Sustainable investments, which integrate ESG criteria, are essential to create lasting value. Since 2009, ESG funds have grown significantly, reaching US$2.9 trillion in assets under management. In Chile, investment in this type of strategy has increased notably, reflecting a growing commitment to these practices.

It is crucial to understand what sustainable investments are. There is no single definition, and they are often confused with responsible investments that consider environmental, social and corporate governance (ESG) factors.

To create lasting value, companies must adopt these criteria. This shift is already being seen in the fund industry and beyond. Investors and consumers increasingly value institutions that incorporate them, and human capital is key to business development. Caring for the interests of stakeholders is directly related to long-term results for investors, as we can see in the following chart for the MSCI World ESG Leaders Index and the MSCI World Index.

Graph 1

Source: Bloomberg 

Since 2009, investment in funds with these criteria has grown steadily. Between 2019 and 2022, it reached record figures with net flows of more than $1.2 trillion. In the last year, these investments have slowed down due to high inflation, rising rates and doubts about the greenwashing. Currently, assets under ESG management total about $2.9 trillion worldwide. Europe leads with more than 80%, followed by the United States, as shown in graph 1.

Considering the assets under management in the U.S., a lower commitment to these policies can be inferred.

Graph 2

Source: Morningstar

Chile has not been left behind. Investment in ESG strategies has increased significantly, growing by more than US$3 billion in the last two years. This represents an increase of almost 25%, both in number of funds and assets under management.

Figure 3

Source: ACAFI

At Fynsa we have experience in impact investments with our investors. We have developed several strategies: renewable energy projects, private equity investments, and private equitythrough Galgo -a startup that seeks to provide access to progress to an under-banked segment of the population-, investment in private debt to provide access to credit to SMEs, and a social approach through the partnership with Fundación Sentido.

In line with the trend, our commitment is to continue promoting initiatives that not only generate financial returns, but also a positive and lasting impact on the communities and the environment in which we operate.

Raimundo Fuenzalida

Portfolio Manager Private Debt Fynsa AGF