investments have dropped to $37.8 billion in 2023, down from $151 in 2021, a whopping 75%.
According to Morningstar data, quoted by the Financial Times, these are the worst numbers the market has seen since 2019.
Steadily rising interest rates shot green energy companies into soaring debts, which in turn contributed to falling stock rates.
This heavily contributed to the downfall in mutual fund investments since money was diverted to high-yielding cash flows. ESG mutual funds experienced a $2.5 billion outflow, globally.
However, a big factor in this trend is also the political campaigning against these ‘woke’ investments. Multiple US states have legislated against ESG investments, often referring to them as being ‘biased’ against oil and gas industries.
A report by the Climate Policy Initiative found that the world’s climate finance should increase five times from $1.3 trillion in 2021-22, as soon as possible to avoid the worst consequences of climate change.
In light of 2023 being recorded as the hottest year on Earth, the recent state of climate legislation in the US has raised some concerns.
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