The central bank to the world's central banks, the Bank for International Settlements, has warned of the growing risk of a price bubble in environmentally friendly-focused asset markets.
Increasing urgency to limit global warming and tackle other issues such as racial and social inequality has seen Environmental, Social and Governance investing explode in popularity in recent years.
A narrower definition including only exchange-traded funds and mutual funds with ESG or socially responsible investment mandates points to even faster, tenfold growth, to approximately $2 trillion. This is evidenced in assets such as clean energy and electric car stocks and green bonds, which have soared in recent years.
Claudio Borio, head of its monetary and economic department, referred to it as the "green bubble" risk, highlighting how the surge in ETFs and mutual funds was comparable to parts of the mortgage backed security market in the runup to the global financial crisis.
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