Investors have plunged nearly four times the amount of cash into responsible investment funds in 2020 that they did last year, latest data has shown.
Figures from the Investment Association published today showed responsible investment funds saw net flows of £7.1bn in the nine months to September this year — 275 per cent more than the £1.9bn measured in the first three quarters of 2019.
In September alone, responsible investments funds saw net inflows of nearly £1bn and total assets in environmental, social and governance portfolios stood at £40bn at the end of the month.
Despite mass inflows, responsible investments still only make up 3 per cent of industry funds.
Chris Cummings, chief executive of the Investment Association, said: “The year so far has seen record investment into responsible investment funds, with over £7bn invested into funds which consider their wider impact on the world.
“In a year clouded by uncertainty, responsible investment funds are a beacon for how savers can put their money to work to support positive change globally, and our industry can be proud that these funds are reaching new heights of popularity.”
ESG investing has boomed in popularity in recent years as fears over climate change have led investors to consider the impact of their money and as a growing number of millennials have begun investing.
Recent data from Morningstar showed global assets in sustainable funds hit £930bn in the third quarter of 2020, a record high.
Strong net inflows have been boosted by ESG’s outperformance amid the coronavirus crisis.
Throughout the crisis, companies that have strong sustainable credentials have tended to outperform those that do not.
Overall, investors placed £5.3bn into UK-based retail funds in the three months to September — more than three times the £1.2bn of sales for the same period in 2019.