German Investments in Sustainable Funds Revealed
The British Virgin Islands (BVI) has reported a significant surge in sustainable investments, with a total of 110 billion euros managed by special funds for institutional investors. This figure, according to the BVI, may underestimate the spread of sustainability among these funds, as values based on the disclosure regulation might not fully capture the extent of sustainable practices.
Since March, products classified as Article-8 and Article-9 funds by BVI members have been considered sustainable under the EU Disclosure Regulation. The BVI's latest report reveals that 361 billion euros were sustainably managed by mid-year, a substantial increase from the end of 2019 when both retail and special funds were at par.
The growth is primarily due to retail funds, which account for nearly 70 percent of the total volume. Compared to March 31, the wealth has increased by 8 percent, and the first half-year net inflows of 22.2 billion euros already exceed the value for the whole of 2020.
Investment strategies in special funds are often individually designed, reducing the incentive for fund companies to classify them formally as sustainability funds. However, a recent survey by the BVI found that funds not classified as sustainable often consider ecological, social, and corporate governance (ESG) criteria.
Despite the overall growth, sustainable special funds had low inflows in the second quarter. Net inflows continued to dominate new business in the second quarter, with investors net investing 10.2 billion euros in sustainable funds.
The value for the second quarter includes catch-up reports of around 80 billion euros due to some fund companies gradually adapting their data reporting to the new rules. The search results do not specify which investment companies have made particularly low investments in sustainable special funds in recent quarters; available information mostly covers active investments and fund strategies without highlighting companies with reduced commitments in this area.
This amount is equivalent to nearly 4,500 euros for every German, signifying a growing trend towards sustainable investing across Europe. The BVI's comment that the values based on the disclosure regulation may underestimate the spread of sustainability among special funds for institutional investors suggests that the actual figure could be even higher.
