September saw UK investors pull £544 mn ($673 mn) from ESG funds, the highest outflow on record, as more stakeholders back away from responsible investing in favor of sturdier ventures.
Across the month, UK savers took a total of £1.4 bn out of funds, with nearly half coming from ESG-based investment vehicles.
The responsible investment funds that monitor all ESG moves has been in decline all year, with the Investment Association recording only £95 bn in funds under management at the end of September, dropping from £95.9 bn in August.
While responsible investing was down in September, other investment opportunities fared better: UK gilts drew in net retail sales of £237 mn and corporate bonds saw net retail sales of £209 mn.
The pull away from ESG has been well documented all year, with big players such as BlackRock and Vanguard actively backing fewer ESG proposals during proxy season.
Vanguard, which has $8 tn in assets under management, supported only 2 percent of ESG-based proposals this year, compared with 12 percent in 2022. It says the decline in support is largely attributable to the nature of the shareholder proposals, pointing out that it evaluates the proposals case by case, ‘assessing each on its merits and in the context of the facts and circumstances of the company in question.’
Chris Cummings, chief executive of the Investment Association, says investors continue to be ‘squeezed by inflationary pressures and the cost of living, as net inflows into funds experience their second quarter of decline.
‘Despite £1.2 bn invested in funds between July 1 and September 30, this is down on the first quarter of the year, which saw almost £4 bn invested. UK gilts continue to be a favorite throughout the uncertainty and were the best-selling sector in September, and an increased inflow into mixed-asset funds was a bright spot in a challenging month.’