ESG Investors Question Their Own Methods After Grim UN Report

The damning United Nations report on global warming delivered a reality check for the investors betting that markets can limit the damage.

The assessment by the Intergovernmental Panel on Climate Change, released on Monday, should prompt investors to “review their commitments to tackling climate change and to take action,” said Fiona Reynolds, chief executive of the UN-backed Principles for Responsible Investment.

Often that kind of reflection sends more money pouring into environmental, social and governance investments, raising concerns that financial markets’ short-term outlook might end up undermining claims of sustainability. Between 2018 and 2020, for example, European asset managers had to strip the ...