The writer is an economist and non-executive director of Chevron
A wall of money is driving equity valuations to record highs across broad markets, spurred by pandemic stimulus programmes and low interest rates.
Stocks targeted by investors for environmental, social and governance reasons have been particular beneficiaries from the deluge. The pool of assets under management with an ESG mandate is expected to rise to $50tn by 2025, from $35tn last year, according to a survey by Bloomberg Intelligence.
High volumes of capital pursuing environmental initiatives in itself is not a risk — but big fund flows without traditional investment rigour and discipline can damage financial markets by creating price bubbles, and undermine efforts to achieve net zero emissions and a low-carbon future.
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