ESG and sustainability** saw approximately $2.5 billion in redemptions in Q4 2023, the first quarter of negative outflows.
Morningstar's latest research finds:
In the fourth quarter of 2023, there was a net outflow of global sustainability** for the first time. Investors pulled $2.5 billion out of the ongoing challenging macroeconomic and geopolitical backdrop.
In Europe, the company outperformed sustainably thanks to passive, netting $3.3 billion in new money and $21.3 billion in funds raised in the fourth quarter. However, the sustainable** loss of active management was nearly $18 billion.
For the full year, Europe received $76 billion for sustainable development**. By comparison, Europe regularly experiences $50 billion in outflows per year.
Investors withdrew a record $5 billion from U.S. sustainability** last quarter, totaling $13 billion in 2023.
In the fourth quarter, more than 120 new sustainable issues were issued.
Hortense Bioy, Morningstar's global director of sustainability research, said, "Global ESG flows may have looked bleak last quarter, but Europe's ESG** – by far the largest market – continues to outperform the rest of the world. Global ESG assets are also growing. The disappointing reality is that active managers have once again failed to prevent redemptions from proving their worth more easily in a corner of the market. "On the contrary, passive** shows sustained resilience. ”