The investment world has been arguing about the pros and cons of green investment funds for a long time. But in many cases, investment analysts have concluded that green funds have lower returns, and their environmental benefits provide a value that is more difficult to value.
However, new research made by the European equivalent of the SEC has concluded that green funds would actually do far better in a climate-related stock market shock.
And some details provided by a report from Investing.com have shown how extensive this research was.
“The European Securities and Markets Authority (ESMA) published what it described as a first attempt to assess vulnerabilities to climate-related financial risks using data from 23,965 EU-based funds worth 10.7 trillion euros ($12.7 trillion).”
The analysis showed that in a severe market shock, there was a considerable difference in losses. Green funds showed a loss between 3% and 7%, while brown or dirty funds could lose between 8% and 19%.
That means that there is now a tangible value in clean funds as they provide a lot of downside protection.
