ESG Market Booms to $35 Trillion, Experts Warn of Potential Bubbles
The ESG (Environmental, Social, and Governance) investment market is booming, with assets surging from $27 trillion in 2016 to $35 trillion in 2020. However, experts warn of potential risks and market bubbles in the stock market today.
The growth of ESG assets shows no signs of slowing down, with a nearly third increase in just four years. Meanwhile, assets managed in sustainable funds and ETFs have skyrocketed over tenfold in the past five years, reaching around $2 trillion today in the stock market. ESG/SRI equity funds account for about 3% of total assets, while ESG/SRI bond funds make up about 1%.
Sirio Aramonte and Anna Zabai of the Bank for International Settlements advise closely monitoring the ESG market in the stock market today. They note high valuations in the clean energy sector, which could be excessive. Similar trends were seen in railroad stocks in the mid-1800s, internet stocks during the dot-com bubble, and mortgage-backed securities during the financial crisis. Appropriate disclosure and reporting regulations are crucial to assess both benefits and potential risks in the stock market today.
While the ESG market continues to grow rapidly, concerns about potential market bubbles and excessive valuations, particularly in clean energy, are rising in the stock market today. Further analysis is needed to evaluate potential risks, especially in high-valuation bond markets in the stock market today. Experts urge close monitoring to ensure sustainable growth and prevent a repeat of historical price corrections in the stock market today.
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