What happens after this fallout settles? Unfortunately, the answer eludes most, and the market does not seem to care, Peers adds. “Many oil companies have invested more in fossil fuel exploration, and that’s fine for the next two to five years because they’re going to have a market for it. But what happens after that?”
The rising interest rate environment has punished bonds and equities, some more than others. Owing to the Russia-Ukraine war, the market is currently rewarding sectors largely excluded from sustainability-themed strategies, and is set to do so for some time, says Mirova’s chief investment officer Jens Peers.
This could mean the underperformance of funds associated with environmental, social and governance (ESG) themes is set to stay. “We know for oil and coal companies, and even weapon manufacturers [that] the next two, three years are going to be quite positive,” says Peers to The Edge Singapore.
