ESG funds: back in favour

• Corporate climate coalition takes off – The Climate Pledge is a corporate climate initiative that has grown to more than 700 companies across 49 countries over 2026 - with all signatories committed to achieve net zero emissions by 2040. So far, participating companies are reducing operational emissions faster than their peers.
  
  
• SEC wants to limit shareholder influence – The U.S. Securities and Exchange Commission (SEC) wants to repeal long-standing regulation that lets shareholders raise issues like climate risk, sustainability and executive pay, to be voted on at company meetings. The move could make it harder for investors to influence company decisions and improve ESG practices.
  
  
• Oracle getting ahead of data centre concerns – The tech company will launch a publicly accessible environmental dashboard for its new AI data centre being built in New Mexico, providing real-time data on emissions, water use, noise and heat – along with independent environmental assessments.
  
  
• EDF raise €1bn for ‘green’ nuclear upgrade – EDF has raised €1 billion a green hybrid bond to extend its ageing French nuclear reactor fleet. The deal shows strong investor demand for low-carbon infrastructure, despite ongoing debate over nuclear energy within ‘green’ investment.

Sustainability resurgence

A new report from Morgan Stanley’s Institute for Sustainable Investing found sustainable funds outperformed the broader market across all regions analysed over the first six months of 2026. Sustainable equity funds delivered a medium return of 9%, compared with 8.6% for traditional equity funds.

This welcome turnaround was driven by sectors like alternative energy, which increased after the Strait of Hormuz closed, prompting countries to reevaluate their energy supply chains and reliance on imported oil.

At the same time, assets under management of sustainable funds grew by 4.8% to a record $4.2tn, suggesting a resurgence in demand as climate change risks remain in the spotlight.

This trend was reflected in our own Parmenion’s own ESG range, where the majority of risk grades across active and passive ESG solutions outperformed their respective IA benchmarks over the first half of 2026.

For advisers, it's a useful reminder that sustainable investing doesn't have to mean sacrificing returns. With clients still paying close attention to sustainability issues, recent performance could help make those conversations a little easier.

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity.

Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.