Investors Withdraw From ESG Funds Lacking Sustainability Targets

Investors withdrew billions in the second quarter from ESG funds without sustainable investment targets, in a sign of growing rejection of strategies that fail to set clear goals.

Investors pulled almost €10 billion ($11 billion) from Article 8 products — the European Union’s second-highest ESG category — that failed to specify what share of their portfolios consisted of sustainable investments, according to a report by Morningstar Inc. The outflows made up two thirds of the quarter’s total redemptions, a fact “worth noting,” the market researcher said.

At the same time, second-quarter inflows to the EU’s top-ranked ESG funds, ...