Just 5% of Passive ESG Fund Investments Make Impact, Study Says

Ronojoy Mazumdar

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Most of the money invested in passively managed mutual funds that track ESG indexes fail to help fight climate change, according to a new study.

"While ESG indices could potentially have a sustainability impact, most currently don't meaningfully facilitate sustainability," economists, including Jan Fichtner at Germany's Bundesbank and Johannes Petry at Goethe University, wrote in the paper. They call it the "ESG capital-allocation gap."