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What’s in a name? In the green investment industry, sometimes there’s not much at all.
New data shows dozens of fund managers have changed their company names and rebranded as sustainable or green investors, and money has come pouring in as a result. But some of these funds have changed little more than the sign on the front door.
Green Rush or Fool’s Gold?
Environmental, Social, and Governance (ESG) investing is all the rage, and it’s no trade secret. Institutional and retail investors are demanding more from firms than just bottom line profits, as climate change has emerged as a defining issue across generations.
At the current rate, global ESG assets are on pace to pass $53 trillion by 2025, according to Bloomberg Intelligence. That would be more than a third of the total $141 trillion in projected assets under management worldwide.
Riding this green shift are fund managers — a record 25 companies that manage mutual funds and exchange-traded funds rebranded as sustainable last year, bringing the total to 64 since 2013. 35 of those funds endured investor withdrawals before rebranding and 45 of them have enticed new capital since “going green.” But a peek under the hood reveals not all who refurbished their images actually refurbished their portfolios:
- The USAA World Growth Fund rebranded last year to the USAA Sustainable World Fund. But it still holds $100 million worth of shares from 47 fossil-fuel companies, the most of any fund that claims to have gone sustainable.
- The $1.5 billion fund has also added shares of oil and gas companies since its rebrand and holds shares in mining company Rio Tinto, which was rebuked by activists after destroying two sacred rock shelters in Western Australia.
In-House ESG Experts: The Sustainable World Fund added a disclosure that says it considers ESG ratings, but that its fund managers are permitted to disagree with them.
Rebranded & Reallocated: Not everyone’s going green in name only. Since Putnam Investments rebranded its Multi-Cap Value Fund to the Putnam Sustainable Future Fund in 2018, it has increased assets 93% to $649 million while shifting 75% of its portfolio to sustainable companies.