ESG (environmental, social, and governance) investing is at a crossroads. 2022 was a year of draining flows to sustainable funds, disappointing ESG investment performance, and political backlash in the US.
There are mixed reports on ESG demand and performance. However, several prominent data providers still suggest a relatively healthy market and appetite for ESG among investors.
For example, despite negative returns for Morningstar’s US Sustainability Index in 2022, it still outperformed the overall market. And according to Refinitiv Lipper, ESG equity funds saw net inflows in Q1’23, while non-ESG equity funds suffered more withdrawals than inflows.
On the consumer side, nearly 40% of US consumers are interested in enrolling in a climate-linked financial product (e.g., a green checking account) according to McKinsey.
ESG technology providers are coming into the spotlight as customer demand collides with pressures for legitimacy and performance. Financial institutions are also relying more on ESG providers as the regulatory landscape continues to evolve.
Using CB Insights data, we identified 115 companies addressing 9 ESG and sustainability priorities for institutional investors, asset managers, banks, and individuals.
