This is a notable trend reversal. For the first time in four years, climate funds, financial products which are supposed to invest in companies better prepared for a low-carbon transition, should experience their first year of outflows at the global level, with 24 billion dollars (22.8 billion euros) of buybacks recorded over the first nine months of 2024, according to data provider Morningstar.
These results contrast sharply with the $345 billion in cumulative subscriptions to this type of financial product over the last four years. They are nevertheless a continuation of a significant decline. If, in 2021, the collection of climate funds represented a total of 150 billion dollars globally, it was reduced by more than half in 2022, reaching 60 billion dollars, then 40 billion dollars in 2023 .
“Headwinds”
However, this poor performance is not accompanied, on the market, by a reduction in the number of climate-related financial assets. Morningstar reports that their number even increased by 6% during the first nine months of 2024. Nearly 1,600 mutual funds and ETFs (exchange traded fund), exchange traded funds, were identified in September and represent a total of $572 billion. European investors make up 85% of this figure, while the market shares of Chinese and American investors lag far behind at 6% and 5% respectively.
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More specifically, these are climate solutions funds and “Clean Energy/Tech” funds., those specializing in clean energy manufacturing and service companies, which were divested for more than $25 billion in total. Climate transition funds, for their part, suffered withdrawals for the first time. Finally, passive funds, which track benchmark indices aligned with the Paris agreement, recorded outflows of $7.4 billion between January and September 2024, despite their general outperformance.
For Hortense Bioy, head of sustainable investment research at Morningstar, several elements can explain this trend, such as “ high interest rates, uncertain political and regulatory environment, greenwashing concerns and anti-ESG sentiment [environnement, social et gouvernance] ». It remains to be seen whether this dynamic of “headwinds” is confirmed in 2025.
