ESG Debt Surges to Record Above $1 Trillion Last Year; Asia, EU Equities Struggle to Outperform: Morgan Stanley

Debt Issuance

Green Equity Performance

Source: Sustainable Investing: Emailed Quarterly Tracker from Morgan Stanley: Jan. 19, 2022

  1. New Sustainability funds. Since 1Q21 Morningstar has
    added ~3,430 sustainability funds to its database, over half of
    which are article 8 & 9 SFDR funds. In the past this has materially
    impacted AUM growth. That said, new additions are slowing with
    ~600 new funds added in Q4 vs ~2,550 in Q1-Q3.
  2. Fund flows & AUM. ESG AUM currently stands at $3.9trn (up
    +5% QoQ, +27% YoY). In 4Q21, ESG net inflows totalled $148bn,
    up +2% QoQ and down -11% YoY.
  3. ESG bond issuance. In 4Q21, $251bn in ESG-labeled debt
    was issued globally,+21% YoY. SSA issuance fell 1.5% YoY to
    $126bn; corporate issuance rose 57% to $101bn YoY. Overall
    ESG-labeled issuance totaled $1.08trn in 2021, a 94% increase
    on the 2020 total of $557bn. We estimate that there is ~$2.6trn in
    ESG-labeled debt currently outstanding and expect the pace of
    issuance in 2022 to remain strong, particularly for green and
    sustainability-linked bonds.

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