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200% more ESG investments from sovereign funds

New data suggests sovereign wealth funds globally increased their commitments to ESG investments by 215.27% between 2020 and 2021.

The amount sovereign wealth funds have invested in ESG strategies surged from US$7.2 billion to $22.7 billion. Over the same period, the number of deals increased from 19 to 37.

This is according to data analysed by Finbold, which noted that in line with ESG commitments increasing sovereign wealth funds have been slashing their investments in oil and gas.

Sovereign wealth funds' involvement in the oil and gas space dropped 46.92% to $6.9 billion from 2020's figure of $13 billion. Last year also recorded the lowest deals in oil and gas at eight. In 2019, the investments stood at $12.7 billion.

"Last year's growth indicates that the ESG space has a financial appeal for investors, and sovereign wealth funds play a crucial role. In general, the sovereign wealth funds are uniquely positioned to promote the global environmental, ESG agenda, and investing in certain products is the first step," Finbold said.

"ESGs come with the idea that investors who integrate corporate environmental, social, and governance risks can attract better returns. This concept is now rapidly spreading across capital markets globally."

In 2019, ESG investments from sovereign wealth funds stood at just $5.2 billion, while in 2018, the figure was $6 billion, a slight drop from 2017's value of $6.6 billion. Over the last six years, 2016 recorded the least investment in the ESG space at $3.7 billion.

Read more: ESGFinbold