Global net inflows into sustainable strategies increased 72% in the three months ended June 30 vs. the previous quarter to $71.1 billion, driven by funds domiciled in Europe, Morningstar data show.
A study of second-quarter flows for 3,432 global environmental, social and governance open-end funds and exchange-traded funds showed that assets in sustainable strategies hit a record high of $1.06 trillion as of June 30, up 23% vs. the previous quarter.
European funds attracted the majority of global net inflows in the second quarter, at €54.6 billion ($61.4 billion). European net inflows were double those registered in the first quarter.
European money managers also converted 40 non-ESG strategies into sustainable funds in the second quarter to meet upcoming regulatory standards and investor demand. Repurposed strategies accounted for 21% of all European sustainable funds.
"The first half of the year saw a record number of new ESG fund launches," Hortense Bioy, director of sustainability research for Europe, Middle East and Africa and Asia-Pacific said in a news release. "Asset managers also continued adapting their offerings by repurposing existing funds into ESG-focused funds and being awarded ESG labels. Investors have more options to choose from than ever before to build portfolios that meet their financial needs as well as their sustainability preferences."
Ms. Bioy added that she was encouraged that the COVID-19 crisis had not stopped the European Commission from making progress on the classification of green investments, known as the taxonomy, and disclosure requirements.