In recent years, investments in funds focused on environmental, sustainability, and governance (ESG) issues have skyrocketed. They totaled US$30,000 million in 2019, US$94,000 million in 2020, and US$159,000 million in 2021. 

But in May, according to Bloomberg, the major ETFs focused on ESG investments saw just $400 million in inflows. Furthermore, of the three ETF categories tracked by Bloomberg—company stocks, bonds, and commodities—the stock category recorded a net outflow of $200 million.

Bloomberg cites three factors that stood out in recent weeks. The first is that in mid-May Elon Musk called ESG a trap set by "fake social warriors". The second is that so far this year, institutional investors have been seeking returns in other assets: the S&P index of oil and gas ETFs rose 68% between the start of the year and June 7. And third, increased scrutiny from regulators. The SEC—U.S. Securities and Exchange Commission— is investigating the ESG disclosures of Goldman Sachs’ asset management unit, after the agency announced “a list of new restrictions aimed at ensuring that ESG funds accurately describe their investments”. Meanwhile, German police raided the offices of Deutsche Bank AG and DWS Group over allegations of greenwashing.

It is difficult to predict how this market will develop, although Bloomberg believes it is unlikely to exceed the levels reached in 2021 this year.